IMAX Corporation Aktie

Hello, and welcome to the Annual General Meeting of Shareholders of IMAX Corporation. Please note that today's meeting is being recorded. It is my pleasure to turn the meeting over to Rob Lister, Chief Legal Officer and Senior Executive Vice President of IMAX Corporation. Mr. Lister, the floor is yours.

Thank you, operator. I'd like to call this Annual General Meeting of Shareholders to order. I'd like to welcome all of you to this year's meeting, which is being conducted via live audio webcast, and thank you for joining us.

The Board has authorized me to chair today's meeting in accordance with our bylaws. Ken Weissman, Corporate Secretary, will act as Secretary of the meeting, and Computershare Investor Services, Inc. through its representatives will act as scrutineer.

Members of our Board of Directors and other members of management are present on today's webcast as well. I would now like to ask Ken to briefly go over some procedural and administrative matters.

Thanks, Rob. I have confirmed that we have not received any shareholder nominations or proposals for business at today's meeting. I have received from Computershare a list of the holders of the corporation's common shares as of the close of business on April 13, 2026, the record date for this meeting.

I have also received the scrutineer's report on attendance, which indicates that sufficient shareholders are present to constitute a quorum as well as the statutory declaration as to the due mailing of the notice of meeting, the proxy circular and proxy statement, the form of proxy and the annual report that contains the 2025 financial statements of the corporation.

These documents will be available for review during the meeting by selecting the documents icon at the top of your screen. Questions can be submitted during the meeting by any registered shareholder or duly appointed proxy holder by selecting the Q&A icon at the top of your screen.

If you submit a question, please include your name and your affiliation and indicate if the question relates to a specific agenda item. We will address questions relating to specific business items when those items are brought before the meeting, and we will address other questions during the Q&A session at the end of the meeting.

Please keep in mind that comments and answers to your questions might include statements that are forward-looking and that they address future results or occurrences. Actual future results and occurrences may differ materially from these forward-looking statements.

Please refer to our SEC and SEDAR filings for a discussion of some of the factors that could affect our future results and occurrences.

Thanks, Ken. I direct that the statutory declaration and the list of shareholders be kept by the secretary with the records of this meeting. Notice having been duly given and there being a quorum present, I declare this meeting to be properly constituted.

The formal agenda for this meeting as set out in the notice is to receive the consolidated financial statements for the fiscal year ended December 31, 2025, together with the auditor's report, to elect directors, to appoint auditors and to authorize the directors to fix the auditor's remuneration and to conduct an advisory vote on the compensation of the corporation's named executive officers. Ken will now discuss voting procedures.

Voting today is limited to shareholders of record on April 13, 2026, the record date for this meeting, as well as duly appointed proxy holders for such shareholders. Voting will be conducted by electronic ballot. We now ask that the balloting be open. If you are a shareholder and you have already voted your shares ahead of the meeting, you do not need to vote your shares again.

But if you use the control number or invitation code to log into the meeting and you accepted the terms and conditions, you will be provided the opportunity to vote by online ballot. If you vote by online ballot during the meeting, any proxies you previously submitted will be revoked.

The polls are now open and all registered shareholders and duly appointed proxy holders who wish to vote can click on the vote icon at the top of your screen. You will be able to see all motions being brought forth at the meeting, and you can select the relevant option next to each proposal.

Voting will end after all items have been brought before the meeting. Rob, we are now ready to proceed with the formal business of the meeting.

Thank you, Ken. The first item of business is the election of 10 directors. Shareholders are being asked to elect the following 10 nominees as directors of IMAX Corporation to hold office until the close of the Annual Meeting of Shareholders in 2027 until their successors are elected or appointed or until the date of their registration or termination.

The nominees are Gail Berman, Eric A. Demirian, Kevin Douglas, Richard L. Gelfond, David W. Leebron, Michael MacMillan, Steve R. Pamon, Dana Settle, Darren D. Throop and Jennifer Wong. Jennifer Horsley, IMAX's Senior Vice President of FP&A and Investor Relations, is receiving any questions that are submitted during the meeting.

Jennifer, can you please advise if there are any questions regarding this business item?

I can confirm that we have not received any questions specific to this matter.

Thanks, Jen. The next item of business is to approve the appointment of PricewaterhouseCoopers LLP as the corporation's independent auditors and to authorize the directors to fix their remuneration. Jennifer, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this matter.

Thank you. The next proposal, commonly known as say-on-pay proposal, is to approve on an advisory basis the corporation's named executive officers compensation program. Although the vote is nonbinding, the Board and the Compensation Committee will review the voting results and will consider shareholders' views in connection with our executive compensation program. Jennifer, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this matter.

Thank you. We have now completed the items to be voted upon at this meeting. We will pause here to provide one final minute to allow everyone to complete their voting. Your votes will automatically be accepted once the balloting closes.

[Voting]

The electronic balloting has now closed. I ask that the scrutineer compile the results of the votes on all business matters into a report. Results will be published on a Form 8-K on EDGAR as well as SEDAR.

This concludes the formal meeting -- business of the meeting. I will now take any remaining questions on topics relating to today's subject matter from registered shareholders and duly appointed proxy holders. Jennifer, are there any questions?

I can confirm that no questions have been submitted.

Thank you, Jennifer. Thank you, Ken. This completes the business of the meeting. Thank you for joining us today and for your continued interest in and support of IMAX. The meeting is now concluded.

You may now disconnect.

Okay. Great. We're going to get started. You'll notice we have a little bit of a unique setup today. So on my left is Natasha Fernandes, CFO of IMAX. And up on the screen on my right, you'll see Rich Gelfond, CEO. Rich, thanks for being with us today.

Why don't we start with you? It's been a while since investors have heard from you. So maybe we could just start by having you kind of share your perspective on kind of recent business trends, what you're most excited about, what you've been focused on as you've come back from your temporary leave.

Thanks, David, and thanks for agreeing to this unique setup. As you know, I can't travel right now, and I really appreciate the opportunity to speak at the conference.

So in a way, the staging of my comeback is perfect with the summer slate kicking off right now and all that's going on in the business. First of all, my primary thing that I've been focusing on is shareholder value and increasing shareholder value. And to that end, I started coming back in the last week or 2, and we decided to initiate a buyback program a week ago, and we bought in over 12 million shares in the last week.

The stock has gone down for reasons. I understand that some films over-index what you thought they're going to do, some go under. We're on the doorstep of the big movie season. I think people are needlessly worried, but we're not. We're quite confident in the rest of the year and where we're going to end up. And I want to reiterate the guidance for $1.4 million in box office.

So first thing I'm focusing on is shareholder value. We're really focused on filling in the slate for next -- for this year and next year in '28. And without giving you specific titles because they're not all formally agreed to, but more agreed to by word is '28 is almost filled in for the summer. I'll talk a little bit more about it later, but I still think there's a number of things we might do in '26. That make me are the reasons for my confidence for box office for this year.

I'm spending a lot of time working on the brand. I think our brand by virtue of the fact that we're indexing so high in all the movies and our box office is pretty much so far equivalent to what it was last year with Odyssey, Toy Story and Dune: Part Three still to come, which comp very favorable to last year's titles.

So I think on a global basis, the brand has done phenomenal, and there's a lot more we could do around it. And I don't know, David, if you had a chance to see Chris Nolan on either Colbert or 60 minutes this past weekend. And when you understand what we have out there for the rest of the year, I think you'd be as excited as I am.

Got. That's great intro. Natasha, do you want to add anything or...

Yes. No, I think we're super excited. The repurchases, as Rich said, is $12 million so far, and that's been great because we believe that we're undervalued, and it's a great opportunity for us. And I think that we're excited for the slate ahead of us. I wanted to reiterate what Rich said about being on par.

Last year, our biggest title of the year was Ne Zha 2 in the first quarter, and then we went on to achieve $1.28 billion in the year. This year, we are right on par as of today with our box office of last year at this time, and yet the biggest of our slate is yet to come.

Got it. So maybe we can unpack the $1.4 billion of box office a bit. Maybe just help us understand how you build the forecast. And I think it's also important to know how you dynamically manage that throughout the year.

So the way we build the forecast, David, is when we do our budget the year before, we get estimates on a film-by-film basis for everything that's laid out for the next year. And our film department weighs into that, our finance department weighs into it, and I weigh into it based on comps, but other things. Is it film for IMAX? Is it film or is it digital? How long is it playing, all the factors like that.

And we know going into a year that not every film is going to track exactly to the ultimate we put together. So you look at this year and things like Hail, Mary and Michael have done much better than what our budget was coming into the year and other things have done worse than what we budgeted it. But it's a portfolio and much like investors that you're hosting manage there as a portfolio. That's how we manage it. And we're leaning in much more heavily to the programming end of it.

So we used to -- our team was mostly staffed with people who came out of distribution in Hollywood and the jobs of people in distribution is to sell a movie. So if you had gone out and you sold movie X and it wasn't performing, you try and push movie X, and that was the skill set. Well, it occurred to us about 1.5 years ago that, that wasn't necessarily the best way to maximize box office.

So we supplemented our team with people who came out of programming work for either a chain or thought of things differently. So when the box office, let's say, isn't living up to its potential with a particular movie, we swap it out and we put another movie in and things move out of the year, so we move other things in. So it's become a much more dynamic process.

And this year -- or as I say, last year, for Thanksgiving, we played 3 movies, and we maximize box office. And you look recently, we brought back Hail, Mary and Michael was originally slated for like a week or 2, and we brought it back this weekend. So we're playing a much more active dynamic role.

Got it. Maybe following up on box office. We did see a few weeks ago, Netflix delay Narnia into '27, leaving a gap in the schedule around Thanksgiving by definition, that film would have had 100% indexing. So first, Rich, how should investors view that as impacting your forecast? And then as a follow-up, right, if we go back to the Investor Day, you had spoken about Narnia as sort of a cultural event, a game changer. So what is the absence of having that fully exclusive model over the 2 weeks kind of mean to your longer-term ambitions?

So let me answer short term and long term, David. Yes. So I think it's premature to take what people thought Narnia was going to do and subtract it because there's been a lot of demand for that slot. And a lot of people are interested in, obviously, it's a good time of year to release a movie. And I was hoping on this call to be able to announce what's going in that slot, and we're really close.

And I'd be really surprised if in the next week, we don't tell you what's going in that slot. So we're on the verge of replacing it, and you'll be the first to know, but I'm quite encouraged by what we have in there.

Longer term, I think the model that we put together will continue to exist. It may be a different partner. It may be different specific terms. But I'm quite confident that we'll have an IMAX exclusive release that along the lines of what we talked about.

And then the final thing I would say is Narnia itself. So as you know, February is traditionally a very weak month. It's moved to Super Bowl week, which is traditionally a very weak date. We have been working hard with Greta, as you'll recall from the press release.

I think we played a role in Netflix agreeing to open it up very wide. We still have an exclusive for the first couple of days going forward. They're going to lean in with a lot of marketing to it. So if I'm right and we have a really good replacement, the movement today looks like not the best thing, but I think people will be comfortable that it's not only good for us, but good for the whole business because we help turn that into a day and date release wide.

I should probably follow up there and ask you just about your thoughts on Netflix and the significance of them committing to that type of theatrical release, right, just with a longer-term view of supply?

So again, you probably should ask them because they'll really have the better answer. But I think that they -- in doing the diligence for the Warner deal, kind of learn more about the traditional movie business and the role that it could play. So I think certainly, they're leaning in heavier than they were. And I think if you look out longer, I think they'll be more open-minded to things like that.

Got it. You mentioned partnerships with filmmakers earlier. Obviously, that's become central to what IMAX does. I think it's one of the things that sets you apart. Maybe we can discuss this a bit. Obviously, with Christopher Nolan, the Odyssey set to release this summer, that's coming a lot more into view.

So we have something called the CEO forum in IMAX every year, where we gather our exhibitors from around the world as CEOs, and we put together some talent and panels. So this year, we don't usually talk about it, but it was so special. I thought it was worth mentioning at this conference.

So our guests this year were Tom Cruise, Timothée Chalamet, Chris Nolan, Denis Villeneuve, Darren Aronofsky, Jon Favreau and many others. So I don't know who could -- by the way, they don't get paid to do this. They come to speak to our exhibitors. I don't know who else could pull that off. I don't think there is anyone except for maybe CinemaCon. But that's the kind of talent that we put together on a consistent basis.

And you even look at this year, we have Mandalorian coming out right now and Favreau, obviously, is one of the fathers of Disney and these types of movies. And then obviously, we have Denis doing 2 and 3 at the end of the year. And then you mentioned Chris. People work with IMAX, like Joe Kosinski's last year did F1. Next year, he's doing Miami Vice.

So the best filmmakers in the world who have done well want to work in IMAX, and that's really what drives us over time. The Odyssey, I'm -- I never like to jinx anything, but I've never seen something I've been this excited about in advance. And one of the reasons is if you saw Chris in any of those pieces, I mean, he's exuding confidence. But there's way more than that. The cast looks like the red carpet at the Oscars. The -- it's a very expensive movie.

Oppenheimer did almost $1 billion, just shy. And Odyssey has a much more international appeal than Oppenheimer did. And the marketing behind Odyssey, it sold out a lot of its tickets for film theaters a year in advance. We're playing it in 41 film theaters, whereas last time, we only played it in 30. So it just sets up well.

And at CinemaCon, I would say June was one of the surprises of the conference in terms of its reception. It was overwhelmingly received well. I don't know if you've seen the tracking for Toy Story, but it's extraordinary. I saw somebody who said 150 to 175 for the opening weekend. We've got Disclosure Day, the Spielberg movie. We've got Minions. I mean it's just a locked thing. And again, I think the filmmakers leaning into it as evidenced by Chris. Denis on June 3, they put tickets on sale for Christmas, and those are already largely sold out.

Maybe relative to your outlook, I've certainly gotten some investor questions on how to view China for the year. Natasha mentioned the [ Naija Comm]. I think earlier, we saw some titles get moved out of the Chinese New Year period. What's the latest you're seeing in the region? And how do you view the balance of the year?

So the summer looks way stronger than the first half of this year. So there's a lot of good Chinese local language coming in. Also the Hollywood films like Oppenheimer did very well in China. So I think that Odyssey will do well. Also, movies that were not playing in North America because of conflicts, such as Spider-Man and Avengers are going to play in China. And historically, some of them have done very well.

So a very strong Hollywood slate, along with a much stronger local language at the back end of the year tells us that the back half of the year will be considerably stronger than the front half of the year.

Got it. So one of the key drivers of IMAX box office has been higher indexing. We really saw that ramp in particular in the back half of 2025 across a range of film genres. Maybe you can talk to some of the factors like studio marketing, film for IMAX that have resonated with consumers.

And then I want to ask you on film for IMAX, right? If you look at the ads, Disney seems to be leaning into that a lot for Mandalorian. Going back to CinemaCon, they did announce the Infinity Vision program for Avengers. So just how should we interpret that?

Okay. So actually, first, I should start on Mandalorian, which open in the next couple of days. And I must say, I love the forecast for much of the U.S., which is lots of rain. We love lots of rain on Memorial Day weekend when we open summer blockbusters. Besides that, I think people are comparing Mandalorian to other Star Wars movies. And it's different than other Star Wars movies. But IMAX's knew the amount of marketing they put into it. So I'm not going to project the box office on Mandalorian, that's for Disney to do.

But I think IMAX will do a larger portion of this than we've done for any Star Wars movie. And that's partly because Favreau is leaning in so hard and Disney is leaning in so hard. So those are examples when you say about indexing. And the other part of indexing is I'm just amazed that Michael did over 15% in its opening weekend in IMAX.

And Sinners, as you know, did 20% and Hail Mary did over 15%. Traditionally, IMAX does like 10% of a blockbuster. So there's been kind of a permanent change. So yes, I agree with all the things you said in terms of studio marketing, the filmmakers. But I think it has to do with habits that people are forming. Like if you go back, almost all of these big blockbusters have done better than they've done in prior years because consumers are in the habit of going to them, and I really expect that to continue.

You mentioned Disney's Infinity Vision. I think we were going to play Avengers when it was scheduled to release over the summer. We made a deal with Warner and Legendary to do Dune Three. And as you know, we stick by our deals like we did with Mission Impossible. We played a movie about an obscure physicist named Oppenheimer. it turned out okay that we kind of kept our word and did that. And we wish we could have played Avengers and Disney understands that.

And I think Disney is going to do great with it. I hope they do. But the problem for Disney was they didn't have their IMAX screens and other than in China, and I think that was really important to them. So they created kind of a marketing vehicle called Infinity Vision, which enables them to "brand" their release.

It's important to note that there is no additional screens. It's just kind of a branding move on their part. And not only are there no additional screens, but there's no proprietary technology. There is no attempt to really create a separate brand. It's like they're going out to existing PLFs regardless of the dimensions of the theater, whether they're monitoring the experience in the theater. So it's a different kind of thing. And I hope they do well on it, but it has none of the attributes of what makes IMAX, and we're quite comfortable we'll do really well.

So here we are, we're at a conference focused on tech and AI. But what I want to ask you about is what I think is your most differentiated format, which is IMAX 70-millimeter film. Actually, I said this to Natasha, one of the ways I sometimes measure demand for IMAX is to look at Lincoln Center availability. for 70-millimeter, right? I remember for Project Hail Mary on opening weekend, there was nothing, right, every single showtime. So Rich, what resonates so much about this format? And how do you capitalize on it?

Well, again, I don't want to spend too much time on this, but Chris Nolan said in the 60 minutes interview, he said, if you want to go big and you want to go to something really special, you do IMAX film. And he's right about that. He's so right about it that we re-upped over the last year, and we created a new camera to enable real-time dialogue in a film shot completely with IMAX cameras. It's a much quieter solution. And I think he might have said on that or Colbert that the performance is different because the old version of the camera was loud.

So I think the film just says to the audience, it's really special. It's the biggest, it's the best. We've now found more theaters to release it in. And what was really impressive, David, about Hail Mary is it wasn't even filmed with the film cameras. It was filmed with digital cameras and then printed out to film. So we're aggressively promoting either using the cameras or printing it out with film. We have a program where we're visiting with the studios.

We're visiting with the filmmakers. And there's a lot of interest in film now that there are more theaters that can show it. And I said this before, both Dune and Odyssey have already sold out a lot of their film screenings for -- in the case of Dune, 6 months from now. So I think film is really going to help the brand, help attendance and see very significant box office for those movies.

Got it. Right. So since the pandemic, IMAX has seen significant growth in local language that's moved beyond China. You've gotten notable traction in India, Japan. Maybe just for investors who are less familiar with international box office, what's important to know about local versus Hollywood mix, how that factors into your program strategy, how that's played into your network growth abroad?

Yes. I think local language films, an important point is they don't only play in the country of origin, they also play in other countries. So a lot of the Japanese anime has done better in China than it did in Japan or for that matter, even in the United States. So we release films that have local appeal in a number of countries.

The biggest ones are China, Japan, Korea, but they include more -- I think Indonesia and Malaysia, we have films. And what they do is they drive local audiences to come to IMAX for local films, and they increase utilization rate at the theaters and they increase the economics for the theater operators. And what that does is drive the financial return, and that drives more signings, that drives more installations.

It drives the whole flywheel that makes IMAX work. And if you look at what's driven our growth over the last few years, it has a lot to do with local language. I think this year, we'll have like 75 local films. I don't remember exactly the number, the percentage that Natasha could jump in, but I think it was like 25% of our box office last year. So it's become a significant part of what we offer.

And should we discuss also, Rich, just the role of alternative content in kind of filling out the schedule, including during the week where some of that gets utilized?

Yes. It's the same thing, David, about capacity utilization. Like how do you find things in the off times or the non-blockbuster times that puts spots and seats. So a week or 2 ago, we did a Formula 1 race in Miami. I think we're doing the Monaco Grand Prix either this coming weekend or next coming weekend. And the Monaco Grand Prix place at 9:00 in the morning. So you're not really infringing on your slate, but you're bringing people in, in the Miami Grand Prix a lot of business.

Music is one place we've done very well with, particularly Led Zeppelin did especially well. Taylor Swift did particularly well. So we're trying to mix and match and find out what brings people in with the lowest cost structure because, again, you don't have the play time to really amortize the marketing cost. But it's been a supplement that's been working well for us. And we just hired someone who comes out of that world. So I think you'll see us do bigger things and more things, and we'll continue to evaluate and decide which are the things we should do and what doesn't work.

I think what's great about local language and alternative content for us is that as we continue to aim towards growing our total box office and growing and hitting those targets that we've talked about at Investor Day, for instance, it's growing all parts of the legs of the stool as opposed to looking at just one.

So Hollywood, where it used to be 90% of our box office, now it's about 65% to 70% of our box office, but we're growing Hollywood still. And then you're growing local language and you're growing alternative. And that's where we can guide to $1.4 billion and then continue to look at how we can grow that every year because you're getting more content in the stream. I mean the biggest part is that we're doing 120 pieces of content this year where that was half that a few years ago, right? So looking at the opportunity for growing that to create the higher utilization.

Obviously, a natural driver of indexing is your network growth. In December, at the Investor Day, you raised the TAM to 4,500 systems. I think that's less than 40% global penetration. So Rich, what are the key strategic levers to execute toward that target? And there's an obvious also just a question about the macro and whether that's impacting just the pace of the installs or signings.

I think it's really the theater economics, David, like last year was a record domestically for IMAX box office and the per screen averages were very high. And I don't think it was accidental that last year, we added 7 more chains in North America, which is a mature market. So that's a pretty notable accomplishment.

So I think the way it works is you look at what the return is like to the exhibitor based on the box office in that region or that country, and that drives incremental sales, and that's why we got comfortable with raising the TAM -- years ago, I don't remember how many, but we thought we could only have 90 theaters in China, and that was our TAM.

But now it's 800 theaters open. And I think our TAM is, I don't know, 1,400 or approximately that. So I think the better the box office does, the further the reach, the more the capture. It ties into what we talked about earlier, the brand and capacity utilization, and that's what really drives your growth.

Maybe we just follow up on the domestic opportunity, right? I guess theater owners, they weigh IMAX potentially against other proprietary brands, ScreenX, D-BOX, the own brands. I'm curious what opportunity you see to further fill out the U.S. footprint, either with the big 3 or just a longer tail of operators.

Yes. There's a lot of potential in North America. And as you know, we do sale deals and we do joint venture deals and hybrids. And what we've been able to do is use our capital efficiently to help. You had asked about the macro as part of your question, which is some of the macro issues because we have so much cash is we can supplement the economics or change the structure.

And I think there's no doubt that North America during the pandemic, obviously, the exhibitors didn't have the capital. But we were able to be profitable during that period and continue to grow because we use our capital smart. So I do think there are opportunities, and I don't remember the TAM. Again, if Natasha does, she should add it. But I think there's a way to go.

Yes, there's a lot of opportunity. And I think as we just go back to the global question, David, I think what people don't actually know because we haven't talked about it a lot is in the past year, we've actually signed deals with 23 new exhibitor partners globally. And that's like -- that's across 15 countries. And so there's a lot of opportunity for us to continue to execute against that TAM that we put out at Investor Day, and we've been doing that, chipping that away and making a really big impact from that perspective.

But also what's great is what we've seen from our experience is as soon as you -- we sign up with an exhibitor partner, they come back for more IMAX like AEON in Japan is a perfect example. 2 years ago, we signed up for 2 systems. They want to test and see whether or not that would be -- would be successful for them having an IMAX. And instead now, they've come back several other times now at this point and signed for more systems with us. And that's growing in a market like Japan, where we have such good opportunity for a high return box office and incrementality into our model. So I think that, that's really important.

Got it. Natasha, let's just touch upon EBITDA margin. So the guide for the year, I think, has a floor of 45%. Maybe just talk to the incremental gross profit dynamics on box office and then cost efficiency actions on SG&A that underpin that.

Yes. There's a lot of opportunity for incrementality in our model, and you saw that clearly through last year. This year, with $1.4 billion, that will come through at a higher rate, which is why we moved our sort of range from being low 40s last year to being 45% plus for the mid-40s. And that really is the opportunity for us.

As soon as you hit over the $250 million of box office in a quarter, we have that 85% incrementality flow-through on each additional box office dollar. But then you couple that with all of the SG&A actions we've taken, I mean, we took significant restructuring last year. We've looked at internally just how do we have cost efficiencies and keeping a steady workforce, but then looking at technology because as you grow the business, the first inclination in any business and company as you're growing is, okay, we need to invest more into people and resources.

But I think we've done -- the team has done a really good job of looking at how do we operate more efficiently and look at using tools and technology. We started doing digital delivery for a lot of our network, whereas we used to manually nail out all of those keys to theaters. When you look at operating a global company, those add up, right? And so I think we have a lot of opportunity to keep looking at that, but I think we've made really good progress so far, too.

On free cash flow, IMAX has guided to conversion of roughly 50% in '26 and growing thereafter, and that's net of growth CapEx a nice pickup from recent years, implies better working capital dynamics. Maybe you could just walk through how you're managing that and then how that growing cash flow factors into your kind of willingness to invest in different structures.

Well, the incrementality of the EBITDA margin, for sure, immediately flows right through to your free cash flow. But then a lot more opportunity in that our cost of the films stays static, right? And so a lot of that incrementality not only flows through, but then the dynamic that you have when you have a free cash flow conversion where you're capturing all of that box office in the year, I think our strong balance sheet helps us there, too, because we're being thoughtful about where we invest or can we invest as we did in first quarter in putting forward capital towards growing the network faster.

And once you grow that network faster, it will essentially grow the box office faster, and you'll get to capture that earlier in the year than later and continue to capture that in the 10-year cycle of our systems as well. But I do think you've seen the incremental step that's happened in our free cash flow last year, and it will just continue as we keep growing our network and in turn our box office as well.

And I think that's all very good. And of course, we're spending to grow our network and invest back in it. But then also, as Rich started off the call today, doing buybacks as well when we see an opportunity to do that.

I want to circle back to the buyback that you just mentioned. I think going into it, the authorization you had was around $250 million. I think it's fair to say IMAX has been an astute buyer of its stock. Maybe just discuss what governs your philosophy and just here and now on the current buyback.

Yes. I think part of that is just our -- we have a strong balance sheet. So what are the competing priorities? One would be growing our network and through the investment and joint revenue sharing arrangement.

The second piece would be stepping that up from doing this concept of lease incentives to be able to provide a little more help in capital towards growing the footprint in new locations, particularly domestically, is what we've been focused on.

And then third, the buybacks. There are always other opportunities that come up, and I think that's where you keep a little bit of capital to make sure you're ready to do those. We're not a highly acquisitive company. So it's not like we're going out and doing a lot of M&A. But I think that there are little pieces of our capital structure that could be achieved and cleaned up as well as we look towards deploying capital, too.

Great. Rich, we've got time for one last question. Maybe it would be great to just get you to sum up your current thoughts on the business and the path ahead.

Yes. As I said at the beginning, David, I mean, we couldn't be more excited. There's never been a summer slate that looks like it does now. I think we pretty much -- unless movies have moved out of the year, we pretty much managed our portfolio and predicted it quite well.

I think our outlooks are generally spot on. I remember a few years ago when a big movie moved out of the year, we couldn't account for that late in the year it moved coming out of the pandemic. So I think we feel very good about where we're situated.

And I think a lot of investors trade us on a week-by-week box office kind of thing, but that's not the right way to look at it. And I think they're missing pun intended, David, the big picture if they don't look at the holistic of what IMAX is and our strategy, how it's working.

All right. That's a good note to end on Rich. It's great to see you. And Natasha, thanks for being here.

Our pleasure.

Thank you, David.

Okay. Thanks, Rich.

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter 2026 IMAX Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Jennifer Horsley, Head of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us for IMAX's first quarter 2026 earnings conference call. On the call today to review the financial results are Natasha Fernandes, our Chief Financial Officer; and Rob Lister, our Chief Legal Officer.

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 on 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 are made 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 a 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.

Before we begin, Rich would like to provide a brief update on his recovery, and then the call will turn over to Natasha.

Thanks, Jennifer, and good afternoon, everyone. Thanks for joining us today. Natasha will handle today's call and Q&A session. But before I turn it over to her, I wanted to provide a brief update on my recovery from pneumonia. I'm happy to share that I'm making excellent progress, and I'm gradually resuming oversight of the business and involved in all key strategic decisions.

Our management team is doing an outstanding job and will continue with their day-to-day responsibilities as well. I want to send my sincerest thanks for your well wishes and kind words of support over these past few weeks. I greatly appreciate it. And I appreciate your time and attention today. With the incredible start to the second quarter and a fantastic slate ahead, I'm as excited as I've ever been about the IMAX business.

With that, I'll turn it over to Natasha.

Thanks, Rich. With the heart of our formidable slate now rolling out, we remain very confident in our 2026 guidance, including a record $1.4 billion in global box office this year. Our story is one of strong growing momentum. It is clearer than ever that IMAX is evolving into something bigger, a global platform for blockbuster films, events and experiences, with the most defined by our technology, relationships and brand, enabling a diversified dynamic content portfolio across Hollywood, local language, documentaries, music, sports, gaming and more.

Project Hail Mary, a film for IMAX release delivered an emphatic conclusion to the first quarter and has now earned more than $90 million in IMAX, more than double our initial projections. This excellent performance alongside Avatar Fire and Ash lifted our global box office outside of China, up 67% year-over-year in Q1 and partially offset our lower Greater China box office, where we faced a significant comp against last year's massive Ne Zha 2. That includes growth of 75% in North America and 60% in rest of world markets.

Our platform has kicked into high gear. IMAX global box office in the current quarter-to-date is over $100 million, up over 10% year-over-year. We scored 3 consecutive global opening weekends of over $20 million with 3 very different titles for very different audiences. This is the kind of strength across genres, demos and geographies that drove our record performance in 2025. We delivered over 18% of the global box office for Project Hail Mary, including 30% market share in China, proving again the strong indexing we command there for Hollywood's biggest blockbusters.

The Super Mario Galaxy Movie was our second biggest animated debut of all time as we continue to grow with family audiences, one of the fastest-growing segments of the box office. And Michael delivered our biggest debut all time for a musical biopic with strong 14% indexing in North America. In local language, Toho's latest Detective Conan in Japan earned a franchise best $3.2 million in IMAX and Dhurandhar 2 notched our second biggest opening weekend ever in India.

Our promising slate was on full display at the annual CinemaCon industry convention this month, including an exclusive look at Christopher Nolan's The Odyssey, the first film shot entirely with IMAX film cameras.

Everything we've seen and know tells us that it will be something truly special and another incredible entry into our partnership with the Nolans that has yielded over $700 million in IMAX box office worldwide, and a sneak peek at the first 7 minutes of Dune: Part 3, which was also shot with IMAX film and looks to be visually stunning as anything Director Denis Villeneuve has brought to screen.

Tickets to select IMAX 70-millimeter screenings of the film recently sold out in minutes, 9 months ahead of its release. Both filmmakers joined us for our recent CEO forum in April, perhaps the most successful in the 13-year history of the event. At the annual event and exclusive gathering of global exhibition CEOs representing at least 3/4 of the world's box office, we also hosted Tom Cruise, Timothee Chalamet and Jon Favreau.

It has truly become a signature event for our company and the only C-level gathering where exhibitors, filmmakers and talent and studio chiefs from around the world can engage in strategic off-the-record dialogue about the industry. It also underscores the power of our team and our brand to connect and lead across the ecosystem and deliver value to our partners in countless ways beyond our technology.

The Odyssey and Dune stand alongside Jon Favreau's The Mandalorian and Grogu and Greta Gerwig's Narnia at the top of a list of major tentpole films leaning heavily into IMAX in 2026. That includes 1 week run to launch highly anticipated releases, including film for IMAX release Mortal Kombat 2, Steven Speilberg's Disclosure Day, a return to Sci-Fi for the legendary director, Toy Story 5, which will look to continue Pixar's resurgence, Super Girl, also film for IMAX, a follow-up to last year's hit Superman, Minions & Monsters, the latest installment of this franchise phenomenon and the live-action version of Moana following the animated sequels billion-dollar performance in 2024. And we see great potential in other film for IMAX titles, including Zack Cregger's Resident Evil, Street Fighter and the End of Oak Street as well as upside in Tom Cruise's Digger and J.J. Abrams' The Great Beyond.

We have a growing lineup of expected Chinese films this year, including 2 releases, Penghu and the film for IMAX title Once Upon a Time in the Middle East that shifted from Chinese New Year and are expected to release later in 2026. We also expect to play Spider-Man: Brand New Day and Avengers: Doomsday across our locations in Greater China and our first film for IMAX releases from Japan and India, Godzilla Minus Zero and Ramayana Part 1 and next year's Varanasi anchor an excellent local language slate internationally.

We've also added several high profile releases to our slate, including the film for IMAX sequel to Brendan Frasers, The Money in 2027 and highly anticipated film for IMAX titles in 2028, including Paramount and Activision's live-action feature film, Call of Duty, directed by Peter Berg and written by Berg and Taylor Sheridan, Joe Kosinski's Miami Vice 85 starring Michael B. Jordan and Austin Butler and A24's Elden Ring video game adoption.

We also continue to program experiences beyond feature films to strengthen our offering from Formula 1 to some supersonic music projects in the pipeline. Formula 1 is exceeding our expectations with strong presales heading into this weekend's first race in IMAX, The Miami Grand Prix. As we've seen with Project Hail Mary, Baz Luhrman's EPiC, Apple's Formula 1 coverage and The Mandalorian and Grogu, content owners are increasingly leaning on IMAX as a powerful global launch platform with exclusive advanced releases, previews and events.

Audiences know that the IMAX experience begins well before and extends far beyond our immersive visual and sound technology. We work directly with the greatest filmmakers in the world on image capture with our proprietary film and certified digital cameras. We offer more picture through our exclusive IMAX expanded aspect ratio. We remaster every film, event and experience we distribute to ensure the highest quality presentation. We monitor all 1,865 of our locations around the world for quality control in real-time 24/7.

And as a result, we have incredibly passionate loyal fan base. Our audience engagement scores consistently rival blue-chip brands like Netflix, Nike, Marvel and Amazon. In short, there is no better platform for blockbuster success than the IMAX global platform. This simple fact continues to drive strong global network growth. Last year, we grew IMAX's footprint by 4% in the U.S. and more than 8% in the rest of world markets. Our momentum reflects how exhibitors worldwide view IMAX and the long-term productivity of the network.

With IMAX still less than 50% penetrated globally in our latest zoning analysis, we continue to see meaningful runway for growth. Year-to-date, we signed agreements for over 40 new and upgraded IMAX systems worldwide across 10 countries with 18 partners, most recently with our biggest deal ever in one of the most productive markets in the world, our 10-system agreement with HOYTS in Australia and New Zealand, which will nearly double our footprint in the region.

Importantly, our sales activity is well distributed geographically with 3 domestic signings, 9 in Australia, over 10 in China, 7 in Japan and 7 across EMEA, including Spain, France, Germany, the Netherlands and Egypt. With more than half of our signings representing new IMAX locations, which are a meaningful driver to our network economics. At the same time, we are selectively upgrading high-performing locations where we see clear opportunities to drive incremental box office.

We are seeing particular strength in key high box office markets like Japan, where we have already signed 7 systems year-to-date, continuing the momentum of our 13 signings in 2025. We also expanded our relationship with VieShow in Taiwan with upgrades that will transition the entire circuit to IMAX with laser. We continue to broaden our exhibitors onboarding new partners in Spain, Germany and France. And looking ahead, we are engaged in numerous additional opportunities with leading exhibitors across key markets. We look forward to keeping you updated on our progress.

Let's turn now to our first quarter results. Starting with the bottom line, first quarter adjusted net income grew 33% to $10 million, while adjusted EPS grew $0.17, up $0.04 year-over-year. IMAX delivered revenues of $81.4 million, a decline of $5 million year-over-year, driven by decreased revenues in Greater China. Revenue outside of Greater China grew by $15 million.

Gross margin declined to $46 million from $53 million in the prior year. Operating expenditures, which includes R&D and SG&A, excluding stock-based compensation, was $28 million for the quarter compared to $30 million in the prior year, reflecting our continued strong cost discipline and timing of spend.

Adjusted EBITDA declined in line with revenue, down $6 million year-over-year to $31 million. As a result, adjusted EBITDA margin was 38% compared to 43% in the prior year. We remain confident in our forecast of total adjusted EBITDA margin of more than 50% in the coming year.

In our Content Solutions segment, revenues declined 8% to $31 million due to the tough comp in China against last year's massive hit in Ne Zha 2. Box office grew significantly outside of China, including 90% growth in EMEA, while China box office declined 62% due to an exceptionally strong Q1 in the prior year and the timing of major releases this year.

We expect IMAX box office in China to be more evenly spread throughout the year versus 2025, where 46% of our China box office came in the first quarter, well beyond the 30% we normally see. Content Solutions delivered gross profit of $18 million, a decline of $5 million driven by lower box office and gross margin declined to 58% versus 69% in the prior year.

Turning to our Technology Products and Services segment. IMAX delivered revenues of $48 million, a decline of 4%, driven by lower box office-related system rental revenue in China. Gross profit margin of 56% was in line with gross profit margin of 57% the prior year. We're off to a solid start with system installations installing 19 systems in the first quarter compared to 21 in the prior year and 15 in Q1 of 2024. Of those 19 systems, 11 were joint revenue sharing systems and 8 were sales arrangements, 11 were upgrades and 8 were new locations. These new locations again showcased our diversifying network footprint spread across Japan, England, France, Singapore, South Africa, China and the U.S.

Turning to cash flow and the balance sheet. IMAX cash flow from operations was $4 million compared to $7 million in the prior year and includes $8 million in higher year-over-year lease incentives provided to exhibitors to support the building of new IMAX auditoriums. This investment reflects the continued prioritization of our use of available capital to invest in growth, including partnering with exhibitors to expand and upgrade our network through joint revenue sharing arrangements. This strategy will empower IMAX to take full advantage of our expanding brand and market share and the promising slate that continues to take shape for the years ahead.

We maintain a strong capital structure, thanks to our asset-light model, and focused execution as well as the work we did last year to refinance our convertible notes and expand our revolving facility. As of March 31, we held $146 million in cash and $300 million in debt with a net leverage of 0.86x.

To conclude, the best is yet to come in what we believe will be a record year for IMAX, and our momentum is building. Our exhibitor partners share our excitement for IMAX, our slate and the value we deliver, which is why we've added more than 30 partners worldwide in the past 2 years and continue to dramatically diversify our footprint. As our global box office and network grows, our increased scale will drive expanding margins and cash flows. And we will remain focused on keeping operating expenses substantially flat.

We remain very well positioned to achieve our 2026 guidance, including record global box office of $1.4 billion, 160 to 175 system installations worldwide and adjusted EBITDA margin in the [mid-40s percent] at -- with at least 45%. There has never been a better time to be in the IMAX business. We continue to deliver clear evidence that IMAX is not just outperforming the market, but helping to expand it, attracting audiences, growing incremental box office and driving value throughout the ecosystem.

Thank you. And with that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question is going to come from Drew Crum with B. Riley Securities.

Rich, good to hear you on the call. Natasha, just on the adjusted EBITDA margin guidance with a floor of 45%, does that assume a global box office of $1.4 billion? And if so, just trying to understand how the margin would be flattish year-on-year with an incremental $100 million plus in box office?

Drew, so yes, margins really -- it does fluctuate normally quarter-to-quarter. But as you look at the whole year, $1.4 billion box office, I understand the incrementality will come through, but we've chatted about this even on the last call as well is that there's always a mix between the regions of box office, whether you have local language or Hollywood and the amount that we're investing into marketing in this year. There are a lot of Hollywood titles that are significantly larger titles than last year.

And as we look towards that, our goal would be to lean in heavily into IMAX and marketing, the titles as well. And so that's where the margins can ebb and flow. And of course, you can capture more than the 45%, but this is just from a guidance perspective, providing that guidance with respect to the floor of the 45%. But of course, there's opportunity in that.

Okay. That makes sense. And then any disruptions created by the U.S.-Iran conflict during late 1Q or early 2Q? Anything -- you've seen anything contemplated in your annual outlook?

No, not at all. It's not for us. We know we have about 35 locations within the region in the Middle East and majority are continuing to operate. We haven't experienced anything significant that has -- will impact our plans for the year as well. And as you heard, we continue to expect to install 160 to 175 systems as well. So if you look at the way that we're building out our entire worldwide network, there's many countries that we're leaning into. And one of those is Australia that we just signed the deal with this week and announced as well.

Our next question will come from Michael Hickey with StoneX.

Rich, Natasha, congrats guys on a great quarter, good -- great start to the year. Obviously, a lot more to come. Just on the Australia deal, nice to see some growth from that region. Just curious if you could sort of frame it for us, Natasha, the growth opportunity network-wise in Australia and Japan? And then the follow-up, I'll give you now, just what you see from those regions as well in terms of relative PSAs and local language development in terms of films?

I think it was a really important deal for us. I mean, for the longest time, we had only about 2 locations this past year in 2025, we ramped up and installed some more locations in time for Avatar and started the year with about 10 locations and now adding this new deal. We're sitting with the potential to double -- more than double our footprint in Australia. Australia is one of the strongest performing regions and countries for us.

Some of the locations have TSAs up to $4 million, which is absolutely amazing. And I think that that's the opportunity is the ticket price varies over there as well. And so knowing that you have the opportunity to have outsized performance from a mix of not only growing your network, but you're also getting the leaning into IMAX and the higher ticket prices. I mean it's been one of our priority markets as well. We're only about 13% penetrated. So there's a lot of growth and opportunity there.

And as you look at Japan, we signed another 7 systems in Japan this quarter. Last year, we signed 13. And off of the success of Demon Slayer in local language in Japan, we're continuing to do that. I did announce in the prepared remarks, and it was heavily shown at CinemaCon as well, Godzilla Minus Zero, as our first local language film for IMAX title in Japan, which they're leaning in very heavy into IMAX with that as well. And Japan is only 47% penetrated. So a lot of opportunity there. And those per screen averages remain just as strong as they've ever been, which is very good because I think as we start to expand in Japan and continue to grow that network, you contemplate whether or not the per screen averages will move, but they've actually shown considerable strength there.

And the next question is going to come from Eric Handler with ROTH Capital.

Natasha, starting at your Investor Day last year, you did mention how IMAX was selectively looking at opportunities to maybe put some more capital into their deals above and beyond just sort of like the cost of the screen installation. This $8 million of higher lease incentives, is that part of that strategy? How do you measure ROI with those investments?

It is, Eric, actually. it was a significant expenditure for us in the quarter, and I'm sure you saw that it impacted our cash from ops, but I see that as a good thing. Investing the $8 million to help grow the network faster ahead of the fantastic slate that we still have ahead of us coming and as well into '27 and '28, I think that's the opportunity for us. And we do value and really look at what the opportunity for a return on it is. So first of all, always using that capital for new locations and not simply for upgrades.

So that would be new box office potential for us, but also in high-performing markets and with partners that we know that we can expand and have a greater penetration as well. And so -- and we know that they'll lean in. And all of those things working together, we've been able to value out what that arrangement will look like. And each arrangement does look different as well. But of course, all within the respect of making sure that we hit our return hurdles, and also just for the opportunity to continue to quickly expand the network, therefore, grow the box office. And as you know, that will continue to not only grow the box office, but then grow the network, and it works in a nice cycle from that perspective.

And then I wonder, as you look further into markets like Australia, Japan, EMEA, are these more JV type deals? Or are you looking -- are they doing more -- are they more interested in like [ straight ] sales?

Actually, it's a mix, Eric. It can be -- it's dependent on the partner. It's dependent on the way the negotiation goes as well. But I think part of it is, we also like to have a good mix within our revenues and the way that we build out the network. So sometimes it's been JVs and others, it's been sales. Japan, for instance, hybrids are a really good opportunity there where not only do you cover the cost of the system, but then you get to participate in the box office performance. And that actually is a fantastic model for a lot of markets like Europe as well and Australia and France, in particular, in Europe has been very good for that, too. So I think that's a really good way to be able to capture the box office potential and the incrementality that can flow through our model.

And our next question is going to come from Chad Beynon with Macquarie Capital.

Rich, glad to hear you're progressing well and looking forward to talking to you soon. Natasha, with respect to China, the comment that you gave earlier just in terms of the weighting or I guess, what we saw last year, this year being more balanced. Consumer feels to be improving. Your indexing is strong. Can you roughly talk about the slate for the rest of the year, whether it's local language versus Hollywood? And really just what gives you the confidence that China will come through in '26?

For China, I think the best of it is that we're managing it on an annual global portfolio, and it gives us the ability to stack our slate for the best results. I mean you can have unexpected outsized performance, look at Ne Zha 2 last year, right, from a local language title or from other titles. I think the biggest thing to remember, Chad, is that as a company, we're not so much focused on the geographies as much as we're focused on the overall slate for our company. And what's great about this year is there's a lot of Hollywood titles that have strong potential in China, like the Odyssey and Dune, but also the local language slate is stacking up as well, and we do expect there to be several titles released into the summer.

And the May holiday is coming upon us this weekend as well, and there's a couple of titles there, including World War, which is supposed to do -- which is tracking very well in China as well as obviously, The Devil Wears Prada and some Hollywood titles going there. So I think what's been good about China is that we're going to be able to create a good mix between both Hollywood and local language and in order to capture the wins this year. And then there's other IP that will perform well there as well, like Post Toy Story.

And then, of course, we're going to look towards the rest of the world and other areas. What's really good, Chad, is that the rest of world regions, if you think about the fact that we've grown over 8% in the rest of world outside of China and domestically, we've grown over 4%, that's where you can also start to see that you capture box office from many regions, not simply focusing on China, but looking at how do we make sure we have a good mix globally and continue to capture those market shares. And it's enabled us to have a trailing 12-month market share of 3.8%. And with that, we've grown our rest of world market share as well in the quarter. So that's been great.

And then maybe takeaways from CinemaCon? It seems pretty positive from investor standpoint. But how are you guys feeling just in terms of the content beyond '26, whether it's the quality or just the number of titles that you took away from CinemaCon or CEO Forum?

CinemaCon, it was great this year. I mean -- we saw you there. And the -- I think the buzz around CinemaCon was so uplifting this year compared to last year. I think the industry is excited. It's going to be a great year for 2026. I think the best of the slate is definitely ahead of us for IMAX with lots of films for IMAX coming, including the Odyssey in June. But I think the other part is if you look out to the future years, I mean, what's very positive is that we have a strong demand and our slate and content visibility continues to strengthen, and we continue to make moves on that every day to strengthen and solidify that.

I mean 2027 is already approaching 10 FFI titles. And there's some really large ones in there, too. In 2028, we actually have 5 announced FFI titles, plus we just confirmed today with Disney Pixar that Incredible 3 will be released as a film for IMAX title, and it will feature IMAX exclusive 143 aspect ratio. So I think what you're seeing is that exhibitors clearly are seeing our growing market share and the growing demand by consumers for IMAX across film genres and content. And there's just so much excitement about not only this year's slate, but also the slate going forward in '27 and '28.

And our next question is going to come from David Karnovsky with JPMorgan.

Natasha, with Disney's Infinity Vision announcement, there hasn't been a lot of details on this, I'm interested in your view. Is it your understanding they're trying to kind of unify PLF formats under a brand or is this just kind of specific to Avengers? And is there any kind of read-through that we should have to kind of your relationship with the studio?

David, from our view, we feel it's a pure marketing play to try and offset the fact that they don't have an IMAX platform or brand for Avengers Doomsday. It doesn't offer the consumer anything that they couldn't get yesterday. And so Marvel fans, we believe that they're among the savviest, most discerning moviegoers out there. And there's a reason why we're the undisputed leader in premium cinema worldwide. No one can match our relationship with filmmakers, our image capture with our proprietary film and digital cameras, our post-production and exclusive expanded aspect ratio.

Essentially, we have the most immersive proprietary architecture in our auditoriums and consistent delivery of that across all of our 1,800 locations as we monitor that in real time and 24/7 for control and quality. And so I think the biggest part about it is the fact that we are a consistent platform and delivery for consumers. And that's sort of how we feel about the announcement with Infinity Vision.

And then I just want to ask one on gross margins for content. Obviously, the year-over-year is impacted by the box office, but there have been some quarters where you put up a higher margin on a similar level. So I just wanted to understand if there are any kind of unique puts and takes to think about it for Q1?

Sure. I think margin will fluctuate normally quarter-by-quarter, and it's similar to box office cadence. When you see the margin percent kind of moving with the box office, and of course, I know what you said about box office and our ability to still deliver on margins in other quarters. And I think part of that is we actually are focused this year on marketing.

You've seen that the Dune tickets and the Odyssey tickets have all been moving and particularly in June, we put those out for sale already, which means we've been marketing. And so we are marketing titles well in advance right now for this year. And so in Q1, of course, we took some marketing charges ahead of time, but we think that those returns are in front of us. And as you heard, I did reiterate our guidance for adjusted EBITDA as well.

And the next question is going to come from Omar Mejias with Wells Fargo.

I want to give Rich my best wishes and in wishing him a speedy recovery. Natasha, maybe first on signings. I think 1Q this year had 23 signings versus last year, 95. Just curious, can you frame this, how much of this is timing related and if this has any impact on install cadence throughout the year?

Yes. I think we're seeing good pacing and ramping of installations and signings. I mean, year-to-date, actually, our signings are sitting at 42. And what's great is it's across 10 countries. And -- so that's fantastic. And I think there -- it's not indicative versus what we had last year. Last year was one large deal for AMC, and we did note that as well. And so for us, that's timing. I mean we are focused for installations, on getting installs in, and we had 19, which is a great number. It was across 8 countries in the first quarter.

One thing that you can't see through our financials is how focused we are on getting installations in high-performing sites, but secondly, on getting installations in for film systems in advance of the Odyssey. And so we do expect to have 41 film system locations in for the Odyssey versus 30 that we had for Oppenheimer. It's about 40% more. And what's key about it is that you're not seeing that counted as installations because we're going into sites that already have a laser or digital system. But once the film is distributed, the productivity of these -- the locations will increase significantly. And so we've added a lot of key locations already for the film systems, and we're highly focused on that.

And on the signings front, I mean, we have the 10-system deal with HOYTS, but then also, we've had over 10 signings in China, 7 in Japan, 7 in EMEA, including Spain, France, Germany, Netherlands, Egypt. I think what's great is that more than half of our signings actually represent new IMAX locations. So a meaningful driver for our network economics and includes some that will install this year as well.

That is very helpful. And maybe one more for me. There were some media reports talking about the $50 movie ticket as a ride for certain films in premium theaters. And just want to get your thoughts on how widespread is this? And how much more room for growth from a theaters perspective you think there is in this fund, especially for some of the biggest titles across some of the PLS locations?

Sure, Omar. I mean we've talked about this before, of course, too. We don't set ticket prices. Of course, we believe there's opportunity in the ticket prices, but it's not something that we do set. I mean we saw the Dune tickets go on sale and then all of a sudden, you saw them go on aftermarket sales as well, right? So I do think there's opportunity, but I think the -- it's a whole experience.

And so exhibitors need to think through what's the opportunity for different films, for different days of the week, for different showtimes and a lot goes into that. It also goes into whether they're capable to do that with their systems that they operate as well. And so I think that's kind of the potential that you see before everyone as to how do you continue to grow box office as well.

And the next question will come from Eric Wold with Texas Capital Securities.

Two questions. I guess, one, Natasha, as you look at the backlog, I know you've worked on in prior years cleaning up the backlog with agreements that maybe stay in there. Any remaining opportunities in the backlog to kind of work with exhibitors to accelerate installations, move locations around to other zones that may be earlier in kind of the queue or shrink zones going to drive new deals?

Yes. I think we -- obviously, we have good visibility into our backlog. We're at about 430 systems. We do come through that backlog. We actually did an exercise a couple of years ago, which I know we've talked about that we kind of walked through our backlog and made sure everything is -- that we're able to roll it out, and we've updated our plans, and we continue to do that. And so we feel good about our backlog. There is always opportunity. There are -- some of our exhibitors are global exhibitors.

So they operate in different countries. And so there are opportunities when they sign deals that sometimes we'll shift it from one country to another, and we've done that very recently as well. And so I think that we're -- our team is very active and skilled in that. They are in constant communication with the exhibitors and are tracking a list. It's all list managed as well, and they have a lot of experience in that area.

Got it. And then just last question, I'm not sure we discussed this in the past, I apologize if I missed it. But looking at the historical model that you put on the website, it looks like 30 or so systems in China were reclassified from hybrid JVs to STLs. Anything that -- I guess, what was the rationale behind that? Is that -- will that have any impact on your revenue share going forward from those agreements?

I think you saw that right in the documents. And from time to time, we always go through an assessment of locations and they might come up for upgrade or renewal and we decide whether or not we're -- both parties together decide whether or not we are ready for an upgrade or renewal or whether we want to wait a little longer for that. And at some point in time, we'll transfer the title. And so it will shift from a JV over to a sales type, but nothing that kind of changes the box office dynamic for us on that. And so I think from that perspective, nothing material that we would need to note from it.

And the next question is going to come from Steven Frankel with Rosenblatt Securities.

Natasha, India has been a market that's had a lot of potential, and you had some good progress with some local language content. But historically, there have been, let's call them, backlog conversion problems. It's taken longer than you thought to get some of these theaters open. Where are we in that process today?

Yes. I think we still have a lot of opportunity. I think we're only about 28% to 30% penetrated in India. So a lot of growth to be had. And you're not wrong, it does take long to install and get permits and complete an installation. But what you haven't maybe seen is that we have grown that network over the past few years. And we have been signing with different partners in India as well. And so that's been a good opportunity for us.

One thing that, as you mentioned, is the local language. For us to be doing the Ramayana Part 1, there will be -- that's -- this year, there will be a Part 2 and then Varanasi, all film for IMAX titles in India. That's a really big deal because over 90% of their box office is local language. And so the big opportunity for us is to continue to show how well local language can perform in IMAX in India, and therefore, it will stir up that conversation for future growth there as well.

And then one quick follow-up on that. What are the ticket prices like on a film for IMAX title in India relative to traditional Indian ticket prices?

On that one, Steve, I may have to get back to you because we've never done a film for IMAX title yet in India. So we're going to see what they go for later on this year, but we will keep you updated on it.

And our last question will be coming from David Joyce with Seaport Research Partners.

A little bit more on the local language side. How do you expect the next couple of quarters to comp year-over-year with China box office and total local language box office versus the prior year? And overall, for this year, do you expect local language to be able to grow versus 2025? Or are the couple of really big titles last year a little bit too much of that hurdle?

David, I think the -- our local language underpinnings are strong. I mean the rest of world, our local language has continued to increase over the last few years. Of course, last year was very strong with the Ne Zha 2 effect. But if you actually take out China, you can see that our local language is growing. And even this year, we expect it to continue to grow. And there's a lot of diverse content.

Within the past year, we've done 9 new countries, like -- local language coming from 9 new countries. Actually, this quarter, we had our first Taiwanese title as well. And so I think that there's a lot of opportunity. But I think what's even more important is that with the Hollywood slate, it is making sure you have the right mix to make sure that we penetrate into the right markets with the right type of film.

And so if Hollywood is going to do better for a particular period, we will lean in, in that. And if it's not, then we'll lean in on the local language. And that's what's great about all of the different pieces of content that we have and all of our content partners worldwide. With having over 60 content partners worldwide, we have the ability to lean into alternative content. We've been doing music films as well.

We did Epic this past quarter for Elvis, and we've done some other pieces of content. We have the F1 races coming this weekend and other opportunities of other local language that we've been doing. We've been doing a Japanese anime rollout as well and in South Korea been doing some content. So I think our whole goal is to make sure we're doing a whole portfolio between our Hollywood local language and alternative content to make sure we're maximizing box office and leaning in.

And even on that, like this past week, we did a fan-first event and brought back Steve Racer for our fans and -- on a night or a couple of nights that we wouldn't have really had much box office brought in over $1 million. And so I think our whole goal is to look at utilization and maximizing box office, and we're highly focused on that.

Great. And if I could just tack on a short one. On the CapEx side, you invested $4 million in JV equipment this quarter. I think that was on maybe 11 installs. Is that a decent kind of ratio for future JVs? Or how else would you think that investment might trend this year?

A little bit of timing plays in there, too, David. Like sometimes we're investing this quarter, and it will come through on a cash outflow, but we might have installed the system already in April, for instance, right? And so I think you just look at the average prices that we've kind of worked through before. And I think that's the better -- best way to do it. But you're right, like looking at it from the installs is the first starting point and then kind of adding in a little bit for knowing that upcoming installations will happen too.

But our whole goal this year, I mean, we've talked about even our CapEx for the year is somewhere between $30 million to $35 million and could be up by $10 million to $15 million just based on us investing in helping our exhibitors roll out faster as well. And we do have a very strong balance sheet to be able to achieve that. And in doing that, we'll be able to capture more box office as well.

Thank you. And I would like now to turn the call back over to Natasha for closing remarks.

Thank you again for joining us today. As you heard, we are hitting our stride at the right time and very bullish as we head into the summer blockbuster season. We've had strong year-over-year growth, and we've already seen that in April with over $105 million achieved in April and over 15% growth year-on-year.

The fact that we've seen a slew of recent hits outperform at the box office and that we're continuing to drive strong market share with a variety of audiences and genres. These are all great signs as we unveil one of our strongest slates in history and build on that to grow our network worldwide. We look forward to keeping you updated, and we'll talk to you soon. Thank you.

This concludes today's conference call. Thank you for your participation.

Good morning, everyone. Please note that for important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures, please see the handout available at the registration area or at the Morgan Stanley public website.

With that out of the way, my name is Sean Diffley from Morgan Stanley Media and Entertainment Research today. And today, we're very excited to be joined by Natasha Fernandes, the CFO of IMAX. Thank you for being here.

Well, Sean, thanks for having me.

So obviously, a lot of big news in the space. First, I wanted to get to the big news on the studio front. So Paramount, Warner merger. So Netflix stepped away from the process. So I wanted you to talk about how that impacts IMAX, how you're thinking about the slate going forward and any other considerations we should be thinking about?

So IMAX is a global platform. I mean, we work with over 60 content partners around the world and partner with all the major studios. So that obviously includes both Paramount, Warner's, Netflix as well, but also new studios like Amazon MGM and Apple, and then a lot of local language studios as well. So I think from that perspective, we're very diversified in who we operate with and partner with.

IMAX and Warner's, we've had a history going back many decades, and we have a really strong partnership. Many of Warner's titles are filmed for IMAX and they really lean into IMAX in their -- in the way that they deliver their content and the way that it's marketed as well. So we believe in the strength of our Warner's relationship. And even Paramount and Skydance. We have a long history with David Ellison and Skydance and a great relationship actually, and we've done many films with them. I mean, this past weekend, we just did Scream 7 with Paramount. And so I just think that we're sitting in a very strong position, either whichever way this would have gone, I believe that IMAX is in the right position to deliver the best blockbuster content across our global platform.

The one thing is that all studios are coming to the forefront of wanting to have a partnership with IMAX, particularly with respect to the filmmakers wanting to have a partner with IMAX to be able to deliver that -- deliver their content across our global platform. So I think we're in a very strong position, and this will take some time for us to all settle out. And -- but in the meantime, we have a strong slate in front of us in '26, and we have over 60% filled for '27 and beyond still filling up. So I think, overall, we're sitting in a very good position.

Great. So clearly, the market likes this outcome more for you than the Netflix outcome, but that was a helpful answer. Obviously, you do a lot with both studios and are positioned well given how things will play out. So you had an Investor Day back in December. You walked through a bunch of puts and takes. Maybe you could share with us what you see as the biggest drivers of growth going forward for IMAX over the next few years?

Yes. We have multiple growth drivers. One would be just our Filmed for IMAX program. And more recently, in the past year, we've really leaned into this program with filmmakers. Our relationships with filmmakers has really changed the way that our business operates. We first operate with filmmakers. In a lot of cases, filmmakers are coming directly to us first. And then we're working with the studios after. And I think that, that has shifted significantly, not only in the content that we are distributing across our IMAX platform, but the way that it's distributed, the way that it's marketed. So that's leading towards growth because it's leading towards consumer behavior growth, right? More consumer demand for IMAX and wanting to see films made with our cameras in our locations across the globe.

But the other part is the growth of our network. Part of our strategy is to continue to grow our network. We grew it 3.5% last year overall. But if you looked at just the segmentation of that, we actually grew at over 8% in the rest of world, international markets, and then we grew at 4% domestically. And you start to think about how do you continue to capture more market share? Well, that's exactly how. Like domestically, we captured over 5% market share with only 1% of the screens. And in the rest of world, we only have just over 2% of the market share. So if you continue to grow our rest of world footprint, that really is the opportunity there as well.

And then lastly would be the diversification in our content. So creating the opportunity for ourselves by having local language and having Hollywood content, but also alternative content as well in other like concert films and live events, that creates higher utilization. So higher utilization in our network creates more growth across both towards revenue, incrementality and cash flows.

Excellent. So the IMAX window is becoming an increasingly important thing that studios consider when they're thinking about their theatrical release. Given that there's a limited number of weekends in a year and demand is growing, how do you navigate this bottleneck?

Well, I think that the opportunity sits in looking at what's the content out there? How much is the studio and the filmmaker leaning into it? How is it tracking, like looking at the tracking information? And then how is it being marketed, right? And really looking at what is our opportunity to maximize the weekend? Like look at this past weekend, we captured $16 million of box office on this weekend, last weekend of February, that really there wasn't originally much playing. It was a carryover title from last weekend. And then we just recently pulled in Scream 7. Then we programmed Twenty One Pilots' concert film. We had the Revenant 10-year rerelease with a live Q&A as well. And then we did a whole slew of local language titles across our global platform. So really looking at what is that opportunity to maximize on every particular weekend.

And we spend time with the filmmakers. We spend time understanding the films and looking at does that make sense for the IMAX network. And if they're leaning into IMAX, what does that mean? Does that mean we want to give them more of the network and really give them more weeks as well. Like the Odyssey coming up, we know that's going to be a winner for the year. And so 100%, we've committed 3 weeks to that title in our film locations and -- because we know that, that film is going to do well, and we're 100% behind Christopher Nolan in the production of that film.

Great. So you preempted my question. So getting a ticket for a blockbuster opening weekend can be extremely difficult. Odyssey is an amazing example. You sold out almost immediately after they went on sale. Is opening additional screens with the same partner in the same theater complex an opportunity here? And is that already factored into the TAM that you've outlined?

The one good thing is I think people will -- you just have to wait a little longer, maybe opening weekend will be sold out, but just wait a little longer. We'll keep it open in the IMAX theaters and you can get a Odyssey ticket. But I do think that there is an opportunity not necessarily to open a second screen in the same location, and we talked about this a little bit at our Investor Day as well. But can you -- do we open a second screen in the same zone? And those would be zones that are high-performing zones where those locations are constantly sold out on opening weekends, then there's an opportunity, for sure, for a second screen in the same zone, but not necessarily a second screen in the same complex.

We don't -- we've evaluated and don't really see the benefit of that. I mean, when you think about a complex with 20 screens, it's not -- every screen is not highly productive, right? So when we pick where an IMAX screen is going to be, we really look at what's the productivity of that screen going to be because we want every single one of our screens to be successful.

Great. Turning to China. This business can be a bit less straightforward for investors to build conviction around. Maybe you could talk about the evolution of the China box office, local language film supply versus Hollywood content in the market? Just how you think about how that impacts your business and how investors should model it?

China is a great market for us. I mean IMAX in China is a very strong brand. We have a really strong presence over there. We are one of the top 3 box office generators in the country as well. And so we have fan clubs. We actually have IMAX fan clubs in different major cities in China as well. And -- so we're very popular. And the brand and just the -- it's like equated to luxury as well, and that's very important in that market.

Really, when you're looking at the slate, it's a diverse slate. It's a mix of local language, but not only local language Chinese, local language Japanese and other titles as well. I mean, Demon Slayer was one of our top performers in China last year and that was a Japanese title. And then also Hollywood content. And last year, of course, was driven by Ne Zha II, which was a huge blockbuster for China. But this year is going to be a little -- look a little differently. It will be more diverse with having a lot more Hollywood in there. There'll definitely be local language content in there. But there'll be family films as well. And then there'll be Japanese titles coming through as well.

And how do you think about differentiation versus competitors in the Chinese market?

I mean, one is our brand, our IMAX brand. We take over 5% of the market share over there as well. And the way that studios are leaning in, we're also using our technology. Filmmakers are using our cameras as well. Marketing, we do a lot of unique marketing things directly with the studios and with the exhibitors, specifically catered to IMAX as well. So I do think that we have a really strong presence.

We actually have 100 employees over there. We have a full operating office and our CEO, Daniel, is well ingrained into the industry as well and connected. And so that's also all very helpful. And I think part of it is the partnerships, like China is a very big relationship business and country. And so I think that we've built that out over there, too.

Great. Turning back to North America. You recently talked about doing more with F1. How should we think about more sports content coming to IMAX and how alternative content broadly is key to your success?

This recent announcement with F1 has been -- it's been really good for us. We've gotten a lot of good feedback from it. We've actually -- we originally only expected to do about 50 locations for domestically. And we've had a lot of exhibitors come back to us and say, "How do we get this?" So looking at what are the opportunities for expansion there, too. But -- and we said we'd only start with 5 races, but we never know like whether or not we'll -- there's an opportunity, obviously, to grow that, too.

I think part of it is working with Apple. We did the F1 movie with them last year. It was highly successful. I think it was our second top Hollywood film last year. And then moving into these live races, I think, is another opportunity. But we've also worked with [ Cosm ] to do soccer in Europe. We've done the NBA in China. We've done League of Legends, so gaming, e-gaming. And I think live content is -- it's a whole market out there, right?

So when you're looking at the opportunity to create higher utilization on the IMAX screens and looking for diversity and looking for growth, I think that's where -- those are the fillers. Those are what's going to help you, are you going to have major Hollywood releases or are you going to have some local language, but there's always opportunity for more programming. And so this is where you get that chance. And you think about an F1 race on a Sunday morning, that's an opportunity because the theater would have been closed, right? And so now you're creating some more box office for not only IMAX, but also for our exhibitor partners who are working with us.

That makes a lot of sense. I'm embarrassed to admit that I watched the F1 movie on the flight here.

Oh, don't even say it. Don't even say it.

Obviously. I wish I saw it on IMAX.

That's embarrassing.

It is. I knew I was waiting for some responses. I know. So you could throw [ tomatoes ].

You need to see it on IMAX. We might have to just rerelease it for you to see...

That's kind of what I was asking. If you would do that for me. So I wanted to talk about international ex China. Which markets do you see as the fastest growth and which are most underpenetrated and you see yourself turning your attention to next?

The rest of world has a really big opportunity for us. I mean since 2019, I think we've grown our rest of world footprint about over 30%. So just starting there, there's a lot of growth to be had. We are only at about 30% penetration right now. So a lot of opportunity when you look at our TAM and ability to grow that market.

And then Japan last year, I think we grew over 17% for Japan just in 1 year. And that was coupled with the fact that Demon Slayer was coming out. So a lot of our exhibitors were wanting to be open for Demon Slayer because they knew that was going to be a huge title and it was for us. It was an over $80 million title for us, and we released it. We were the only premium screen for it to be released first. And then we had an exclusive window and then it went to all the screens. And so that was a really big opportunity.

Australia, we -- I think we've more than doubled where we were last year. I mean, we -- last year, I think we started the year at 2 screens and then we ended by over 10 screens for Avatar. Europe, France, we've had a lot of growth. Germany, we've had a lot of growth. We just did our first German title last year, and that led to more growth.

And last year, I think we did 4 new markets for different types of like local language titles. And even this year, we just -- we're now doing a Brazilian title, 2DIE4. And what we've noticed is as you start to do those local language titles in the market, it starts to open up the opportunity to expand the network. And the rest of the world really is that big opportunity.

And I mentioned the market share, like if domestic in China are sitting at over 5%, but our rest of world market share is just over 2%, you can see where the opportunity for growth is. And that's all incrementality in our model. It's not costing us anymore to distribute that film to those markets. So when you look at that incrementality in our model, it will just flow right through to gross profit and our bottom line and cash flows.

That's great. That makes a ton of sense. And as we think about kind of ex U.S. growth, how do you think about FX and inflation affecting your economics internationally, including pricing, costs, receivables, collections, et cetera?

I mean we are a global company. So I'm not going to say we're not subject to it. Definitely subject to FX and inflation. But all of our contracts include CPI inflation. So we do also charge inflation on our contracts to offset some of that. Our box office is impacted by FX. But even if you looked at last year, it wasn't impacted as much year-over-year by FX because it's so global in the way. So while some countries may increase, some will go the opposite direction and they can offset each other, too. So I think that, that's what's helpful about a global model as well.

Got it. Okay. And your business has shown the operating leverage in the model by both improving margins and cash flow. Can you describe some of the dynamics and that give you confidence on this expansion that it can continue for the coming years?

Definitely, I mean I manage the P&L with our executive team. So I'm very confident in our ability to deliver on what we've promised. I mean, we ended the year with 45% EBITDA margins above our guide last year for 2025. It's multiple factors. One is the box office and the incrementality that comes through in that box office. And this year, we're guiding towards $1.4 billion. So it's a higher box office level, but our costs do not grow at the same rate as our revenues. And so there's a lot of opportunity for the incrementality to fall through in our model, and you would have seen it even just very clearly in 2025, where not only did the adjusted EBITDA margin come through at 45%, but also our cash conversion rate was at 46%. So it was -- it came through at a very high rate as well and the opportunity to grow that. And we said that, that would grow to over 50% in the next few years as well.

And part of it is looking at where do you find opportunities for cost savings or for continuous head count analysis, which is stuff we do as well. And on the operational side, looking at SG&A and all of those pieces. So it's a full model of looking at where your opportunities are and thinking through how do you maximize that return for your shareholders.

Excellent. Turning to capital allocation and the balance sheet. You recently refinanced your convertible debt. Your cash flow profile looks very healthy going forward. With that in mind, what's kind of your ideal leverage and liquidity profile for the business?

I think we've done a lot of work in 2025, and we set the balance sheet up in a really strong way for the future between doing -- renewing the revolver and expanding it by $75 million, but then also securing the convertible notes and refinancing those as well at only 0.75%. I think our balance sheet is in a very strong position for the future, and it enables us to do the future investment in JVs and growing our network. It enables us to do share repurchases, enables us to do expansion for different R&D investments as well, like how we did the film cameras last year. I think that it's all very important for us to protect our technology mode and continue to advance that as well. And so really making sure that we have the capital to be able to do that.

And a follow-up to that is how do you think of the trade-off between buying back stock and investing in the network, especially when the content slate is really heating up?

I don't necessarily see it as a trade-off. I think there's opportunities to do both. Like we have a track record of providing and using our excess cash to do share repurchases. We've even borrowed to do share repurchases as well in the past couple of years. And so we do see that as a good use of our capital. But one thing we see right now imminently is growing our network would actually provide a greater and faster return right away in that the faster we can grow our network is the more that the incrementality will fall through our model and be able to, every year, beat our best, right? And then that's the goal is to continue to create growth year-over-year. And growing that network enables for us to capture more market share to increase our cash returns and then, of course, those cash returns will go to shareholders.

Got it. Okay. And AI is obviously like the topic of the conference. I'm curious, how do you view IMAX in an AI world? Obviously, getting into a theater and kind of experiencing that firsthand is almost the way to solve people drowning an AI slot. But how do you think about AI impacting your business more broadly?

I mean when you look at going to the IMAX experience, I'm not sure that's going to see something AI created necessarily. But I do think that there's roles that AI plays. I mean you look at -- we're global. So we're in 91 countries, and we're doing over 100 pieces of content a year or plus. And so when you're looking at that, you look at versioning, you look at like dubbing, for instance, and there are opportunities for AI to do that instead of someone manually typing all of the versioning through, right? You look at cost reductions on the remastering side and the ability to use software and algorithms to be able to enhance and create the IMAX versions of film, opportunity is there as well. And then, obviously, just as any other company in your back office, looking at ways to use AI to create efficiencies through the way that you operate and therefore, save on SG&A as well.

So I see it -- the other opportunity for us would be as a revenue driver when you look at programming. One of the things that we've started to do in more recent years, and that's part of the reason that we've had such success in executing against our targets is because of looking at the ability to program our screens to create more opportunity to -- for higher utilization. And using data, like collecting data, large sums of data and sifting through that manually can be cumbersome and very hard and a very long and arduous process, right? But if you're using AI to collect that data and analyze it and then tell you, "Well, actually this location is only showing 3 shows, whereas they had capacity to show 5 shows." Well, now you just created 2 more shows full of revenue for yourself, right?

And so looking at that, looking at, okay, where does horror titles play because they don't play everywhere well, but maybe they may in select markets well. Historically, we would have had to pull out our spreadsheets to see where a past horror film played well. Well, now you can use data to collect that very quickly to be able to say, "Okay, let's pivot very quickly and program."

So adding new content into your pipeline can be easier now, like the fact that we just added Scream in, now we could easily program that through and know where to play it and to be able to maximize box office. Same thing we just added this coming weekend is The Bride, and we just added Hoppers in just a couple of weeks ago into the slate. So looking at how do you constantly work towards maximizing your programming opportunity before you, and AI is a good opportunity for that.

Really helpful. I want to open it up and see if we have any questions in the audience.

[indiscernible].

Yes. So for those of you who didn't hear, the -- our relationship with exhibitors and globally as well. We have really strong relationships with our exhibitor partners. I think we have over 250 partners across the world that we work with. And I know that many of them have their own sort of platforms and -- but they also have an IMAX. And I think that's part of it is understanding that IMAX is one of the offerings they can have, and it's a very strong offering that meets consumer demand. I think that's what drives a lot of the behavior you're seeing with not only the way that we're expanding with exhibitor partners, but also the future and the ability for us to continue to expand comes out of the fact of consumers demanding IMAX.

And you're looking at even now content coming exclusively to IMAX. Well, with Narnia coming out later this year, so exclusively to IMAX, or even these F1 races, exclusively to IMAX, there is that opportunity where we are -- our goal is to bring more box office, not only to IMAX, but to our exhibitor partners, and I think that that's where we're able to help lift the industry as well by contributing more in that way by us working through our relationships with content producers and creators to bring more content. And we generally have very good relationships with our partners worldwide. And I think you see that, by the way, not only do they come back to the table and upgrade their existing locations, but they're usually upgrading and expanding to new locations as well. And so I think that, that gives us -- that shows sort of the way that our relationships work with them, too.

[indiscernible] But would it be possible just to discuss a little bit more the strength in China and Japan in 2025, and what the timing of that will look like in 2026 just from a comp's perspective? I know we've already is, but I'd love to just make sure I'm understanding it correctly.

So I'm sure you're thinking about the Ne Zha effect from last year and how 46% of China's box office came in through Q1 last year, and that's not what it's going to look like this year, for sure. This year's going to be a lot more balanced in the way China's box office comes through this year, mostly because 2 of the films that we had originally thought would come through Chinese New Year actually are now looking like they'll come through in the summer period, which is Peng Hu and Once Upon a Time in the Middle East, which is a film for IMAX title. And then the potential for Creation of the Gods III somewhere in the summer/fall as well.

And then there's a stronger Hollywood slate this year in China. And so that also will contribute. Project Hail Mary is coming in now. We started the year with Avatar, but Project Hail Mary. There'll be Star Wars, and Odyssey should do very well in China. We'll actually get to split screens in China later in the year with Avengers and Dune, and have both playing there. So I think that you're going to see this year a little more balance between local language versus Hollywood.

I think China last year for local language is probably closer to 70% of the year of the entire year. Whereas this year, you might see it come through a little more balanced, not only from the split between low language and Hollywood, but also throughout the year a little more even. Now the way that we look at it from a global perspective, I mean, we've guided towards $1.4 billion, that is all of our regions, though, contributing, right? And when we look at the way that even last year, domestic and rest of world contributed, they are contributing generally at a faster pace because you're growing your network there as well. But also we're taking more market share naturally by the marketing, by the filmmakers leaning in, by just consumer demand as well. And so I do think that you'll start to see domestic and rest of the world continue to grow at a faster rate as well, all contributing towards our global goal of $1.4 billion.

And you rattled off some of the franchises that you're most excited about. But if I had to pin you down to maybe 1 or 2 in 2026 that you think could maybe present the biggest upside surprise to IMAX at the box office, what would they be and why?

I'd love to say Odyssey, but I don't think anybody thinks that's going to be a surprise. It's definitely going to be the title that delivers this year. I think Narnia is -- it's a great experiment. And so we're all looking forward to seeing what that will do because it will be launched -- IMAX will be the launch platform for that title. I'm excited about, I think, well, Michael, and I'm excited about that title. I'm also excited about Project Hail Mary. I actually just recently started reading the book, and it's a very good book. So I'm excited to see what that title will do as well. But then you have clear winners with Dune coming in later in the year or 2.

This year has a lot more hits. You can see a lot more hits between Project Hail Mary, Super Mario, Michael, Star Wars and then Odyssey, of course, going to be massive. But then leading into later in the year, you're going to have Narnia and Dune as well. And then you've got all these family titles. Which -- we've been capturing more market share on family titles, too. Like Toy Story 5 is coming, Minions as well. And so I think you'll start to see the year fill in, in a really strong way.

You're getting me excited. It feels like...

You can't watch things on the plane.

I know. It is embarrassing.

It's not -- that's very embarrassing actually.

Just listening to you rattle off all those titles, does it feel to you like 2026 is really the year that we kind of got out of the strikes and all the issues around that, and we're kind of hitting our stride? Like what -- how would you assess the '25 versus '26 and beyond?

I mean '25 was a record year for us.

For IMAX, yes.

I mean we guided to $1.2 billion. We delivered $1.28 billion. So I think we've already hit our stride, but we're continuing -- our goal is to keep raising that bar and executing against it. I do think the industry as well is growing stronger. And so I think that, that will also be helpful overall to the entire industry. And I think that we're growing our screens, and I know that we're contributing as well to that, and that's been a good place for us to be.

Great. And if we were to look into the future and we got to 2028, what would you want investors to say IMAX did better than anyone else out there across kind of media and entertainment over that 2-year period?

Well, I'm the CFO, so I'm going to say that we executed better than anyone else did, for sure, because that's my goal is to make sure that we're always executing against what we did. But also that we over deliver -- in the end, we deliver better than what we put out there as our guidance. I think that, that would be a really great thing for investors to be able to sit back and just like we did in 2025, to deliver stronger than what we guided.

Excellent. Perfect place to end. Thank you so much, Natasha.

My pleasure.

Good day, and thank you for standing by. Welcome to IMAX's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jennifer Horsley. Please go ahead.

Good afternoon, and thank you for joining us for IMAX's Fourth Quarter 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 on 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 a 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?

Thanks, Jennifer, and thanks, everyone, for joining us today as we review our results for a record-breaking year and look ahead to a very promising 2026. 2025 was a truly transformational year for the company in which we firmly established IMAX as a premier global platform for entertainment and events with a powerful position among out-of-home experiences and a content pipeline that continues to grow richer and more diverse.

We finished with a record $1.28 billion in global box office, up 40% year-over-year. We captured our biggest share of the global box office ever, up 700 basis points year-over-year. We achieved our highest grossing year ever for local language films with $405 million worldwide with 67 international releases from 14 countries, including 2 of our top 5 in Ne Zha 2 and Demon Slayer: Infinity Castle. And we drove significant network growth with agreements for 166 new and upgraded IMAX systems and 160 systems installed worldwide, including 8% network growth in the rest of the world.

We are an unqualified winner in a complex entertainment landscape. Signs of our impact are everywhere. Studios put IMAX front and center in their marketing campaigns, driving record indexing and enormous media value for our brand. The New York Times, Wall Street Journal and Los Angeles Times have all published features highlighting our unique success. Our stock is among the best performers in global media and entertainment, up over 44% in 2025.

And IMAX releases earned 58 Academy Award nominations, including 5 of the 10 best picture nominees. Every one of Warner Bros.' 30 nominations was for a film that played in IMAX, including Sinners, which was shot with IMAX film cameras and One Battle After Another, which received an IMAX 70-millimeter film run. We delivered at least 20% of the domestic opening for Sinners, One Battle After Another and F1.

Our financial results reflect our progress and the strength and incrementality in our model. We beat projections across almost every key financial metrics, setting several company records. We delivered a record $410 million in total revenue in 2025. We achieved double-digit percentage beats on original consensus estimates for adjusted EBITDA and EPS with $185 million and $1.45, respectively, for the full year. We delivered a 45% EBITDA margin, a record and our first time breaking 40% since 2019, record operating cash flow of $127 million for the full year.

And in the fourth quarter, we delivered record box office and over 50% growth in adjusted EBITDA and adjusted EPS. We expect another outstanding year in 2026 with a projected $1.4 billion in global box office, 160 to 175 system installations worldwide and total adjusted EBITDA margin in the mid-40s range with a floor of 45%. And through 2028, we aim to drive revenue growth at high single to low double-digit compound annual growth rate, adjusted EBITDA margin of over 50% by 2028, adjusted EPS growth at twice the rate of revenue and free cash flow conversion of approximately 50% in 2026 and growing.

We believe we are far from our peak, but rather in a period of evolution and growth. With superior immersive technology and unmatched scale, IMAX is the premier global platform for blockbuster content and blockbuster content continues to grow in importance across the global ecosystem. The world's greatest filmmakers, studios and even streamers are leaning into blockbuster theatrical releases as drivers of IP and value throughout the chain.

As this trend accelerates, IMAX becomes an increasingly valuable player. We're the only game in town with a global platform, content portfolio and well-recognized brand. We're able to leverage the shift to premium and consumer demand for great out-of-home experiences. And with a very strong slate booking all the way into 2029 and an expanding total addressable market for IMAX systems, we are capitalizing on our strong position and delivering for our shareholders.

The slate for '26 is arguably the strongest we've ever seen, highlighted by massive films for IMAX tentpoles, headlining a record of at least 12 films for IMAX releases worldwide, including Christopher Nolan's The Odyssey, the first theatrical feature shot entirely with IMAX film cameras. Tickets for select IMAX 70-millimeter showings sold out a full year in advance, and we will have 40 film locations for Odyssey's debut in July. The Mandalorian and Grogu, the big screen debut of the massively popular Disney+ former TV series from Director John Favreau, who crafted the film with cutting-edge technology specifically for IMAX screens. Dune Part Three, the next installment in Denis Villeneuve's franchise and the first of the series shot with IMAX film cameras. And next month's Project Hail Mary, a film for IMAX space adventure that is earning excellent buzz and will screen in IMAX 70-millimeter across 16 locations, an indicator of strong indexing for recent releases.

Highly anticipated family releases in a time when family films are leading the box office and IMAX is capturing a greater box office share of family films than ever before, including Super Mario Galaxy Movie, which we're hearing is testing extremely well, Minions 3 and Toy Story 5. The previous installments of these films all gross near or above $1 billion, a diverse collection of distinctive and filmmaker-driven releases that we believe hold real upside from Michael to Zach Cregger's Resident Evil, another strong offering of local language films from around the world, including the eagerly awaited sequel Godzilla Minus Zero from Japan and the Indian epic, Ramayana.

And finally, Barbie Director Greta Gerwig's Narnia, a pioneering partnership with Netflix that we believe will deliver greater value to our exhibition partners. Furthermore, we are already 60% booked for 2027 with blockbusters, including Top Gun: Maverick and F1 Director Joe Kosinski's Miami Vice, which will be filmed for IMAX; Star Wars: Starfighter from Deadpool and Wolverine Director Shawn Levy. The film looks to be a throwback to the galaxy-spanning adventure of the original trilogy; the Thomas Crown Affair from Academy Award nominee, Michael B. Jordan; Avengers Secret Wars and the Batman 2. And for '28, we look forward to being involved in Sam Mendes' groundbreaking Beatles, a 4-film event.

With 2 months down in '26, we feel good about our projected box office for the year as we enter one of the most promising periods. Our global box office in January was up 16% year-over-year. Avatar: Fire and Ash extended our success with that franchise, earning more than $188 million in IMAX, our sixth highest grossing release of all time and our highest indexing of the series with 13% worldwide.

The Chinese New Year holiday delivered $28 million on the strength of Pegasus 3, our biggest Chinese title since Ne Zha 2 and we continue to diversify our content slate, securing an agreement with Apple to stream live broadcast of Formula 1 World Championship races to IMAX locations this season and delivering a very successful exclusive opening of Baz Luhrmann's Elvis Doc EPiC.

We also continue to drive strong system sales and network growth worldwide, particularly in underpenetrated high-value rest of the world markets, where we installed a record 118 systems in 2025. We now work with more exhibition partners globally than ever before, 257 in total last year, up 28% over 2019. Surging demand for IMAX supported an expansion of our total addressable market to nearly 4,500 total zones worldwide, double our current systems in operation and backlog.

To capture that opportunity, we're executing against a 4-pronged strategy: One, focusing on high-growth underserved markets. We've had tremendous success here, driving our biggest year ever for sales and installations in Japan in 2025, tripling our network in Australia since 2023 and making strong progress in France and Germany.

Second, continuing to unlock new opportunities in North America. Domestic is an engine of growth for us with new and existing partners alike, dispelling the notion that this is a fully mature market. In 2025 alone, we struck agreements with each of the biggest exhibitors in the U.S., AMC, Cinemark and Regal, that advance key strategic priorities, including new locations in Los Angeles and New York with Regal and 3 new IMAX 70-millimeter film locations with Cinemark.

Third, identifying opportunities to add a second IMAX location in high-performing zones. For all our success with marquee locations in major metropolitan areas, we are still deeply underpenetrated in many, presenting an opportunity to grow within our best market centers. For instance, we have only 5 IMAX locations serving a population of 1.6 million people in Manhattan, including our first new location in 15 years set to open in Battery Park. And we see a lot of opportunities in metropolitan areas, including Chicago, Boston, San Antonio and San Jose, among others.

And lastly, finally, we continue to explore innovative deal structures that leverage our liquidity. Given our strong balance sheet and momentum, we can help our partners get more IMAX into their circuits quickly through upfront capital expenditures that pay for themselves given our strong market share gains and the impressive film slate lying ahead.

In sum, 2025 was a transformational record-breaking year for IMAX. We exceeded our targets for financial performance and finished with a strong fourth quarter. We drove great results for our exhibition partners, breaking box office records as fans, filmmakers and studios clamor for more of the IMAX experience. We continued network expansion with significant runway to grow further even as we capture a record share of the global box office. In every way, we've leveled up our performance. With an incredibly promising slate locked in for the next several years, we continue to believe the best is yet to come. We're focused on strengthening our position, executing with financial discipline, providing the most immersive entertainment experience on the planet and delivering for our shareholders.

Thank you all. And now I'll turn it over to Natasha.

Thanks, Rich, and good afternoon, everyone. In a time of limitless entertainment options and more discerning global audiences, IMAX delivered record fourth quarter and full year results, exceeding our guidance and Street expectations across key measures. Fourth quarter box office was $336 million, up 16% versus the prior Q4 record, driving full year box office to $1.28 billion. We captured a record 3.8% of global box office, up 700 basis points year-over-year, underscoring the increasing value the IMAX platform delivers to exhibitors and to the broader industry.

Strong demand for the IMAX experience also drove us to the high end of our installation guidance with 160 systems installed in 2025, up 10% year-over-year. As we keep our focus on delivering value for shareholders from a profitability perspective, our operating leverage resulted in an adjusted EBITDA margin of 45% for full year 2025, above our guidance of low 40s percent. And adjusted EPS reached a new full year record of $1.45, an increase of $0.50 year-over-year. Importantly, these results translated into our highest ever cash from operations of $127 million with cash conversion directly benefiting from the margin expansion.

Our standout 2025 financial results once again illustrate the uniqueness of IMAX's operating model and position as a leading entertainment platform. And we believe the momentum is carrying into 2026 as we look toward the exceptional slate. With all the major tentpole Hollywood releases still in front of us, many with breakout potential, we believe we are well positioned to achieve another year of strong performance. We expect IMAX box office will build through the year with Q1 representing the lowest box office quarter.

Specifically in China, we expect a more balanced year as opposed to 2025, where 46% of China's box office was in Q1 as 2 of the largest local language titles Once Upon a Time in the Middle East and Penghu did not make it into Chinese New Year and will likely release mid- to late this year, along with there being a more balanced and compelling Hollywood release setup for Greater China.

Taking a closer look at our Q4 and full year 2025 results. We had a strong close to 2025 with fourth quarter revenues up 35% year-over-year, which drove us to a full year revenue record of $410 million, an increase of 16% over 2024's full year revenue of $352 million. Gross margin continues to grow faster than revenues, clearly demonstrating the value proposition of our business model, which enables a high level of incremental profit flow-through as we scale our platform and box office growth. Q4 gross margin was at a 58% margin, a 540 basis point improvement over the prior year period, while full year gross margin was $246 million at a 60% margin, up 600 basis points year-over-year.

Looking at our results at the segment level, Content Solutions revenues grew significantly, driven by higher box office with fourth quarter revenues of $38 million or 50% growth over the prior year comparative period and full year content revenue growth of 21%. We have continuously focused on diversifying our content offerings and sought to outperform expectations and 2025 displayed the success of our strategies. Every quarter of 2025 had a different content storyline enabled by our diverse programming strategy. Q1 box office was local language driven. Q2 into Q3, our Filmed for IMAX program delivered some of our highest indexing levels in our history. Q3 benefited from a diverse mix of local language, horror titles and alternative content, and Q4 anchored the year with large Hollywood tentpoles.

Fourth quarter Content Solutions gross profit was $22 million, while full year Content Solutions gross profit of $100 million grew 50% year-over-year, more than twice the rate of revenue, actualizing a proof point of the significant operating leverage in our model. As a result, we delivered a 66% gross margin for 2025, a substantial increase of 1,260 basis points from the 53% in 2024.

Turning to our Technology Products and Services segment. Fourth quarter revenues were up 32% year-over-year with a gross profit margin of 58%, up approximately 500 basis points year-over-year, while full year revenues for this segment grew 16% with a gross profit margin of 57% up approximately 400 basis points year-over-year, driven by higher systems installed under sales arrangements, growth in box office driving a higher level of rental revenues and increasing maintenance revenue associated with the growing network.

In the fourth quarter, we installed 65 systems, up from 58 last year. For the full year, installations reached 160 systems at the high end of our guidance, driving 3.5% growth in our commercial footprint, led by 4% growth in our domestic network and just over 8% in the rest of world, a very strong result, reflecting our growth prioritization. We're expanding in the strongest box office markets, including in the U.S., Japan, France and Australia. Japan grew almost 20%, while Australia more than doubled its footprint. We believe growing in our strongest markets will both scale our platform and meaningfully increase our network productivity.

And the engine for future growth remains strong as we completed 166 system signings in 2025, an increase of 28% year-over-year. More than 25% of the signings were signed and installed in the same year, reflecting the demand by our exhibitor partners to get IMAX locations quickly up and running to capitalize on the strengthening IMAX slate. We expect the same dynamic in 2026, given the outstanding film slate in front of us.

Turning to operating expenditures, defined as research and development and selling, general and administrative expenses, excluding stock-based compensation, was $29 million in the fourth quarter and $118 million for full year 2025. Full year operating expenses increased only 1% year-over-year, a much lower rate than the 16% growth rate in revenues, reflecting continued expense and cost discipline that helped to offset the impact of inflation and continued investment in the business. We will continue in 2026 to focus on optimizing our uses of technology and evaluating work processes to enhance productivity across our business as we aim to crystallize a high level of flow-through to gross profit and to the bottom line.

Included in Q4 results is $22 million of onetime charges, $15 million for the strategic repurchase of over 99% of the convertible notes due 2026 and $7 million resulting from a noncash goodwill impairment of the legacy SSIMWAVE business associated with the monitoring of content quality. We continue to lean in on our core business where we see tremendous opportunity to gain share and expand the network. We have been repositioning our streaming and consumer technology business to enhance our differentiation, particularly in support of live streaming content across the IMAX platform as well as the evolution of our core DMR and system technologies. With this shift in strategy, we have also been reviewing and optimizing the cost structure of the SSIMWAVE business.

Overall, our strong operational performance led to record full year total consolidated adjusted EBITDA of $185 million. Adjusted EBITDA grew 33% for the full year, more than twice the rate of revenue growth, reflecting the operating leverage stemming from higher revenues coming from both box office and system sales. This resulted in an above-expectation full year adjusted EBITDA margin of 45%, up approximately 570 basis points year-over-year and placing us above our full year guidance of low 40s percent.

Full year adjusted EPS was $1.45, up $0.50, driven by the strong profit growth. 2025's results reflect a 28% tax rate compared to 13% in 2024 or a year-over-year headwind of $0.16 per share. No tax benefits were recognized for the onetime charges in 2025, while 2024's tax rate was unusually low, having benefited from an internal asset sale to more closely align intellectual property rights with its global operations.

Turning to cash flow and the balance sheet. Cash flow from operations of $127 million set a new full year record, exceeding the previous high of $110 million in 2018. And full year free cash flow, which includes $28 million of investment in the IMAX network through joint revenue sharing systems, was $85 million, which equates to a record adjusted EBITDA conversion of 46% or a conversion of 61%, excluding this investment in network growth CapEx. We believe these results reflect the positive incrementality in our model as well as improvements in working capital, which we expect to continue as box office and our network expands.

Turning to investing cash flows. We continue to prioritize use of our available capital to invest in the business, including partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue sharing arrangements, allowing us to benefit from the rising demand for IMAX and the stellar IMAX slate in 2026, '27, '28 and beyond. Our capital-light model and execution have resulted in a strong capital structure. As of year-end 2025, we held $151 million in cash, an increase of 50% from year-end 2024 and $289 million in debt with a net leverage of 0.7x.

During 2025, we strengthened our liquidity and reduced dilution risk through strategic transactions. We renewed and expanded our 5-year revolving credit facility to $375 million, adding $75 million of liquidity. And in November, we refinanced our 2021 convertible notes with $250 million of new convertible notes at a very attractive 0.75% interest rate. And through this transaction, we simultaneously retired the vast majority of the 2021 notes with cash of $46 million to minimize dilution. Importantly, we also entered into a capped call on the new notes, raising the effective conversion price from a company dilution standpoint to $57 per share. Together, the cash payment for the outperformance in the 2021 notes and the new capped call equates to approximately $70 million, strategically spent to maximize the opportunity for shareholders to benefit from the growth we expect in the coming years and in our view, is akin in some respects to that of a share repurchase.

To sum up, we aim to build on the momentum in 2025. And as Rich shared, the table is set for '26 and '27 with mega titles like Odyssey, 2 Star Wars movies, Narnia, Dune and Avengers; beloved proven family content, including Toy Story, Moana, Minions, Shrek and Frozen; large fan-based video game IP such as Super Mario, Mortal Kombat, Zelda and Minecraft; Tier 1 Superhero franchise films around Spider-Man, Batman and Superman as well as potential for new breakout IP like the upcoming Project Hail Mary film, music-centered content like the Twenty One Pilots concert and Michael and new sports ventures such as recently announced with Apple TV for live F1 races.

As we highlighted at our recent Investor Day, we believe we have a clear strategy to continue to expand our entertainment platform in 2026 and beyond to bring the IMAX experience to more audiences. We are focused on deepening our relationships with leading filmmakers and building new connections with a diverse array of content creators and studios. At the same time, we are aiming to grow our footprint, box office and productivity of our network along with the value we can bring to our exhibitor partners. As we have shown, the growth in box office and our increasing network scale will positively impact our bottom line and cash flows given the incrementality in our financial model and our laser focus on keeping operating expenses as flat as possible.

Given these dynamics, we expect to drive total adjusted EBITDA margin to over 50% in the coming years. That's why we believe IMAX's position has never been as strong. We are focused on executing on the significant opportunity in front of us to deliver on our guidance and expectations for 2026 and beyond and to drive ever-increasing shareholder returns.

With that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from Omar Mejias with Wells Fargo.

Rich or Natasha, can you give us an update on the state of the Chinese box office and the early start to the Chinese New Year? We saw Pegasus 3 start very strong and outperform initial expectations. But just curious on how is the overall health of the market and the slate ahead.

So Omar, I don't think you could take 10 days and talk about the state of the Chinese box office. I think when you look at China, Chinese New Year was kind of, I'd call it a B slate this year and very similar to the slate in '24. And what happened was there were a number of titles that were supposed to open for Chinese New Year, and they slipped and they weren't done in production, and they moved them to this summer. So I think that's what accounted for kind of modest results during that period of time. But I think in -- the summer will be better than we thought it would be because we thought those movies will have played earlier. So I think the result is more a matter of timing than it's the result of any trends in the Chinese box office.

That's very helpful. And maybe my second question on local language and alternative content. You guys had a record year in 2025 with over $400 million in box office, recently announced a new deal with Apple to air F1 races. And based on your investor presentation, it looks like you have a big slate ahead. So how much runway does IMAX has to drive local language and alternative content box office alongside Hollywood content? Is there a certain limit to the growth of non-Hollywood content box office?

Well, I don't think we think about it in that way, Omar. I think we try and program the best content for a particular market throughout the year. So I think one thing you're asking is, are you too stocked with Hollywood films where you can't do a lot of foreign language films. But again, it depends when things are scheduled, how they're performing. We might slide something in if something is underperforming or move something if it's overperforming.

But there are a couple of very big international films this year. One is called Ramayana, which is an Indian film that the director and producer are preparing for global release later this year. And again, I don't think anybody said, well, we have Ne Zha this year last year. So you just don't know how they're going to break out. But I believe there's enough runway and enough space to accommodate more in number of international films -- local language films than we had last year. And we're pretty comfortable with how they look at the moment going out. I think that's going to continue to be an important part of our business.

Our next question comes from Eric Wold with Texas Capital Securities.

A couple of questions on kind of just pricing. I know it's kind of come up in the past, Rich or Natasha. I know you can't directly control ticket pricing with your exhibitor partners. But can you talk about what you've seen maybe over the past year, kind of maybe an average ticket price increase for IMAX showings as exhibitors look to take advantage of kind of this shift in moviegoer demand? And does any expectation for additional increases play into your box office outlook for '26? Or could that be an incremental upside driver if they do kind of play into that demand with additional price hikes?

So I'm not sure what the numbers were for '25, Eric. But I do know that for '26, we've been -- again, we can't tell the exhibitors what price to charge. That's their decision. But I think given the strength of the slate and especially the number of event films coming out this year, like Mandalorian, like Dune 3, like Odyssey, that there is potential to -- for price increases in there. And I think, especially if you also look at the film releases coming out, I mean, historically, the exhibitors charge the same for film as they charge for digital and even coming out soon is Hail Mary in about 16 film locations.

So I think there are definitely instances where I think you could push the price higher. And if we ran theaters, we would certainly do that. And I'm hoping that at least where there are films in great demand, of which there are a lot this year, that the exhibitors would choose to test that.

And then just a follow-up on that. As you build out some of these emerging markets that are maybe a little bit newer to IMAX screens and build them out, can you talk about what you typically see with the exhibitor partners there on their pricing? Do they tend to be a little more conservative given the consumer may not be fully aware of the IMAX product as much as more developed markets and then kind of ramp pricing from there? Or do they tend to be, I don't want to say aggressive, but maybe as aggressive as other developed markets at the get-go?

Well, we provide them as part of the sales process with what the IMAX premium is in different countries around the world. So I mean, they're aware, and that's one reason they buy in because they understand the price premium. And they understand it more as a percentage than an absolute number because obviously, in India, the premium -- the ticket price could be different than it's going to be in Japan. So they have the tools to do that. And I think the trend we've noticed is depending on the country, they charge a similar premium than they would somewhere else. So that's not really an issue. I think they understand how to maximize their profit.

Our next question comes from Michael Hickey with StoneX.

Rich, Natasha, Jennifer, congrats, guys, on amazing development. First question, Rich, just on your film cameras, really remarkable run here you've had with centers in '25 and getting 16 Oscar nominations is really remarkable and one battle for another as well, which I think was on your digital cameras...

Sorry, Mike. We got like over 50 Oscar nominations overall.

Totally. I just focused on centers, but you're right. I mean it's truly incredible. And '23 was Oppenheimer. This year, you've got Odyssey, you got your next-gen cameras with Odyssey, which are quieter and lighter. One, I guess, how do you know -- I'm curious how you're going to answer this, Rich. How do you know the right films to pick? Because some are obvious, but when you look at something like centers, I mean, that was not obvious. And obviously, that's been an incredible success.

How are you -- and I'm sure it's an ecosystem thing, but how are you approaching and finding the right films to pick? When you have this consistent level of success, obviously durable, what opportunities? Obviously, we see a lot of them, but I imagine your phone is ringing more than ever, there's installations, maybe a better opportunity to scale more of the 70-millimeter film opportunities or just relationships with filmmakers, talent and your competitive moat overall? Just sort of curious how this builds your overall opportunity over time.

So Mike, it's a perfect time to ask you that question because I've been out in L.A. for over a month right now. And I've been meeting with filmmakers, I've been meeting with studios. I've been meeting with producers, and you're quite right, the demand is very elevated from over it was before. So I'll give you a couple of categories of answer, like something that never would have happened years ago. But like well-known filmmakers who you know will approach us and will say, I want to do an IMAX film and they'll actually do like a pitch and they'll come in and they'll tell us why -- what it's about and why they want to do it in IMAX and why it's important to them. And that's a category -- obviously, I can't say who. But last week, we got pitched by some very well-known filmmakers, and it's a little bit off the beaten track. So if someone had sent in a script, we might not have been interested, but we are interested because it was very unusual. It doesn't fit in a box.

Another way, which I think is really important is the relationships we have with existing filmmakers. So one example would be we've done a lot of films with Joe Kosinski over the years. And then he did Top Gun: Maverick and obviously, it was a huge success and a huge success in IMAX. And then we did F1 with him, which is not as well-known IP, obviously, and it became one of our top films of the year. So Joe is working on his next project, which is Miami Vice. And he came to us and then we started talking to him about the different opportunities to shoot in IMAX and different tools, and we're still working our way through that.

And then it will be studios who will say, by way of example, Warner knows they've got 30 Oscar nominations. So they're looking at their slate, the people who run the studio, and they're going a filmmaker and they're saying, hey, have you thought of shooting this with either IMAX film or IMAX digital cameras? So there's a lot of opportunities that come in. And I think maybe the most promising one is the filmmakers who worked with us before and film for IMAX and their desire to use IMAX technology.

So there are a lot of ways, but having spent the last month with a level of meetings that I've never seen before and the types of talent coming in and executives, there's lots of projects coming in. And without spending much more time on this, if you don't know the filmmaker that well, you look at their reputation, you look at other things that they've shot and what it looks like. A big thing for us is -- the filmmakers is also leaning into the IMAX of it all. And a great recent example of that was Ryan Coogler and Sinners, as you probably remember, he made a pamphlet about aspect ratios. He talked a lot about IMAX everywhere he went, and that really helped a lot. So it's all of the above.

The second question, big film for you, Narnia, very important film, very important partner. And I think if anyone you sort of crack here, it seems like [indiscernible]. Just curious, as you continue to [indiscernible] or whoever on the team you're talking with, do you get the sense that they're more motivated, Rich, to make this movie. Do you also feel like that there's a bigger opportunity maybe in the future with this model that you've created here, which obviously was smart or maybe your normal model, you use your cameras. I think just to I guess, sort of your excitement for Narnia, the input from Netflix and the future opportunity you would see with that really for yourself and the broader.

So the first point, Mike, is that we make movies with filmmakers and studios or streamers are part of the system. So Greta, as you know, came to us because she was excited about releasing it in IMAX. And together, we planned to talk this through with Netflix and brought Netflix into the fold. So the most important thing is that Greta is incredibly excited. And when she thinks about how to make the movie and she thinks about the sets and she thinks about the magnitude and scale, she really leans in. And it's too early to see a rough cut. But from conversations with her, I believe she's making a movie that's going to look fantastic in IMAX. And that's the thing that probably makes me the most confident.

In terms of the business model, I mean, Netflix has approached us about a number of projects since we did that deal with Greta. And some of them we did under different sorts of models like Frankenstein with Guillermo del Toro and a number of other things over time. And we're always talking to them about different ideas. My hope when I did this deal was this model is going to work so well, and I'm not talking about only the box office. But remember, the point of it is to create a buzz and a cultural event.

And I think when Greta releases this in IMAX, it will be a cultural event. And I think they're going to get the benefit from that of increased streaming hits after that. Remember, it's a series of books. It's not a one-off, and it's going to help build an event. And I think that's what we really do. So I'm very optimistic that when the IMAX audience sees that movie, there's going to be the kind of reaction, which is going to lead to a number of good things.

[Operator Instructions] Our next question comes from Chad Beynon wit Macquarie Capital.

You guys at the Investor Day and reiterated today, talked about the high single-digit, low double-digit growth through '28 and hopefully beyond. I think a big component of that is that underpenetrated rest of world opportunity that you've spoken about. So Rich, what do you think the main catalyst is at this point? The business model makes more sense every year for these exhibitors. You're clearly putting up the results, local language is working. So what's the next inflection point to grow the pipeline for that rest of world?

So when you look at the slate going ahead this year, and I believe the financial returns that follow for the exhibitors. For us, we've talked a lot about that. But for the exhibitors, I think it just makes so much sense. And obviously, exhibition has had its challenge in its traditional industry. And I think it's certainly looking for growth opportunities for its network and its strategy. And I think they look at their box or someone else's box next door that's selling out and is getting very attractive paybacks.

I think that's going to have a big influence. And using some examples for markets in Japan in 2025, the per screen average was up an enormous amount from 2024. So the returns to the exhibitors are much more attractive. So it probably doesn't surprise you that there's a lot of activity coming out of Japan in '26, and our team was over there and there's a fairly large number of deals under discussion.

Also, Avatar really did extremely well in certain areas like France and Germany, where it was among the leading markets in the world and numbers that were a step change over the previous year. So there's a lot of activity this year, inquiries coming out of France and Germany. So I think in general, it's looking at performance and trying to replicate it and bring it forward. But then you add some kind of obvious things like the slate this year, and there's lots of movies, as I said in my prepared remarks, whether it's Mandalorian or whether it's Odyssey or whether it's Dune: Part Two. And I think people want to get open in advance of that. The people who opened before Avatar, we looked at the number, I don't recall, but I think we opened like 27 theaters right before Avatar opened. And you look at the performance of those theaters by being open for Avatar, their ROI and their payback period were far superior to what would have been if they waited. And our team around the world is using that data and sharing it. And I think that's what's helping create a catalyst.

We're also being a little bit more flexible, as we talked about in our prepared remarks, in using some of our capital in different places in the world where we know the results are really terrific. So I'll use Japan again as an example. But the numbers were so strong and compelling. The payback periods are fairly short and the economics is very good. So we're seeding some of those markets by using a small amount of our capital to help jump start them. So I'd say all of that.

Our next question comes from Steve Frankel with Rosenblatt Securities.

Rich, you had a big install quarter in Q4. Given the demand situation, how much more can you ramp your team and to take that to another level?

Yes. It's just a question of timing, Steve. So if you ask me how many we could install in the fourth quarter? The answer is an awful lot because it's like -- analyze it like a supply chain. So can you order the parts in advance? Can you do the designs? Can you deploy the teams? So sort of in any given year, it's a much larger number than we're doing now. If you said to me, people want to open for Hail Mary in 3 weeks, it's more difficult to do that. But over the longer term, I never used the word infinite, but you certainly could open a lot more if you wanted to. There's not much constraint on that.

Our next question comes from David Joyce with Seaport Research Partners.

Given that you've got a lot of cash on your balance sheet now, how are you seeing your mix of sales versus JRSAs this year? Given that you've got more of that cash and it's a strong box office here, how are you thinking of the relative ROI between those approaches?

David, we see it as a lots of opportunity for us to use our balance sheet, and we talked about it at Investor Day as well, but the opportunity to look at those top-performing zones and could we help the installation go faster by essentially seeding the money, as Rich was just talking about and in return, getting some sort of change in our deal type as well or change in our economic -- our standard economics so that we could get that return as well, but have the theaters open earlier. And I think that, that's the opportunity that we have with a strong balance sheet with our liquidity position sitting at $550 million. It is a significant opportunity in front of us to roll out our backlog at a faster pace and also look at more opportunities. And we talked about it at Investor Day of second screens or top-performing locations, flagships.

And so we think that while we look at not only investing in our business with respect to our own technology and the way that we operate in the Filmed for IMAX program, and we invested in cameras. There's also the opportunity to look at expanding the network. And I think what's been great is this past year, we expanded our domestic network by 4%, and we expanded our rest of world by over 8%. And so we are using our capital in the right way right now, and we see the ability to ramp that up.

Our next question comes from David Karnovsky with JPMorgan.

This is Kiscada Hastings on for David Karnovsky. I just want to ask on STL installs and upgrades this year. Is there any insight you can give us on expectations regarding market mix? You've been talking about more opportunities in the U.S. and whatnot. Should we expect revenue per install and revenue per upgrade to be relatively stable year-over-year?

So generally, yes, I think that we have a standard sort of selling price. Now the opportunity is that the box office grows, and you would have seen it in the incrementality in our model in 2025, the JV systems, we have the ability to capture more box office there and as our box office grows. And so I think that as you look at the mix, we did guide towards 160 to 175 systems with a mix of 45% to 55% sales to JV mix. So I think we're still tracking towards that. That's what we've guided publicly, and we'll keep working towards that. I think the opportunity, though, is looking at how do we capture more from those JV locations as the box office grows there as well. And that was one of the significant contributors to us not only having the over 45% adjusted EBITDA margin, but also our cash flows that came in at a record level.

Our next question comes from Eric Handler with ROTH Capital.

Just sort of a follow-up to that last question. Wonder if you could talk about how you're thinking about capital allocation at this point. You don't have debt due until 2030. You should have more free cash flow than last year. How are you thinking about buybacks? You've had good luck -- you've had good returns with the JRSAs. Where else can you sort of invest internally that you think would get high returns as well?

So Eric, I think the best place we can invest is in our network growth. And that's because when you look at PSAs this year compared to last year, when you look at the films that we have in '26 to slate, but maybe more importantly, you look at the backlog of films in '27 and '28, like we have an insight that most operators around the world don't have, which is we know what our slate is going to be going forward. And we have kind of a unique perspective on how it's going to perform. And we have a perspective also on how IMAX fits into the ecosystem. So if we have an opportunity to leverage our network growth or leverage our returns through maybe steering a deal one way or the other way. We think the releveling of IMAX is probably the best opportunity there is in terms of where to put our money. Now I would also add that people didn't think of it this way, but Natasha mentioned it briefly in her remarks. But when we issued our new convert and we took out the old convert, we could have taken out the shares that were in the money in 2 ways. One, we could have given people shares; or two, we could have used cash. And we took them out with cash, which effectively lowered dilution and was analogous to a share buyback. So obviously, we're open to being opportunistic in various ways, but we're very focused on how to capitalize on our growth.

Our next question comes from Patrick Sholl with Barrington Research.

Just in terms of installing into like a second screen in a zone versus entering a new market, is there sort of any difference in the return profile or the speed of getting to sort of like, I guess, a steady state of PSAs?

There doesn't appear to be a difference because if we're putting a second theater in a zone where the exhibitor is, it's -- you see a very successful zone and the brand is well known there. So you're leveraging off of your previous success. And I know we've been saying for a while that we're going to do more of that. But we've actually taken some concrete steps with different exhibitors and identified specific locations where we would put a second screen in and are discussing with exhibitors. And seemingly, they have a more open mind to it than they did in prior years, especially coming off the strong results in '25. So I think you should model it as a similar return profile, but I'd be surprised if you didn't see some of that materialize this year.

Pat, the other thing to consider is that we have a very experienced team who is involved in the analysis of the returns on locations and really assessing what is best for the IMAX business. And I think that's one thing we've proven over the years is that as we continue to expand, we're expanding in locations that are returning to our bottom line as well. And we do analyze each of our locations as we look through signing new deals, signing upgrades, signing whether it's second screens or flagships and assessing to make sure that it hits our ROI hurdles.

Yes. And I think I'd also like to remind you that the converts we issued, the interest rate is 75 basis points. So this is a well-priced capital for us.

Our last question comes from Drew Crum with B. Riley Securities.

Rich, I want to go back to the discussion around alternative content and the partnership with Apple TV for Formula 1. It looks like the initial launch is U.S. only. Do you have the ability to add international screens? And more broadly speaking, how are you thinking about bringing more live sports into your programming mix? With 2026 being a World Cup year, is that a consideration?

Sure. So the answer is the international -- your first part of your question with F1, Apple only controls the North American rights. So we made the maximum deal we could have made with Apple. But we are exploring the possibility of looking at international races, and we are following up on that. But again, that wouldn't be through Apple. That would be through others, and we announced this in the last 2 days. So it's a little premature to expand on it yet. But yes, we would be interested in finding a way to expand that.

In sports, we've been offered a lot of opportunities in all kinds of different sports. But sports is complicated. It's got to be the right formula. It's got to be the right match with the IMAX experience. These rights issues, as you know, are very complicated and expensive. So you've got to model it through and see which sports have a good return and which don't. We have had some discussions about the World Cup. But again, there's interesting issues there because the finals of the World Cup are on the same weekend that Odyssey opens. So it's not -- you can't just stick your finger in the air and say, "Oh, that would be a good idea." There's complicated issues around all of these. But again, there's a lot of interesting things going on and stay tuned. I think some of them will come to fruition.

I'm not showing any further questions. I'd like to turn the call back to Rich for any further remarks.

Yes. So thank you very much, operator, and thank you all for joining us. I really appreciate people who have invested in us for a period of time because 2025 really brought the pieces together. And as a management team, we had high hopes and we always believe that all the pieces could come together and put us in a new place. And I've tried -- the quantitative results are evident in what we reported. And the qualitative ones are less evident to you. But if you were living my last month in L.A., they would be equally obvious to you. And it's very gratifying to be seen as a different company in such an important position, not only in Hollywood, but around the world. And I think our job is to make sure that we use that place and we use our momentum to continue the growth rate and maybe even make it higher and really capitalize on where we've come into and making sure that we take full advantage of that opportunity. And thank you all for joining us.

Thank you, ladies and gentlemen. This does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

[Audio Gap] Mark Jafar, Global Head of Communications for IMAX Corporation. Thank You much for being here everyone at IMAX for IMAX Investor Day 2025. We are very excited to welcome all of you. Those of you who are in our offices here in Los Angeles. and everyone who's joined on the live stream all around the world. And we are very, very excited to share our strategy for building on this record-breaking year at IMAX for driving long-term sustainable growth at the company and for delivering returns, strong returns for all of our shareholders. .

And we think we're just getting started. So let's get started today with today's agenda. First up, we'll have a conversation with our CEO, IMAX CEO, Rich Gelfond, to talk about our growth outlook and strategy for the company. Next, our Chief Marketing Officer, Anne Globe, will join to share some brand-new insights on our audiences in the IMAX global brand. Then our new Chief Content Officer, Jonathan Fisher, and our new Head of Global Distribution, Heather Morgan will join to discuss our growing IMAX content portfolio worldwide. After that, we'll have a Q&A with our CEO of IMAX China, Daniel Manwaring, to provide insight on the vast evolving opportunity that we see in this big market for us.

Then our Chief Commercial Officer, Giovanni Dolci, will join us to talk about our plan to grow the IMAX global network. And then we'll take a look at IMAX's end-to-end technology platform with IMAX Global President of theaters, Mark Welton. And finally, our Chief Financial Officer, Natasha Fernandes, will walk you through our long-term financial plan, including 2026 guidance and our 3-year financial targets.

And of course, we'll save plenty of time for questions for all of you at the end in the room here. For those of you who are here in person, the presentation will be followed immediately by a nice lunch on the patio, and then we'll have an exclusive advanced screening of Avatar: Fire and Ash in glorious IMAX 3D, a full 2 weeks before anyone else will see it in the world.

One note for everyone watching at home, we will have a number of brief exclusive videos throughout the presentation that unfortunately, we are not at liberty to share on the live stream. So we just ask you kindly to bear with us as those play, no more than a few minutes each, while they roll, and we'll be back shortly. And for those of you in the room, please know photos or videos as those videos play out. Thank you again for your time, your interest and your investment in IMAX.

And with that, let's roll our video and then we'll talk to Rich.

[Presentation]

All right. Rich, it's been a while since we've had an Investor Day at the company, I think, since 2017, in fact, why are we doing one now?

It's a matter of how we communicate our story. So the way we interact with most of you rather than on a one-off basis is through our quarterly earnings calls and each quarter, we'll talk a little bit about what happened in that quarter and what's happening in the next quarter. But in fact, there's a much bigger picture of what's happening with IMAX. And we felt it was time to sit down with our investor group and really explain. And I think we think of it as a level reset meaning that IMAX was this company that's been around for almost 60 years, and it's gone through a lot of phases.

But I think we needed all as a group to kind of step back and say what's happened over the last period of time and more particularly what's happened this year. And IMAX really is at a new level. And when we designed the day today, we thought we would start with kind of this brief intro that I'm doing. And then we would have you meet the management team and the people who are implementing all of these initiatives.

And I think you'll come out of it feeling like you have a different understanding of IMAX because it's very easy to say what's the issue of the week and what's happening this quarter and what's this movie. But the data throughout the entire company shows that we are in a very different place. And it's kind of an auspicious day to start because yesterday became the highest grossing year in the history of IMAX. So we broke our record -- I promise you, it seems, I don't believe in coincidences. But it must have been a sign that we scheduled this 4 months ago, and it's exactly that time.

But when you go through kind of every piece of our business, whether it's films that are being shot with IMAX cameras or whether it's film, it's digital cameras or film cameras, whether it's financial performance, whether it's new technology that we've come out with this year, whether it's your noticing when you come through the Midtown Tunnel in New York, you drive down Hollywood Boulevard that every sign says IMAX on it. And in fact, in many of the cases, IMAX is bigger than the title of the movie.

Just so much has changed about our business in terms of the reset. And we think to know where we're going forward, you really have to understand that underlying change. And our business, and to be really honest with you, all, one of my most difficult task is getting our management team to even understand how much has changed. So this last weekend for Thanksgiving, we put together an [ ultimate ] and a forecast for our movies and what Zootopia was going to do and what Wicked was going to do and some of the management team, Mark will tell you, that it drives you crazy because I don't think our own team understands how much we're in a different place than where we were before.

So for the last holiday weekend, we set a record by doing $41 million worldwide and say, okay, it's a movie business. Everybody makes up some kind of phony record every weekend. But this time, though, we beat our prior record by 70%. So when you're in a business that's more or less linear, you beat your record by 3% or 5%. But in fact, we beat it by 70%. And I think when you see people take you through their businesses, you'll see that's not a one-off, whether it's signings, whether it's installs, whether it's backlog of theaters to be installed, whether it's backlog of movies coming in the next couple of years, every aspect of our business has kind of moved to another level.

And then I think you're all sitting there and say, okay, what is the future hold for IMAX. So as this trend accelerates, IMAX becomes an incredibly valuable player, either as a wholly differentiated, publicly traded company or as part of a larger company with the keys to unlock even greater value in our strong business worldwide. And we're very excited about all of those possibilities.

And we're going to run our business to maximize value in every possible way. We're uniquely able to leverage the shift to premium and consumer demand for great experiences had to become a springboard for other growth opportunities. The opportunity, The Odyssey, Narnia and expanding the total market for IMAX systems now is the right time to talk about IMAX's future.

So you mentioned the story of the day earlier. I think the story of the week, the story of the month, potentially the story of the year that everyone is asking about is the potential sale of Warner Bros. Discovery. I'm curious what your thoughts are on the bidding process there, which seems to be heating up by the minute and how potential sale could impact IMAX.

Warner Bros. is for sale? .

Yes. I'll show you the article.

I hadn't heard about that, Mark. So it's been rumored in the press that there are 3 potential buyers for Warner Bros. And as you know, we have great relationships with Warner Bros. But fortunately, we also have terrific relationships with all the potential buyers. And I think we have some insights into how each of them might run the business differently. And I think we're not going to share those until it's clear that there's a winner.

But I think the most important insight from our point of view is that whoever wins, we believe IMAX will win. And we've been through a lot the last 7 years, whether it was a global pandemic or whether it was consolidation happening in the industry or whether it was acquisitions like when Disney bought Fox. And every time, there's been alarm bells that have gone off, what does this mean for IMAX's future and every one of those, we've actually built our business better. We built it stronger, [indiscernible] on the pandemic.

I mean while a lot of people thought about survival during the pandemic because of our asset-light model, we use that period of time to think about the next place as we go, you are seeing the result of all that planning right now. So to be a little bit more specific about it, we've had a relationship with David Ellison and with Paramount for 2 decades, at least, we've done a lot of their biggest movies of both Paramount and David Ellison because they only recently came together.

So whether it was Top Gun with Paramount, which we -- by the way, with Paramount and David Ellison or whether it was The Mission movies, Paramount has incredibly leaned into IMAX over the years. And in our private discussions since the acquisition, they've assured us that they're leaning really hard into theatrical and some people from Paramount were there last night, who are actually pulling us aside and saying, you should hope we win because we're going to go really all in to IMAX, if that happens.

And I believe it, in addition, Anne Globe, who you'll meet soon, our CMO, who I know for over 2 decades. Anne was the CMO of Skydance for 6 years before she joined IMAX. So in addition to the corporate relationships, Anne, myself and a lot of others have a lot of strong individual relationships. If it's Comcast, that's the winning bidder, we have a phenomenal relationship with Universal and Comcast. As you all remember, we -- the Academy Award went to Oppenheimer, which was made not only with the Nolans but with Universal and you'll see a clip later at the Academy Awards. They shouted out IMAX as being essential to why that movie worked.

We're doing Odyssey with them this year. We're doing Wicked right now with them as we speak. But we have a much longer history, I'm sure before many of you were involved with the company, but we did the Fast & Furious franchise. We've done Minions. We have very deep roots with them, and I'm very comfortable that if they were the winner in the Warner sweep stakes that they understand the importance of IMAX very much.

And then the other one, Netflix, which has been more buzzed about in recent days. We have a really good relationship with Netflix. And we have a different view than a lot of exhibitors do. A lot of exhibitors put a good guy and a bad guy labels on different companies. But we've really gone out of our way to work with Netflix. And you'll hear a lot of talk today coming from us about Narnia and Narnia is a movie being made by Greta Gerwig, which comes out next Thanksgiving, and it comes out exclusively in IMAX theaters around the world for a month.

And I want to repeat that exclusively in IMAX theaters, and there is a 28-day window. So if you want to see that movie anywhere in the world before it streams, you need to go to an IMAX theater. And just to give you some context for Oppenheimer, we did, I think, $170 million while it was playing in other places in the world. And the fact of -- this will be the first IMAX exclusive release. And the reason it happened was that it was Greta's idea, Greta really said probably a year before we made the deal that I'm making a movie that deserves to be shown in IMAX and needs to be shown in IMAX.

And again, it took a fairly significant period of time but we negotiated with everybody important at Netflix, including the CEO and Chief Content Officer over a very detailed distribution plan, which includes theatrical marketing. It includes the way they're marketing the movie is see it in IMAX and see it in Netflix, see it both ways. Yesterday, some of our investors with one of the analysts went over to Netflix for one of these bus tours. And they asked the Netflix people, how do you feel about IMAX?

And what the Netflix management said is, we love this model that we're doing on Narnia, and we'd like to do more of it. In fact, the proof is in the pudding, they've come to us to do other pictures like that during actually this year. But we felt strategically so good about Narnia,we want that to prove itself out before we move on to where we go with Netflix.

Also, I believe, for what it's worth that the regulatory authorities would not approve a deal with Netflix unless part of that deal was there'll be a theatrical release. And am I -- do I know that as a fact, no, but I've been in my chair for almost 32 years, and I not only know all the studios and the players and the exhibitors, but I know a fair amount about how [ Windows ] and Netflix and theatrical interrelate because we were in the middle of that during the pandemic.

The other thing is that Warner Bros. has contracts that run through 2029 that guarantee a theatrical release. So no matter who owns Warner Brothers, those contracts have to be honored. And one reason we did the Narnia deal is, I've always felt that if you just have the same point of view and you sit in the same spot, your industry dies. And I think even warring parties in this industry realize that there's got to be new models and new middle ground set. And I've thought all along that, Narnia, and I know this is an overstatement, but it's really going to change the theatrical world because I think exhibitors who said never Netflix.

Once they see what this movie is going to do. And I think Netflix -- and I don't know if you've read the comments coming from Netflix even from Ted has said, IMAX is such a differentiated experience than the living room that we get the fact and we want to do more things that way. We also did Frankenstein this year in a limited release with Netflix, and we have a number of projects on the drawing board. So whoever wins, I think IMAX is going to be a winner. I don't think it's obvious how this road is going to twist and turn. But I feel quite confident that we're in a good place.

You mentioned transformation and managing changes, there is seemingly no greater sea change to the industry than AI. But that's not something that you've kind of beat the drum about as many have. What's the company's approach there?

Look, we recognize that AI is going to be a big part of everyone's future and particularly in the entertainment industry. But we're not -- except for a limited stat, and I'll get to in a minute. We're not creating AI tools. We're more users of AI than creators of AI. And I just felt it was inappropriate to jump on the bandwagon and to over promise that has many of the companies you guys probably invest in, where the AI future.

But if you back away from it, IMAX is a platform and it's a global platform. And what we do and the more content there is, we have a limited supply. So the thing that IMAX really sells and allocates is this beachfront property, this window to the world curating in 90 countries and 1,800 theaters. So as there becomes more content, the big beneficiary is IMAX. And there's no question in my mind that more content is going to be coming out of AI. The costs are lower. Special effects, price comes down.

We started a few years ago with 6 studios. Now among the 200 pieces of content that we released this year, we deal with sports leagues, we deal with music companies, we deal with gaming companies and adding on a whole supply of AI content is only going to be good for us. And you're all going to ask, does that mean you're going to change your take rates? Does that mean you're going to change your marketing? And the answer is, I don't know. We'll see how it plays itself out.

But it's only good for us to have more content. And we have a little bit dipped our toe in the water, Mark. So there's a thing called the AI film festival, where they give out awards for the best AI film and IMAX the winners, the final round is actually in IMAX and it has been for the last couple of years. So we work with those companies. And as a matter of fact, we have an event called the CEO Forum, where we talk about the future of entertainment with IMAX exhibition partners and such studios, and our AI panel this year had the Head of AI at Lucasfilm.

We have the Head of AI at Nvidia. We had people from USC Film School, we had studio people. So we're very much see that as an opportunity. But we just don't know exactly where it is. And one thing we don't want to do is overpromise where we don't know where it's going. On a smaller scale, we've been using versions of AI for a long time. So as you can see, we upraised the movies. So a film will shot in digital or 35-millimeter and you put it on a big screen like this is just not going to look that good. And we have a process called DMR, which relies on some conventional tools but also relies to a certain extent on AI or AI-related tools, and that facilitates our business.

We're using AI today in a lot of our marketing approaches, whether it's analyzing data or whether it's coming up with drafts of different creative materials where we used to have to pay agencies to come up for 3 ideas. We're using AI to come up with 30 ideas. You'll hear a lot about the fact that we monitor our content in real time in every theater around the world 24/7. We have a [ knock center ] it's called and AI will enable us to get more inputs. So what we've traditionally used it for is to set the sound in the theater. So if this theater was half empty, you would set the -- you would calibrate the speakers in a different way than if it was full.

So this real-time center helps us calibrate that. But we get enormous amounts of data. It also tells us if the bulb is getting dull. So you don't -- when you go to IMAX you know that it's the optimal experience and the filmmakers know it's the optimal experience. So we have all this data we weren't able to access. So we're working on internal projects like inventory management. So how long from now is the going to blow. The -- our systems now are laser, when are the laser is going to burn out? How can we maximize light input into these things. So we're very much see it as part of our future, but we just don't know exactly the path.

You mentioned IMAX beachfront property, right, and the scarcity of that. Certainly, there's other players in the industry who are looking at IMAX and saying, like, how do I get some of that for myself. So I'm wondering how you think about increased competition from [ PLFs ].

Yes, I'm looking at AI also, and I'm thinking of competing with Nvidia because there's a lot of money there. But you just have to sort of have a basic culture and tools. So IMAX has 115 people doing R&D. The POS, I think if you added them all up, it's probably about 5. And I think their R&D is mostly on the formula of the butter for the popcorn as well as how much electricity to bolster the bulbs that go in.

I mean we're just a completely different culture and a completely different enterprise. And our enterprise is based on the idea of quality and filmmaker friendly. And that's what we exist to do. The PLFs make all of their money or most of it on selling popcorn. We don't sell popcorn. I personally don't like popcorn, please don't quote me on that. It's not what we do as a company. So for someone to say, we're going to compete with IMAX. And there's the brand. The biggest thing is it's an end-to-end solution.

So we capture the images, either with IMAX cameras or we convert the images with IMAX proprietary algorithms into the input that goes into our system. Every other PLF. The first time they have seen the film is when it comes in the mail or it's streamed in. On Odyssey, with Chris Nolan, we've been working with him for that on that movie for 1.5 years, 2 years, maybe more. We built a new generation of cameras through our engineering department, which you'll hear a lot more about from Mark Welton and others later in the presentation.

And another example would be the F1 movie when Apple and Joe Kosinski and Jerry Bruckheimer decided to make the movie about a year, maybe more 1.5 years, we met with them. And they said, look, we don't really want to make the movie unless it's going to come out of IMAX and they had had a very good experience to say the least with Top Gun. And they design something like a dozen miniaturized IMAX cameras, which fit on each of the racing cars and they're remotely controlled.

So when you watch the film and it's turning corners, the cameras are turning and there's lots of other aspects to it. So on the image capture side, we're very much involved. I mentioned to you that when the movie is in the theater, we're the only ones monitoring in real time is that the way Joe Kosinski wanted it to be seen. The marketing around it. I mentioned that briefly earlier. When Anne comes up, she's going to show you some of the specialized design that the studios put together for IMAX, and we have a marketing team that goes out there. And again, I think I'll stop abusing the PLFs. But their marketing team is busy marketing, whether it should be the big popcorn or the small popcorn or packaging popcorn.

I mean I know it sounds like I'm being a bit of an A hole here. but they're in a different -- it's just a different business. It doesn't do what we do. I think back to when -- I don't know how many of you know the history, but I was part of a group that bought IMAX in an LBO an 32 years ago. And when we came to meet with the IMAX then management team, I asked a question, I said, IMAX's uptime is 99%. Suppose it was 98%, how much more money can we answer -- could we make? And the answer was, we won't answer that question because our question is how do we get it to 100%.

Now I'm not suggesting we didn't change some of that philosophy because we like making money better than the private ownership did. But it's just -- it's in the paint. It's part of what this is. And if you just think about the idea of competing with us, I should mention one other really important thing. And that's the infrastructure of theaters. We're in the best street corners in 90 countries. So whether it's the 68th Street in New York or the London Science Museum or the best location in Tokyo, the cost of those buildings is close to $10 billion, and those locations don't exist.

So when I read in the paper, the SCOOP and Bloomberg that a startup is going to compete with IMAX, frankly, we're always on our game, but it's just not an incredible threat. I think we've been in business almost 60 years. I just don't think you build something like this overnight. And I hope you come out of this presentation, understanding more of the complexity and details that make IMAX what it is.

Switching gears, local language film making and international filmmaking have been an increasing contributor to box office over the last several years. How is that reshaping the global box office and IMAX's business?

So the inspiration for local language films came during the pandemic because what happened was Hollywood is pretty much shut down, as you know. But our company is so diversified. And I think as someone will go through a slide, around 40% of our box office is domestic, but the rest is from around the world. So in all but the first year, the first few months of the pandemic, IMAX was cash flow positive and didn't burn through cash.

And it was that diversification, which really helped us. So we weren't spending a lot of time on new Hollywood movies. And we didn't lay people off. We kind of kept people on special projects. And one of them was really how to diversify globally and how to get more local language content. And we spent a lot of time and a lot of effort, and it wasn't visible at that time. But it was very much a strategic goal for us.

And in 2019, we had like 3 local language films in India. And I think this year, we have like 20 or 25. And our box office this year, about 35% to 40% has been local language films. And local language has 2 components. So it's an Indonesian film in India, but it's an Indonesian film, in Indonesia also. And it's a French film in France, and it's a French film in Belgium.

So one of our recent great successes has been anime. You know about -- most of you know about Demon Slayer, where we've done almost $100 million. And most of that is in different countries like our most successful Japanese opening ever in China was Demon Slayer, where it had a huge weekend. So it's not just the local territory, but it also boosts our international footprint. And Gio, who will talk about global sales is going to talk about how that's also helped our expansion efforts.

Because if you're in Korea, you don't only want to see Hollywood films. You want to see Korean films. So the more content we have available there, it really helps boost our theater network. And then some of this was luck, some of it was prescient, but the studios were so focused on streaming and getting a Netflix multiple that they missed the fact that pre-pandemic, they had 80% market share in the world.

And now in '24, they had 60% market share in the world. And that's because local language was creating content that was resonating in those markets. And I think there are only 2 companies that really saw that and capitalize on that. And 1 is Netflix and you know local language has been a big part of their momentum. And the other one is IMAX. I bet a lot of you don't know what a big part of our box office that is. So we're going to continue to lean into local language and it's continued to be a more important part of our company.

So a lot of new, new-ish faces on the IMAX senior management team. Tell us a little bit about who we're going to hear from today.

Okay. So you sort of told them at the beginning. So I'll go a little bit briefly but after my presentation is Anne Globe, as I said, not only does Anne have a lot of experience with studios, but amazing amounts of relationships that always amazes me how many people in a restaurant come up to Anne. And we have a very long-standing relationship, has been helpful and her team gets a lot of credit for the marketing changes.

Then we're going to go into our content side of the business, and we recently hired Jonathan Fisher. And in the world of coincidence, which, as I said, I don't believe in it, so but it was. Jonathan started when I just started the negotiations with Greta and with Netflix. And Jonathan was a senior executive at Netflix for 5 years, and he's proven to be extremely helpful as we navigate this changing world. And reporting to Jonathan is Heather Morgan, and it's also a little bit of an unusual hire. We had hired people who had experience in Hollywood, had a lot of experience in exhibition. So she worked for AMC on the programming side. She worked for Harkins. She worked for getting the other one...

Alamo .

Alamo Drafthouse and she helped program. And I think you guys know that when you're in the IMAX business, we program the screens. So AMC, Regal, and [ Wanda ] they don't program it, we program it. So we had the thought, why don't we get someone who knows a lot about programming to help figure out the slate for us and put it together. And besides Heather reporting to Jonathan, there is a lot of the alternative content, the foreign language content. He becomes the air traffic controller for the 200 pieces of content they put on the screen. .

Then after Jonathan, Daniel Manwaring, who is our CEO of IMAX China, Daniel ran parts of CAA in China for more than a decade. He also has a financial background, and he has unbelievable relationships in the Chinese film community. And we thought that would be especially interesting to you all because you don't get face time with Daniel frequently. And then after Daniel, Gio Dolci, Gio has been at IMAX for 13 years. He spends more time on a plane than any pilot, I know, like literally the guy who lives around the world. And he has lots of relationships with the exhibitors, as I know we talk a lot about our relationships with the filmmakers and the studios.

But like the CEO Forum, which I mentioned, we have just fantastic relationships on a global basis. And Gio manages those, and he'll talk to you about what our growth prospects are there, then Mark Welton, who oversees, he has a fancy title, like President of Theater, as you know, everyone in Hollywood as a President of something. But Mark, along with the video we put together will tell you about our technology and the role that our technology plays in the whole IMAX experience.

And then finally, the wrap-up will be somebody who won't be interested in listening to at all, which will be Natasha, who will give you guidance and numbers and things that if you are interested in. So I suspect you'll all be interested in that.

So 1 last question, Narnia, as you mentioned a year from now, it will be playing exclusively in IMAX theaters around the world. How are you feeling about how that project is coming together?

So this is one where you could see I'm pretty passionate about the IMAX business. But this is one that my team has to hold me back because I think, as I said before, that it's really going to change the world. I know that sounds like a lot of hyperbole. But Greta is making this movie for IMAX and then is fully understands that when word gets out of what this movie is, it's going to create a cultural event. .

So for us, the goal is not only to do good box office and IMAX, but to prove out that IMAX can create worldwide events where they didn't exist before. So we want Netflix to do well in streaming. That's part of our goals in this. And again, when we negotiated with Netflix, we were in a very unique position because the exhibitors have a history and the exhibitors also have an animosity at some level because they see themselves as competitors. But we don't compete with Netflix.

I mean does anyone here have a television set that looks like this screen. And I think we recognized it. So we had a very productive negotiating session. We said, we're not doing it unless there's a theatrical marketing budget. So there is. And we're not doing it unless there's a blockbuster budget for this movie.

And trust me, there is a very blockbuster budget for this movie. And the premiers have to be in IMAX. And Greta has to go on talk shows and talk this is a real blockbuster movie that's being made for both. And then I guess I do have to talk a little about why I'm so excited about it. This is not your mother's or your grandmother's Narnia, The music in it is unbelievably contemporary music, which IMAX fans like, and I'm not going to say specifically, but things like Pink Floyd and the [ Dorrs ] and that kind of music, which people go to see in IMAX. And the movie itself is going to be -- it's being filmed at the largest sound stage in Europe. I went on the set where there were hundreds of people and multiple green screens and is filmed at multiple locations, and you're going to see a clip in a second.

And if you can't see how passionate Greta is about it, then you'll have to wait to see the movie to see how awesome it is. So when I look at the most important movies, coming out for us in '26, for me, it starts with Avatar in January then the Odyssey and a lot of people will be talking about that. But the cast to the Odyssey looks like the award section of the Academy Awards. The budget behind that movie, the marketing campaign, most of you probably know that we put tickets on sale a year in advance and are the ones we put on sale. we sold out, The Mandalorian, Star Wars, Jon Favreau invented special technology to film that movie for IMAX. Dune: Part Three, Denis Villeneuve is filming a good part of the movie with IMAX film cameras.

I left one out, how can I leave one out.

Mandalorian, Dune.

Mandalorian, Dune and then the movies, which have an amazing buzz already are things like Hail Mary and like Michael, the Michael Jackson story. So but of all of that, including those movies, the one I'm most excited about is Narnia because I think of its potential to change IMAX and to change the business.

Great. Well, thank you, Rich. Let's take a look at that clip.

[Presentation]

Okay. I'm Anne. I'm going to balance the scales a little bit by saying that I love popcorn just in case anybody is curious. I've been at IMAX for almost 2 years. As Rich mentioned, just before that, I ran marketing at Skydance Media and at DreamWorks. I know some of you from the DreamWorks days. I'm pleased to talk to you today about all the great momentum we have had recently with our filmmaker and studio partners. Hopefully, you've seen a lot of stuff in the marketing in the community. And of course, it all starts with our fans. IMAX has become a cornerstone of event film campaign, signifying a can't miss theatrical experience.

As you can see here in this great Times Square billboard for the recent blockbuster Wicked For Good, a real favorite this holiday season. And this [ Wild N Whacky's ] Zootopia 2 Sandy, both films contributing to our record-setting Thanksgiving results this past weekend. IMAX has been spotted everywhere, like in the subway where this summer, you may have seen this giant Mission Impossible signage or many of you have been traveling from New York.

If you've been through JFK, you may have seen this tran takeover. And at tentpole premiers as some of the year's most notable films where IMAX is front and center as our studio partners encourage audiences to see their films in the best way possible. In some cases, the IMAX brand is the most notable cinematic message. We're always working very closely with our studio partners to build these groundbreaking campaigns and create custom elements like [indiscernible] for the most anticipated film of the Year, Avatar. Now I'd like to share with you our upcoming TV spot that features IMAX.

[Presentation]

I'm going to keep talking. We recently commissioned a new study with NRG to bring you the most up-to-date brand and audience data, and it shows amazingly that 76% of moviegoers are more likely to see a film in a theater if they know it's an IMAX release. Plus this is a great one. IMAX continues to add value to the life cycle of these films with 70% of moviegoers saying, they're more likely to watch a film when it comes to a streaming platform if they know it was released in IMAX.

The study shows that IMAX brand awareness is on par with top well-known entertainment brands like Spotify, HBO Max, ESPN and Pixar, but with even stronger fan engagement. Our fans are really passionate and recommend IMAX with the same level of advocacy as top tech streaming and global consumer brands like Nike. IMAX is known for building community at the scale of the most coveted brands in entertainment, including high-quality content creators like A24, Marvel, DC, Pixar and even the game Giant Nintendo. Most importantly, our brand strength has helped power the increase in our global market share.

As Rich mentioned, our 2025 GBO is now at a record high of 3.8%, up 23% over last year alone. We're also up 16% domestically, capturing 5.2% of the box office, all on less than 1% of screens. All in all, we're very capital efficient at IMAX, getting great value from these big studio campaigns and focusing our resources on selling tickets, which benefits all of our partners in the ecosystem.

The results are clear with a record number of 5 films this year, opening in the U.S. with more than 20% indexing. All due to audience momentum. Not only do we excel with fanboys, as you might expect, but the IMAX audience is really everyone. We have significant momentum with males and females alike of all ages. We're seeing our strongest growth among teens 13 to 17 year olds, ensuring our audience base will continue to grow into the future.

This team and young adult audience contributed greatly to our 19% average indexing on recent anime hits like Chainsaw Man and Demon Slayer. Plus, we're also over-indexing in the growing core category with an average of 14% of opening weekends for this year's top hits, Sinners, Final Destination, Weapons and The conjuring. I can wholeheartedly recommend all those films.

Our total IMAX fan community is also growing with over 11 million followers on a worldwide basis, up about 20% in 2025. Hopefully, you're already following us on your favorite social channel. And if you're not, please join up. We've got a lot of great steps planned for 2022. Of course, [ posts ] with top talent are always really popular, like this surprise appearance from Brad Pitt. Sadly, we could not get Brad Pitt here today. But interestingly, 2 of our top 10 posts this year came from our growing anime fan base with a global Japanese blockbuster Demon Slayer, resulting in almost 8 million views and 400,000 engagements.

Our fans also love everything that is unique to IMAX, like this behind the scenes look at our film reels and projection process for the huge hit centers. We had over 6 million views. Plus nothing compares to Chris Nolan to spark a wave of fan excitement at any time, like even on his birthday when we posted this happy birthday post and it generated 4 million views. We're now offering [indiscernible] merchandise and apparel by recently expanding our consumer products line with seasonal branded merchandise drops, so you can get a jump on that holiday shopping at imax.com.

And overall, our box office has really been driven by a loyal, passionate fan base which sets the stage for us to transcend the ordinary in 2026. So now I'm very excited to end the session with that little preview they gave you. And I think, hopefully, you all got these 3D glasses, so you put these on. We are about -- you're going to be the first people ever to see this new piece that we are going to debut later this month with Avatar. Hopefully, you're familiar with our countdown that you saw when we kicked off the presentation today, you're the first audience to see this special exclusive IMAX countdown. So let's see if it's actually going to play. Let's go.

[Presentation]

It's hard not to get excited when you see the most successful filmmakers in the world affirming what we know to be true IMAX is a global platform that offers the best canvas for creators and the most immersive experience for fans. We've invested significantly in proprietary technology and partnerships throughout the industry. In over 6 decades, we've built huge brand equity. Our unique, highly advantageous business model ensures that we are positioned to continue growing, whether that be with the biggest Hollywood blockbusters, Chinese films that break $2 billion in box office or local language and alternative content titles that super serve our global footprint and passionate fan bases.

We take home an average of 18% of every IMAX tickets sold, and content owners and exhibitors know we're worth it. I've spent my career at the intersection of content strategy, data analytics and finance at leading companies, including Netflix, Illumination, Universal Pictures and the Walt Disney Company.

In my role as the Chief Content Officer, I strategically manage a content portfolio that has more than doubled over the last 5 years to ensure we are strengthening the ecosystem we've built among our creative partners, our IP holders, exhibitors and of course, our fans.

Today, we want to talk to you about our path for continuing to grow our business and deliver stronger results year after year. We are focused on further strengthening our indexing growing our local language business, increasing the flexibility in our slate and using [ old ] content to augment box office and increase brand affinity.

We have been increasing how we leverage data and analytics with strong results, and we have huge opportunity to use AI to further improve our capacity utilization to meaningfully increase our box office and revenue. Partnering with me is our new Head of Global Distribution, Heather Morgan.

Thank you. Good morning, everyone. Hello. As Rich mentioned, I've spent my career in theatrical exhibition creatively programming content and designing experiences that drive audiences to the big screen. Today, I'm absolutely thrilled to have had the opportunity to leverage this expertise on a global scale, partnering with our incredible leadership team to shape the future of IMAX while continuing its legacy.

The position that we hold today at the very center of the film ecosystem has been decades in the making. Jim Cameron worked shoulder to shoulder with IMAX and perfecting how to shoot in 3D for the original Avatar. Michael Jackson, Moon walked across our office while working on his 2009 concert documentary, this is it. The history of IMAX could fill volumes. But our story is just getting started.

And now we're investing in future generations of filmmakers, working closely with Ryan Kugler, Michael B. Jordan, Zach Kreger, Greta Gerwig and many others to write the next chapter. Working with brilliant creatives, both within and outside of IMAX, we curate content for our platform to reach more than 80 million fans through over 250 exhibition partners on 1,800 screens worldwide and counting.

Today, Jonathan and I are excited to share IMAX's strategy to offer a unique, diversified global content portfolio that mobilizes audiences and builds affinity for the IMAX brand. Now that affinity may begin with our filmmaking partners, but the studios and IP holders that supply our content are critical to our success. We have vastly expanded and deepened those relationships over the past 5 years.

Several years ago, we relied primarily on a small number of Hollywood studios to source our content. And while Hollywood remains the strong core of our business driving roughly 65% of our global box office, we've dramatically expanded our roster of partners to meet the evolving tastes of audiences around the world. We now actively partner with more than 60 content owners worldwide. They represent streaming platforms, studios of every size, music labels, major league sports teams, video game developers and more.

Audiences today are resounding in their feedback. They want optimal experiences, and they want maximum variety. IMAX gives them both. From Hollywood tentpoles like Avatar and breakout hits like Sinners to local language juggernauts like [ Najat 2 ] and iconic concerts like the Grateful Dead to inspiring documentaries like the Blue Angels, we have increased the number of films and events that we program, reaching nearly 125 new pieces of content this year. And that isn't everything we play. It's new pieces of content only.

If you include every single event that's played on our screens this year, it totals over 260. All of these events coalesce and puts us on track to deliver more than $1.2 billion in global box office. As Rich mentioned, this week, we broke our company record for the highest global box office achieved in a single year, unseating 2019 with $1.13 billion. And as Anne shared, our market share is at a record high. This momentum will continue. Next year's slate looks incredibly strong, anchored by 5 massive tentpole titles that are all deeply IMAX-centric, Avatar: Fire and Ash, the third installment to our 2 highest grossing films of all time, will lead our start into the new year.

As Mark mentioned, this afternoon, before audiences anywhere, we offer you the opportunity to watch this cinematic masterpiece, the very best way possible right here in IMAX. In May, we'll bring you The Mandalorian & Grogu. In close collaboration with Director, Jon Favreau, we did indeed build custom version of [ Apple Vision Pro apps so that he could frame and optimize shots specifically for IMAX, while onset in real time. In July, of course, we're going to begin the The Odyssey with Christopher Nolan, the first narrative film shot entirely with IMAX film cameras.

And as Rich mentioned, in July, exactly one year from the release of the film, we put tickets for The Odyssey on sale in 26 of our 70-millimeter film locations and nearly all of them sold out within an hour. His last feature, Oppenheimer grossed more than $185 million in IMAX box office representing a staggering 22% of the film's total gross. We believe that the sky is truly the limit for The Odyssey.

Next Thanksgiving, as you've heard, will bring you Narnia from Greta Gerwig, an IMAX exclusive event that has all the makings of the global cultural phenomenon that she created with Barbie. And rounding out the year, we'll have Dune Part 3, the first denis Villeneuve saga that is captured with IMAX film cameras. There was such demand for its predecessor Dune Part II that some IMAX locations were showing it literally around the clock and the anticipation for this next film is even higher.

There is far more than that in store for next year. If you were in an IMAX auditorium over Thanksgiving just as I was, then you saw the same thing I did. Excited kids, teams and moms, packing the house to watch Zootopia and Wicked, along with all the dads who are pretending like they didn't want to be there. Those 2 films delivered -- you're laughing, you know it's true. Those 2 films delivered a combined $40 million in IMAX box office, becoming the highest grossing Thanksgiving weekend in IMAX history, exceeding last year's record, as Rich said, by 70% proving that families, not just fan boys want to see their favorite franchises in IMAX.

For them, we have multibillion-dollar franchises, Super Mario, Toy Story and Minions, all returning to IMAX in 2026. And with video games looking like the next big IP driver of blockbuster movies, we'll have Mortal Kombat II, Street Fighter and Resident Evil. There is much more on next year's slate than I could probably cover today, but I would like to end with something special. The King of Pops Heart thumping biopic Michael with his nephew Jafar Jackson in the starring role. I could try to describe to you how epic this film is going to be, but there is literally no way that I would do it justice. So instead, I would very much like to show you, you are the first audience anywhere in the world to see this exclusive clip of Michael.

[Presentation]

That's good. It's so good. All right. As you can see, the Hollywood lineup for 2026 does indeed look amazing, but we are not stopping there. In the clear sign of demand for our platform, our 2027 slate is already over 50% booked, truly an unprecedented milestone for this company. And the emerging quality of that slate is outstanding. To give you just a small taste, we'll have Miami Vice from our phenomenal partner, Joe Kosinski, who pushed the envelope of IMAX technology with both TOPGUN MAVERIK and Apple's F1. We'll have Star Wars: Starfighter, starring Ryan Gosling. Our team visited the set and the film is poised to recapture the imaginative tactile, swashbuckling spirit of the original trilogy.

We'll have the Legend of Zelda, a long-awaited live-action adaptation of the iconic video game series full of lush world's heroic scale and a mythic story that fans have been living inside for decades. And of course, 2 wildly anticipated Saga conclusions, Spider-Man: Beyond the Spider-Verse and Avengers: Secret Wars. Once again, leveraging the immense demand for our platform to create unprecedented long-term visibility into our slate, we have actually already begun locking in select titles for 2028.

To name just one for today from Director, Sam Mendez, will have the Beatles, 4 interconnected theatrical biopics, each telling the captivating story of the band that created the mania from the perspectives of John, Paul, George and Ringo. Now you may be thinking that this sounds like a lot of film and you would be correct. With just 1 IMAX screen per theater complex and only 52 weeks in the year, there are far more studios and filmmakers who want their films to be released in IMAX than we could ever accommodate.

To maximize our utilization, we are implementing a dynamic programming strategy where multiple Hollywood titles and events play together on screen, such as Wicked For Good and Zootopia are doing currently. This is a notable departure from the way we operated just a few years ago and is just one of the many avenues through which we are proactively maximizing the value of our platform.

Another avenue is our film for IMAX program in which films are shot with IMAX cameras and are specifically created to be seen in our format. This means that we, the filmmakers and the studios are all telling consumers that the very best way to experience these films is in IMAX. As you heard in the video, Ryan Kugler said, these films have an expanded aspect ratio. This is exclusive to IMAX, which means it isn't just the same image made larger. Moviegoers are actually seeing more picture in the frame, images they wouldn't see in any other format. And when this happens, it drives meaningful results.

When a title is filmed for IMAX, we see 28% higher IMAX indexing. In 2025, 4 filmed for IMAX titles opened over $30 million with 20% indexing, which were centers, Mission Impossible, F1 and Tron: Ares. This year, our 10 Hollywood film for IMAX titles generated $442 million or about 35% of our IMAX global box office and every single one of those landed in the top 20 highest grossing films of the year.

Our positioning of these films drives greater interest, greater conversion and greater box office. IMAX doesn't just choose tentpole titles. We create tentpole titles. In just 3 short years since we've launched the Film for IMAX Program, it has become arguably the most sought after and influential seal of quality that this industry has to offer. We have 12 Film for IMAX Hollywood titles slated for 2026 and 9 already identified for 2027.

And while we can't tell you absolutely everything that's going to be playing on our screens in the years to come, I can tell you that it extends far beyond the boundaries of Hollywood.

We continue to open our aperture, expanding into new awe-inspiring experiences across the creative spectrum. While space is limited and content options are abundant, we believe there is room for more seats at the IMAX table, specifically in the form of expanding tenerships with the industry's leading streaming companies. We've positioned ourselves as a preferred partner for streamers, as a premium out-of-home experience that is differentiated and that announces a film is truly cinematic. This year, we partnered with Apple to bring Joseph Kosinski's octane-fueled F1 into our theaters, propelling the film to over $600 million worldwide.

IMAX alone generated over 15% of that box office. This past October, we partnered with Netflix to bring Guillermo del Toro cinematic Frankenstein to select IMAX locations around the globe, and we hosted multiple live events with Guillermo and Star Oscar Isaac in our theaters. And of course, in November, we are bringing visionary filmmaker Greta Gerwig's bold, reimagining of the world of Narnia, exclusively to IMAX screens around the globe as a film for IMAX title.

Within the first month of me joining IMAX, as Rich has mentioned, I had the privilege to work on structuring Narnia deal with Greta and our partners at Netflix. It was a fortuitous opportunity given my background. And I'm still not sure if this was the primary reason that Rich hired me. But be that as it may, this was an exciting proof point right off the bat for me that IMAX is an essential part of the movie ecosystem and we're positioned to execute groundbreaking deals that no one else can deliver.

We have one of the most singular creative voices and commercial forces and film, making a truly epic blockbuster film that will only be available in IMAX for fans around the world. Ted Sarandos was asked why Netflix had partnered with IMAX on Narnia, and if this was a change to the Netflix's approach to traditional theatrical windows. Ted's response was the following: "I doubt anyone has a screen as big as an IMAX screen at home. It is a differentiated consumer experience." We couldn't agree more with him.

Over the next 2 years, we already have 4 films from Amazon MGM Studios confirmed on our slate. We began the year with Mercy starring Chris Pratt, followed by project Hail Mary, the film adaptation of the New York Times #1 best-selling novel starting Ryan Gosling. And in 2027, we have the The Thomas Crown Affair directed by and starring Michael B. Jordan. Streaming and technology companies see strong brand alignment with IMAX as we are a premium tech-driven offering focused on pushing traditional content boundaries.

And we reach a worldwide audience in ways that no other company can do. Local language content is something we are uniquely positioned for given our footprint of 1,800 locations in 90 territories. With this global footprint, we serve an international fan base and our local language initiative delivers on 4 key pillars: First, it delivers more of what fans are looking for as we're seeing in the increased results in home territories. Second, in certain circumstances, these titles can become global hits as we've seen with Demon Slayer, Chainsaw Man, J-Hope, Hope on the Stage and even the release of the classic studio Ghibli title Princess Mononoke.

Third, local language titles improve our scheduling and flexibility and can help us sustain our results even during periods where Hollywood titles aren't at their strongest. And last but definitely not least, local language titles are particularly valuable to our exhibition partners and our commitment to growing this vertical continues to provide invaluable support to our sales team and expanding the footprint. We are on track to deliver a staggering $400 million in global local language box office, representing 37% of our total performance.

To put that in context, in 2019, we delivered just $131 million from local language titles. By the end of this year, we will have distributed approximately 68 local language titles, originating from 15 different territories, and we will continue to grow the volume and footprint in 2026 and beyond. This year, in South Korea, 40% of our IMAX box office has come from local language titles. In Japan, that number is 67%. And in China, it's 74%. And audiences want to see more of their local films in IMAX.

All right. Now is the part of my presentation where I get to throw just a bunch of data and stats at you. So strap in, please. We really could do this all day. So I'm just going to highlight a few extraordinary performance metrics, which illustrate the value of local language titles. '25 box office champ Ne Zha 2 delivered a staggering $167 million in IMAX box office. And in response to fan demand, we played the film in 27 markets worldwide, including 2 runs in North America. Last month, Demon Slayer: Infinity Castle opened in China, delivering the highest IMAX opening weekend box office attendance and indexing ever for a Japanese title in that market.

At $95 million, it is now IMAX's second highest grossing local language release of all time behind Ne Zha 2. And it isn't just new releases that fans want to see. They also want to see their favorite classic films presented with a never-before-seen level of quality and scale. We recently finished a phased global release of Studio Ghibli 1997 Classic Princess Mononoke, which generated over $15 million in IMAX box office.

Prior to Demon Slayer, Princess Mononoke earned our biggest opening weekend for a local language title ever in the United States on a film that's nearly 30 years old. But we aren't just standing pat and doing what we've always been doing. We are looking to innovate and expand our commitment and our moat in local language content. Today, we are excited to announce a long-term deal between IMAX and GKIDS to extend our partnership on Studio Ghibli titles.

Beginning in 2026, we will be releasing multiple titles from Studio Ghibli with more details to come. The future of anime has never looked stronger and IMAX is strategically positioned to be an integral part of it. In addition, content exclusivity is a key component of our local language strategy. We are leveraging our strength to secure exclusive windows and ensure we are the first place where fans can view their favorite films and events.

Last month, we exclusively debuted the domestic release of K-Pop sensation, J-Hopes's concert film Hope on the Stage. Last night, in partnership with GKIDS, we exclusively debuted Jujutsu Kaisen,, execution Omnibus in the U.S. This Monday, in partnership with Neon, we will be the first and only screens showing the North American release Of No Other Choice. We're also further expanding film for IMAX into local language film making, releasing in time for Diwali 2026, Indian Cinema Mogul, Namit Malhotra, brings Ramayana Part 1, an adaptation of India's iconic Epic and the most anticipated Indian film next year.

The momentum continues as Oscar Winning Director, S. S. Rajamouli, India's most commercially successful filmmaker and the Director of RRR unveils his next film, Varanasi, followed by Ramayana Part II during Diwali 2027. Both will be filmed for IMAX.

And in Japan, we are expanding our partnership with Toho on the first film for IMAX Japanese title and we will be excited to bring you more details on that title very soon. Year-round, we provide fans unforgettable experiences beyond theatrical features, ranging from music and concert films, sporting events, gaming tournaments and rereleases of iconic films often never before seeing on IMAX. Alternative content drives not only incremental box office revenue, but brand affinity among audiences beyond regular moviegoers.

Just this year, we've released titles from The Grateful Dead, Prince, Depeche Mode and Pink Floyd, to name a few. And as we mentioned earlier, these events also drive increased capacity utilization and efficiently fill gaps in the Hollywood slate. Our teams jokingly last August old content August, but it's no joke that music and rereleases carried us to year-over-year domestic box office for the month that was 117% better than the exhibition industry as a whole.

By year-end, our alternative content events will have generated over $30 million in incremental box office, an immeasurable return in fan engagement. We are doubling down on these efforts, projecting nearly 20% growth in the box office that these events will deliver next year. Music, in particular, has delivered great results for us with titles like becoming Led Zeppelin and Pink Floyd live at Pompe. Becoming Led Zeppelin was released exclusively for a week in IMAX and was the #7 film in the domestic box office on its opening weekend.

Pink Floyd was the #6 title where IMAX contributed 82% of its opening box office on a weekend where we were playing the incredibly successful centers for most of our shows. It is now very possible to release a film to great results exclusively in IMAX and then to use that IMAX release to launch additional value throughout the rest of the life cycle. And we're not just telling ourselves this. The industry sees it as well. We are excited to announce that in February, just as we did with becoming Led Zeppelin, we are partnering with Legendary filmmaker, Baz Luhrmann and Neon and Universal Pictures for a 1-week exclusive IMAX run of EPiC: Elvis Presley in Concert.

I saw this film, and it had me singing and dancing in my seat, which I promise you're glad you weren't there to see that. But given how great the film is in IMAX, we do want to share this trailer of what the King will be bringing to all of you and all of our fans in February.

Can't to see it again. We've delivered over half of our top 20 highest grossing music events in just the past 2 years. And speaking of music exclusivity, we are continuing our partnership with Universal Music Group's Mercury Studios. We've already successfully collaborated with Mercury on Queen Rock Montreal and Prince's [indiscernible] both exclusively in IMAX. And next week, we're Rereleasing Stones at the MAX, the groundbreaking 1991 concert film shot with IMAX cameras that many have called the greatest concert film ever made.

And in February, we'll have Eric Church, Evangeline vs. the Machine comes alive. The concert film for his Grammy-nominated album, again exclusively in IMAX. And while some artists work the stage, others [ create on the court ]. I'm very excited to announce our next original documentary project, Stephen Curry: Portrait of an Artist, directed by acclaimed filmmaker, Gotham Chopra in a collaboration with the NBA, Tom Brady's Religion of Sports and Stephen Curry Unanimous Media. We are currently in the market with this project and expect to announce a distribution and streaming partner by early next year under the advantageous multi-window model we established with Blue Angels.

What should be clear by now is that IMAX is in a different position than we have ever been before. with our best-in-class end-to-end technology, our deep filmmaker and studio relationships and our global footprint, we offer something no one else can. And with these differentiators, we are able to set our own destiny, and optimize our slate in ways that would have been impossible just a few years ago.

We are redefining what success looks like in our industry. Around this time last year, we shared our expectation for our 2025 box office to hit $1.2 billion. What would be a record performance for us in a year that was not expected to set records at the overall box office. Now I remember meeting with a senior executive at one of the major studios, someone I've known for over 15 years. And he mentioned this figure to me. He rolled his eyes and told me that he didn't really know what we could be basing that on, but good luck to us. Well, we're happy to share that we are well on track to exceed $1.2 billion of box office. This week, on December 2, we already exceeded our previous best year ever with nearly a full month to go, and Avatar: Fire & Ash still to be released. We definitely don't take anything for granted, and we know we must continue to execute on all fronts, but it is clearer than ever that if you're a creator or a content owner, there is no better, more immersive global platform for your work than IMAX

Thank you. .

All right. Thank you, Jonathan, and Heather. We are very happy to welcome to the stage now. IMAX China's CEO, Daniel Manwaring.

So for those of the folks here and at home who don't know you, can you give a little bit of a background on your experience in China?

Sure. So I've been in China for 20 years. I started my career in finance. Before joining IMAX, I was with CAA for a little over a decade, as Rich mentioned, leading our Motion Picture division there as well as our film finance group. I represented Chinese talent. I've worked with Chinese studios now for very long time, probably over 12 years.

And I was also fortunate to have met my wife and she is also in the business. And so we're a filmmaking family.

Yes. Not for nothing, your father in law if I may, is considered the greatest filmmaker in Chinese history [indiscernible]

Also my words, but yes, I agree.

So tell us a little bit about the IMAX China operation and what your team looks like for those of us who aren't familiar.

Yes. So I think 1 of the to being successful in China is localization. And we've got a fully localized business there. We are, I think, the epitome of what a Western brand is in terms of brand power and all the stuff that I'm going to talk about with our releases and our content. But we -- at the end of the day, we run a very localized mission. So we have 100 employees there. I'm the only westerner who oversees our offices Shanghai and in Beijing. But everything from our NOC offices, as we mentioned earlier, to our marketing divisions to our accounting, I mean, these are all Chinese employees. And I think that's a real key to being successful in China, you have to localize.

So looking At 2025, as it almost wrapped up, how has the year played out versus your expectations? And what do you see ahead for 2026?

Yes. We've done a phenomenal job this year in entertaining Chinese audiences. What I love about this year is the way the content is looking like it's going to sort of diversify towards the end of the year. In terms of a level of local language Chinese content, which will probably make up somewhere between 58% and 60% of our total box office, around 35% being Hollywood. And then from Japanese animation, which has had an incredible run in China.

Just looking at some of the numbers, we've had 40 million people come through our cinemas in China and that's up over 63% year-over-year. A lot of that was driven by, obviously, an incredible market share. Year-to-date, we're at 5.3%, which was driven by a 73% year-over-year increase in our box office compared to 2024. So the numbers say a lot. We're really proud of that. Hong Kong, Taiwan, Macau, they're also going to have record years this year.

It's been really great to see our platform there, just elevate and get ready for next year. And we've talked about some of the successes. Obviously, Ne Zha 2, we were really successful in capturing a huge portion of that box office. And it wasn't by accident. We've got a really fortunate position with our brand in China where we get to see these films ahead of time. And we knew well in advance. That was going to be a whale of a movie, and we positioned properly. We're really proud of that number. But then Formula One coming in, in June and doing 42% of that box office on less than 1% of the screens, and Demon Slayer. And then obviously, most recently, Zootopia, which still has very long legs and that's all before Avatar 3. So we've got a lot to look forward to.

Yes. And speaking of any sense of what's to come in '26. .

Yes. So next year, Chinese New Year falls for February 17, which is a little later than normal, we are getting 1 extra day, which is a really positive thing. We most likely won't start to see films date for Chinese New Year until around January. That's typically very normal. Right now, it's kind of like all the horses are in the pen and people are trading horses for which slots are going to go Chinese New Year and versus the summer. But we do have a pretty good idea of some titles that are going to be coming up for that period. .

Some of them, I'll mention, [ Pangu Jean ], which is a big war epic movie, not dissimilar from like a Brave Heart as anticipated to possibly go Chinese New Year. [ Jangimos Scared Out ] will very most likely go during Chinese New Year. That has got an incredible cast. I mean it's -- to Rich's point on Odyssey, it's like a red carpet-type cast. We also have Pegasus 3, which is a franchise that we've done very well in, in the past. The lead actor of that is a gentleman named [ Shentong ] who is probably one of the biggest actors in China and has not had a movie this year. So it will be the first time audiences get to see him again.

The Boonie Bears franchise, which is always a consistent winner during Chinese New Year as well as potentially a spin-off of [indiscernible] movie, who did the Detective Chinatown series, which we have a long history with being very successful. So there's a lot to look forward to. And that's just 2026. And we're also finally -- and this is pretty rare to be honest, we're seeing some transparency even into 2027. So I can tell you now, The Wandering Earth 3 and 4 are actually currently in production. I visited that set a few months ago, and it is just something like nobody seen before. I mean this is may not be on the level of Narnia, but for China, it is massive.

Also, the 3 Body Problem, which was a series that maybe many of you have seen on Netflix. That is widely known as China's most famous and sought after SciFi that is going to be directed by Zhang Yimou as well, and that will be likely releasing in 2027. Those dates again, not confirmed, but it's going into production, and we're pretty hopeful of that.

Godzilla Kong, another one of those coming to China. They have always done really well for us there, Frozen III. And then there's another film called Death Stranding, which is based off of a gaming IP that has a lot of huge following in China that I think could also see some success there.

So when you get behind some of those eye-popping box office numbers that you mentioned earlier, what kind of content is working at the Chinese box office. And then to answer the eternal question, is Hollywood back at the Chinese box office?

Well, I'll answer the second question first. I think last weekend was a nice answer to that question. We're doing over $20 million on Zootopia II was a really strong signal that, yes, Hollywood will always have a place in China. And I think the key to your first question is what leads to a successful movie in China.

Number one, it's got to be an event, right? It has to be something that culturally resonates with people. It has to feel like an event. It has to feel big. And that's something that plays to our advantage tremendously. I also think that people are -- for many years, there was a lot of ways in which Chinese studios could kind of manipulate the system a little bit, whether it was purchasing your own tickets on that first Friday to show a huge opening day or manipulating some of the word-of-mouth statistics. That's all changed. We've seen a large return to normalcy.

And that's a really healthy thing for the market, particularly word of mouth. I mean, word-of-mouth is driving everything in China right now. And that transparency between what people feel when they walk out of the cinema and what's on social media only seconds later is just so narrow now. Again, that's somewhere where we are really fortunate to succeed because as of now, we generate about 30% of the word of mouth on any given IMAX title. And what I mean by that is if you go on some of the ticketing apps, you'll see if the review was done by someone who watched the film in IMAX, there's a small IMAX logo right next to it. And those reviews rise all the way to the top.

They're the most thorough, they're the most honest, they're the most transparent and most importantly, authentic. So we make up a big part of the word of mouth. A lot of the ticketing platforms really rely on us for that, and it's a great position to be in.

Yes. And so how do you collaborate with filmmakers and studios to create those events [indiscernible]

Sure. So it starts really early. It starts as early as the development stage actually. We will oftentimes go into meetings with a Chinese film maker, and he's still finishing the script and he's talking to us about where he wants this aspect ratio to come in and how it can be presented on IMAX in the best possible way. I'm doing dozens of set visits throughout the year, mainly focused on our film for IMAX titles, of which this year we did more than any other previous year.

But we're a real partner during the development and production process. And then obviously, it doesn't end there. It actually gets even more important when we start to talk about the distribution. Now our platform in China contributes the second highest amount of box office, second only to Wanda, which is our largest client. So we command quite a bit of weight when it comes to distribution and the studios and the filmmakers make sure that they get in with us early to ensure that the distribution of their film is done properly on IMAX.

So yes, that's a little insight as to our process.

And also give us some insight into the role of China Film Bureau and the government and what our relationships are like there?

Sure. Well, I'll start a little bit with policy. That's always been a topic of interest is what is the policy like in China. And I have to say it's extremely favorable right now. We're seeing basically almost every single film that wants to get is getting in. And not only is it getting in. In fact, I think this year, every studio film that was asking for a day and date release was able to get that. So the policy right now is let's get back to business. They -- the film Bureau has their own KPI. They're trying to maximize box office and they want to do whatever is possible to bring more foreign content in as well as boosting the Chinese language content.

Now with respect to our relationship with the Film Bureau, I have to say it's a pretty unique one. They see us as a local company in many ways, but they see us as a foreign expert. So we're invited into backdoor sort of rooms and meetings that most foreign companies are just simply not invited to. Very often, they're leaning on us when they're making policy changes when they're thinking about how to grow box office, we're part of those conversations. So it' a very unique position to be in, and we work with them very, very well, and we don't see a change anytime soon in that progress.

So shifting gears a little bit, what is the strategy for network growth in China?

Sure. So currently, we operate 800 theaters in China. We span across 220 cities. 90% of those cities have a population of over 1 million. And in fact, 17 of those cities have a population of over 10 million. So it's easy to think, well, 800 theaters in China. What does that really mean? When you look at the numbers of the populations of these cities, it is really, really big. .

Now going back to your question about growth, we're going to be really surgical in how we grow. We are already looking at replacing a lot of current PLFs there. In fact, we signed a deal with Wanda earlier this year that I think represents certainly a part of how we intend to expand. Part of that deal was going in and replacing a large number of their own PLF, which is called Wanda Prime as well as a lot of the top Dolby sites that Wanda also operates.

So we really like that. We really like targeting high-traffic areas, cinemas and complexes that have a proven history of box office that we can model out really well and going and stealing theaters away from our competition. In addition to that, though, I think there's also a lot of other areas to grow in. We just recently opened a theater in Urumqi in Xinjiang. We have a theater that's doing very well in Tibet. China is a big place. There's always going to be these new areas in which you can grow in, and we're constantly looking for those as well. So it's sort of a bifurcated approach on doing upgrades and renovating and taking over existing complexes as well as continuing to keep an eye on new construction and new areas.

So Wanda, as you mentioned a number of times, our biggest -- still our biggest exhibition partner in the world, how is that relationship changing and evolving and growing.

Yes. Our relationship with them is phenomenal. As many of the folks here might know, Wanda Film was acquired by Ruyi earlier this year. We had worked with Ruyi for many years, even before this acquisition. The transaction was backed by Tencent, which has offered a lot of great synergies with Tencent. We have worked with them for many, many years on the film side of the business. But now we're doing even more. We've done 2 of the Legal Legends matches for which Tencent owns [ Rio Games ]. We're looking to do a lot more on the e-sports front. We really like that demographic. .

And Wanda is they see us as a strategic partner to their growth. Post the transaction of Ruyi and Wanda, we've seen Wanda start to upgrade their lobbies faster than ever. I think we even have an image here of one of those lobbies. They're really in the process of just leveling up their entire network, and they've made it very clear to us from day 1 that IMAX is a crucial part to that.

So fortunately, we're in a fantastic position with them right now.

I missed 1 thing. Sorry, I want to mention this because I think probably today, we'll be announcing a strategic partnership with them to go out and develop more merchandise. So because of these beautiful lobbies, there's a lot of shelf space that is available there to bring more merchandise into those those systems. And it's going to be a combination of sort of our own merchandise that Anne showed a little bit earlier, but we're also going to be really focusing on the localization of the IP that makes sense for China there. So whether it's co-branding, small figurines, with Chinese characters and IP that resonates or partnerships with Japanese companies who are releasing films and have certain products that we know the Chinese are going to be really excited about.

Obviously, [ La Bubu ] came out of China. They're very good at making acute fuzzy things that people buy. So we see that as a really interesting opportunity and a chance for us to open up a new realm of getting closer to our customers through the use of that merchandise.

So how do you plan to do that overall over the next couple of years? What are your strategic priorities? And what do you see as the greatest opportunities for IMAX China?

Sure. Well, first and foremost, network growth. We're never going to stop growing as well as market share and box office growth. Those will always remain our highest priorities, no matter what. So I've talked a little bit about, I think, how we're going to approach that. We're also going to be really doubling down on digital. We see that as an incredible force in growing our market share. We've used a lot of new data techniques this year to get to this record high market share that we've had so far.

So we're going to be focusing on digital. We're also going to be really looking hard at our B2C relationship, our direct relationship with the customer, forging that consumer journey that starts in the cinema, but really follows a life out of the cinema and connects to their WeChat, connects to the products that they buy, developing that ecosystem around the IMAX brand.

One thing that just constantly gets me excited, and I see this often. In fact, I was talking to someone last night who had also seen this on their feed in social media. Very often, you'll be swiping on TikTok or one of the local content platforms, and you'll see people taking pictures of their IMAX tickets. And it's almost like a badge of pride that they bought the IMAX tickets and they're boasting about it on social media.

I mean you see it throughout -- We've seen it tremendously through Zootopia, but you see it during Chinese New Year. And that to us, I think, is just such a compelling direct example of how influential our brand is in China. So continuing to grow that stickiness with the consumer. I think is going to be something that we look really hard at as we grow.

Great. Well, thank you very much, Daniel. Daniel Manwaring, CEO of China.

Thank you.

Morning, everyone. Thank you for being with us. As Rich mentioned earlier, I've been with IMAX since 2012. And over this period, by main mandate has been to grow the IMAX network. So today, I have to start by telling you that at no point in time in these 13 years, I've ever seen an appetite for IMAX as strong as I've seen today. And at no point in time, I've ever seen an opportunity for future growth as big and as global as I'm seeing today.

And this obviously makes me very excited. It's really that simple. More cinema operators want more IMAX systems. And given how markets and consumer trends are evolving, we see more opportunity than ever before to add more IMAX locations to our estate. So today, I briefly want to touch on why this is happening. I want to give you some insights on the opportunity as we see it. And then I want to tell you, of course, what we're going to do to capture that opportunity.

In my view, the best and most concrete proof point of the appetite for IMAX is our growth trajectory over the years. IMAX went from being in a handful of locations in a couple of markets to now having you heard it, 1,800 venues in 90 countries all around the world. Sometimes, I like to remind myself that we are actually in more countries than Starbucks is. And it's about to get even better. I mean if you look back, you can see that there have been some pivotal points in our history when our growth model really got supercharged.

One of them, if not the biggest one of all, was the first Avatar release in 2009. That's when IMAX went from selling 35 systems a year prior to then selling 220 systems the year after that Avatar release, quite incredible. And what we're seeing now is that we're writing to another 1 of these historical moments. We are heading into a 12-month period where the sequencing of extraordinary IMAX titles, we really supercharge our growth.

Some of those titles are the ones that were referred by other earlier. I mean Avatar: Fire & Ash, then

The Mandalorian & Grogu, The Odyssey, Narnia, Dune Part 3, we really expect peaks in box office, which drive peak in sales and will ultimately drive peaks in our growth. And since I'm seeing the Narnia, [ Avatar ] up on screen, I've got to tell you I was also privileged to be on the Narnia set back in September in the U.K. with Rich and of course, I cannot tell you anything. I would like to tell you a lot of things, but I'm going to mention that I've rarely seen anything of that quality and that scale. So I'm really looking forward to it.

Now let me tell you why we are experiencing this extraordinary momentum. There are many factors that drive the opportunity for IMAX. But the fundamental reason lies in the unique end-to-end model that IMAX operates, which is essentially a self-feeding virtual cycle geared for growth. The more IMAX systems we put out there, the more relevant the format becomes for all the stakeholders in the industry, starting with filmmakers. Filmmakers commit to IMAX, and that enables IMAX to have a very special unique version of the movie on our canvas, exclusive to IMAX. With that in mind, we see audiences seeking out that very special content.

We see audiences seeking out IMAX screens, and that drives higher box office in IMAX. Higher box office means higher revenues for our exhibitor partners who want to do more IMAX locations. And the model keeps feeding itself. If you allow me, it's like a multiplier effect, the more resources you put out there in the marketplace, the more growth you get.

Very importantly, our model is really geared towards delivering benefits and tangible value to all the stakeholders in the ecosystem. We want filmmakers to leverage IMAX to put their creative vision on our canvas on the best possible screens and presenting the best possible quality. We want studios to leverage IMAX to use their box office. We want exhibitors to use IMAX to bring more audiences into their theaters.

We want to enable everybody to deliver an exceptional entertainment experience and make more money while they're doing that. The relationships that we have with this stakeholders are really critically important to what we do at IMAX. With cinema operators, for instance, we're not in the business of selling a piece of hardware and then off we go to the next transaction. Our philosophy is to treat our clients as partners. So we go into every deal into every transaction with a view opening a venue that will then deliver value to that partner.

And then we liaise with that partner over the years to make sure that, that is indeed the case over time. Look, in the same way as Rich mentioned, we have relationships with world's best filmmakers. We also have relationships with the world's best cinema operators. These are relationships that have taken us years, sometimes decades to build and many flights in my case.

But it's also what makes IMAX what it is and it makes our model almost impossible to replicate. We curate these partnerships. For example, for our exhibitor partners, we run an event for our 40 top clients around the world every year, we get them together for an off-site gathering, inviting the CEOs of the world's best cinema operators so that we can discuss key topics affecting the industry, but also very importantly, so that we can spend the time together. It has become a family for us.

We have chief executives flying from all over the world, from Australia, from Japan, from France, you name it. And we invite very special guests, industry executives, talent and filmmakers. Guests in previous additions included the likes of Christopher Nolan, Tom Cruise, Denis Villanueva and Joe Kosinski and many, many others. We also leverage key industry gatherings, but in a very different way than anybody else does.

Speaking of flights tomorrow, I have a joy of enduring a 20-hour journey to get from here to Bangkok for CineAsia, which is the most relevant conference in that part of the world. We're going to be there, but we're not going to do what everybody else does. We're not going to have a booth on the trade show floor, we're not going to do a PowerPoint presentation. Instead, we're going to make a point of meeting face-to-face with all the key stakeholders in the industry over there, specially exhibitor partners. We're going to understand how their markets are doing. If their IMAX locations are delivering the performance that they are supposed to.

And of course, we're going to talk about the next steps in the partnership. Not just that, though, with our positioning in the ecosystem, we're going to leverage our access to all stakeholders to introduce them to each other. For instance, we sometimes are asked to introduce CEOs of local exhibition chains to studio heads and vice versa. All of this is to say that we are really proud of how we relate to our customer base. And I actually believe that the video that you just saw is very tangible proof of how our partners are looking at IMAX.

And this approach is what made IMAX what it is today. The good news is that it works, and you don't have to take my word for it. The data speaks for itself. Especially in recent years, we have proven that we can not only continue, but we can actually accelerate our growth path. Looking at hard facts, we are on track to close 2025 this year with at least 166 system signings. To put that in perspective, that's 16% more than our system signings in 2019.

So we're doing better sales-wise than in the so-called much revered pre-pandemic year. Since 2019, we also increased the size of our network by 15%. At the point in time when, as you would know, the global cinema screen count actually decreased by 3%. So it's really undeniable that the appetite for IMAX is at an all-time high. And something I think it's worth noting is that, that demand and that opportunity is as global and diverse and balanced as it has ever been.

The appetite for IMAX is truly a universal phenomenon. Up until recently, our sales were typically driven by one or key -- or 2 key growth markets. If you look at the decade of 2010 to 2020, it was the U.S. first and then China accounting for the lion share of our signings. That's no longer the case. I mean, 10 years ago, 2016, for example, China accounted for 75% of our system signings. This year, China is on track to account for 13% of our system signings with all other regions of the world making a very material and balanced contribution to that total.

And that's a great thing because our growth story is no longer tied to 1 or 2 markets. And the same goes for our clients. Look, during a time where the industry has been facing so many challenges, we are bringing more and more exhibitor partners into our business. We see more and more exhibitors choosing IMAX. In the past 5 years alone, we've added 56 partners to the IMAX business, going from 201 partners back in 2019 to now 257 partners.

So our customer base is expanding massively. And that may seem like a small data point. But for us, it's incredibly important because we are proving that the IMAX model is viable for a very diverse array of cinema operators and not just for a handful of big chains. So that's critically important. And of course, it's not just about sales. It's also about deploying the theaters that are contracted. And we have developed an amazing track record in being able to fulfill those installations. Our growth is fueled by our ability to make those projects real.

This year, we expect to end the year with up to 160 installations, which, as you will know, is at the very top end of our earlier guidance. And as you will hear from Natasha later on, we expect this momentum to continue into 2026. But the most exciting part of the story is that we are still very far away from our end goal. Based on our last TAM analysis, we are at only 39% of global penetration by open venues. So there are over 2,700 zones that could be served by 1 IMAX of venue and yet do not have one.

And you'll have to excuse me excitement, but for someone who works in sales, this is a dream scenario. I mean we have continued appetite. We have a model that we have proven works extremely well. We have locations that keep doing better and better. And we have hundreds of places around the world that are still underserved, places where people would want to go and watch an IMAX movie, but they don't have an IMAX venue to go to. This is a very good position to be in. But I do want to tell you a bit more about that TAM analysis.

Some of you may be familiar with the fact that we tend to update this analysis every couple of years usually. So the last time we did that was 2023. And at the time, we concluded that there were 3,600 trading zones around the world that could sustain an IMAX venue. This year, we reran the analysis. And when we looked at the data, we actually concluded that, that number is closer to 4,500. You would ask why what happened? Are you guys going crazy.

And the reality is that we are in a completely different position. We are in a different position as a business and as a company, as you heard from Rich, we are in a different world in terms of consumer demand. And very importantly, with IMAX being in a different position, our clients are also in a completely different world. their performance increases as our performance improves. I would say there are 5 key main reasons for the increase in TAM. And in no particular order, the first one is certainly that IMAX [ virtual cycle ] model that I was talking about earlier that multiplier effect. The more IMAX systems we deploy, the more opportunity to add more systems because demand increase. And let's remember, markets change over time. They evolve or we understand them better.

China, I think, is a very good example. When we approached China 15-or-so years ago, at the time, I believe we thought that there was space for up to 60 IMAX venues in the territory, now we have 800. The second reason for the increasing time is certainly tied to increase the consumer appetite for IMAX and the increased IMAX market share.

It's well documented that consumer spend for premium cinema going is at an all-time high. And IMAX is taking an even larger share of that spend. So at some point back in the days, we thought that $20 million in overall box office, not just IMAX was needed to support successfully one IMAX venue. That number is now much lower because a larger portion of consumer spend in cinema going goes into premium and especially into IMAX.

We actually believe that nowadays, we need about $7 million in box office spend to sustain successfully one IMAX venue. The third reason has to do with our methodology, which I have to say it's more sophisticated than it was before. Thanks small part to the availability now of very good AI power tools that make our life easier. They let us understand way better the markets in which we trade or the markets in which we want to trade. For example, there are tools out there that we can use to estimate consumer drive times or whether in that particular area consumers are willing to spend for premium entertainment.

The bottom line is that we understand our target markets better than ever before. The fourth reason you heard it loud and clear from my colleagues, it's the content offering. It's stronger than ever before. And especially, I would say, it's as differentiated as it has ever been. The film for IMAX program allows us to put a very different version of the movie on our canvas and it's a version that nobody else can have. Our efforts in local language, for instance, are making titles available in IMAX that have never been seen in our format before. And the IMAX releases with film prints, for instance, add yet another element of differentiation that nobody else can have.

The fifth and final reason that I would quote for our increase in TAM is the power of our brand and the marketing associated with it, which as you heard from Anne, is as strong and as prominent as it has ever been. You would have now all seen those posters with the big IMAX logo, bigger than the movie title. That stuff drives demand and with increased demand comes an increase in the opportunity. So with this amazing runway ahead, how do we get to 4,500 venues around the world.

Doing what we've been doing so far is certainly part of the recipe, but it's not the old story. I should also note that operating in 90-plus countries means deploying and devising strategies that are customized for each one of these territory. So it's really difficult to generalize, but there is some common ground. So today, we identified 4 key areas of opportunity that we thought it would be worth discussing with you.

First of all, there are undoubtedly some heavily underpenetrated markets out there that deserve an IMAX venue be because the appetite is very strong. Performance has been extremely strong and yet they don't have one. These are the proverbial low-hanging fruit. In the past, we often talked about the likes of Australia, Japan, France. By the way, anyone would like to delve deeper into a specific territory, I would be very happy to do that. That's my passion and my life.

Today, we picked an example. We thought we would talk about Indonesia because we don't talk a lot about Indonesia, but it's a very good example of a market where our growth is tied to the overall growth of the industry in that particular territory. It's also a very good example of our TAM evolves over time. I mean in 2019, we had Indonesia zoned for 16 IMAX venues.

Today, we have 18 IMAX venues open and very successful. Indonesia currently has 2,400 cinema screens, serving a population of 280 million. To put that in perspective, the U.S. has 40,000 cinema screens serving a population of about 340 million. So it's undeniable that the cinema industry in Indonesia is posed to growth. The screen count will increase and IMAX is very well placed to be part of that growth.

In the past 2 years alone, we almost doubled our network size in the market. To enable this growth, we have also deployed a very customized content strategy. I don't know how many of you would know, but Indonesian audiences love horror movies. To the point that 5 of the top 10 box office titles last year were horror films. So what did we do? We made Indonesian horror blockbusters available in the IMAX format. And this had an amazing effect on the performance of our venues.

So you can expect that we will continue this effort in the years to come. We're also deeply embedded in our relationship with Cinema 21, which is by far the market leader in the territory. We are part of their considerations when they look at new venues, new projects. So with all of this in mind, we believe that Indonesia can actually sustain up to 60 IMAX venues with the main hurdle timing-wise, being, obviously, the development of the cinema and retail infrastructure in the market besides underpenetrated global markets besides that low-hanging fruit, the past few years have really shown us that the North American market continues to be an amazing growth opportunity for IMAX.

I remember having a very heated argument with someone who was telling me that the U.S. is saturated for IMAX. That couldn't be more wrong. Actually, our opportunity in North America is twofold. First of all, the big chains are doubling down on IMAX, you would have all read about our deal with AMC earlier this year, our deal with Cinemark a couple of months ago. They want more IMAX venues because they deliver again tangible advantages. We are, in fact, currently in talks with certain big players to identify the next batch of new locations that we would add to our network.

But it's not just about the big chains. It's especially in the last 2 to 3 years, have really shown us how there is a much increased appetite for medium- to small-size players. These are operators who are putting very interesting entertainment offerings out there. Sometimes they are replacing older infrastructure. sometimes they're actually going to compete with that infrastructure. And for us, this is very positive because, first of all, buying from these players widens the target market. And with that, we're able to pick the best locations to go in. But also, quite frankly, it puts competitive pressures on the bigger players, and that's very good for our growth and our model. So we believe that this broadening of target market will have really a positive impact on us in the years to come.

And when we look at where we can grow, we are also believing that existing trading zones have become underserved. And with that in mind, there is an opportunity to add more IMAX venues into existing zones where an IMAX location is already located. Let me explain this in a bit more detail.

As you may know, part of the value proposition that IMAX presents to the exhibition partners is the provision of an exclusivity zone, a radius around the venue where we commit that we're not going to open another IMAX. Over time, both exhibitors and IMAX started to realize how some markets have really outgrown their zones. This ties back to the point about the TAM changing and the increased appetite for the format. Over time, we have seen cinema operators adding additional IMAX venues within the same trading zone, quite simply because there is more demand than there was before.

As a matter of fact, across North America alone, there are 74 zones where one or more IMAX venues have been successfully added already to an existing zone and very importantly, without cannibalization to the existing venue. And we're gradually starting to see this phenomenon in other parts of the world, places like the U.K. or Japan. And we believe that there is way more opportunity in that space. We actually estimate that there are about 200 existing zones around the world that have already IMAX venue where we can successfully add at least another IMAX locations. So that plus 200 zones is part of the 4,500 revised TAM that I was talking about earlier.

Some of them are a no-brainer, like think about New York City. The entire New York City area has only 7 IMAX venues for a population of about 8.5 million. Manhattan alone has 4 IMAX venues only, all located between 69th and third Street. So there is nothing outside of that pocket. There is undeniable -- undeniably an opportunity out there with these existing zones.

Finally, but very importantly, but when we think about ways we can boost our growth, we see a strong opportunity to leverage our capital position to enable transactions that would not otherwise be possible. There are many great cinema operators out there with very viable businesses, which, unfortunately, at this specific point in time are capital constrained. These are cinema operators with whom we would like to add more IMAX venues and they would like to add more IMAX venues with us, but they have a liquidity issue, and it's a short-term liquidity issue.

So what we are doing is that we are devising new deal structures where we will look at funding certain high-performing locations where we see a very high ROI opportunity. And we believe that this is a way to get quicker, faster into better occasions that would not otherwise be possible with a win-win situation for all parties involved. I want to conclude with a brief reference to what we sometimes call the IMAX flagships.

There are some IMAX venues around the world that have really established themselves as flagship destinations. These are places that people take planes to go to, to watch a move in. Some of them is because of their architectural profile. -- some of them is for features, the screen size. Some of them is for heritage. I mean we have some locations that have been out there for decades, the BFI IMAX in London, AMC Lincoln square, the Melbourne museum.

But there are also some new ones that have been built in recent years. Grand cinema sanction in Tokyo, which is the one that you see up there is an amazing IMAX venue located on top of a high riser. And remember visiting it for the first time, it was in construction, they took me up this very narrow staircases. And I got to that lobby, and I had the most amazing view of talking that I've ever seen.

And that is the IMAX lobby and then you go into this incredible auditorium. And I thought to myself, I think people will fly from all over Japan to try and watch a movie in this space. And sure enough, I met someone a year ago who confessed that they flew 12 hours from another continent to watch a movie in this venue. So by the way, this is a venue that is regularly amongst the top 5 best-performing IMAXs around the world. And there are more. I mean, Trompalasta in Germany is the largest IMAX in the world, which has been recently built or more of the Emirates in Dubai was recently redesigned and refurbished and now has set a new bar for premium cinema going.

We believe that these projects are really important at a point in time where consumers are seeking out experiential entertainment. So we're going to do whatever we can to enable these projects in as many locations as possible. And the good news is that we have conversations currently ongoing for flagship destination theaters at least in every continent of the world. So you can expect to see more of these places that we really believe carry the IMAX brand and allows us to explain to the world what IMAX is all about.

Thank you for enduring my monologue. I hope I've conveyed why I started the presentation by saying that I'm really excited about what's going on at the moment and why I believe there has never been such a good time to be in the IMAX business. Thank you.

Please welcome Mark Welton, our Global President of IMAX theaters.

Good morning, everyone. I don't know who suggestion it was that technology has to follow both content and sales. But anyway, with -- I'm really happy to be here with my fancy title, as Rich said, I lead our global sales development and operations teams across 1,800 theaters in 90 countries and also oversee our technology and operation office in Ontario, Canada, Mississauga. And so today, I'm going to try to bring a little bit of technology to Hollywood. I've been with the company now 29 years. And really what's remained the same throughout has been the core values of our technology, which is passion, innovation and [indiscernible] quality.

Our technology, really, as I think Rich mentioned, is really the foundation of our business and really the engine that drives the most moviegoing -- the most immersive movie-going experience there is. It's really -- it really connects, I've been traveling recently and meeting a bunch of clients. And from London to Dublin to Korea, to Dallas, and it really resonated me that our technology really connects that brand we talked about to not only to our exhibitor partners, but to audiences around the world.

Really, our technology is a purpose-built ecosystem. And what do I mean by that? Well, it all starts in the sales process. Our sales teams work with our partners, and we pick the most iconic best locations there are. Then we have designers that design the locations from the ground up. We bring in our project managers. We bring in our installers, and they work with our clients to, first of all, deliver every -- open every location on time and really kind of create where the magic happens. And then so if you take the proprietary design, you take the wall-to-wall screens, the projection, the sound, the post production tools, like Rich mentioned, the camera platform and our 24-hour monitoring system, it really works in like one seamless IMAX platform.

I'm always -- I'm often asked is, do we have competitors. We do have competitors. But really, they can't do what we do. And what do I mean by that? Well, I'm going to give you just a very brief example because I'm under the gun here. I was meeting with one of our partners a little while ago, a couple of weeks ago, and we were talking about our locations, we're opening next year about the design and locations about what type of projection is sound. We are talking about the seating, the carpet, the portal, et cetera, and I was informed that they were going to put a PLF in the same complex.

So in my mind, I looked at and said, well, maybe you can save on some construction costs. And they looked at me and they said, "Well, we're just putting a laser projector in a standard box with standard sound", and that was the difference, right? They don't have 100-plus designers, technicians, engineers working daily to make the IMAX experience better. They don't have a 24-hour monitoring system. They don't have an in-house production team. And they surely don't have relationships with filmmakers like Chris Nolan and Denis Villeneuve that actually consider our camera platform, the gold standard of cinema.

At IMAX, we're not a collection of parts. We're really a end-to-end solution, as Rich mentioned, that wants to make the IMAX experience every day. Together, if you take the technology, the post production tools like DMR. If you take our camera platform our monitoring system, and of course, our global network reach, you really create a competitive moat that no one can match.

So let's talk a little bit about innovation. IMAX has a legacy of innovation, right? 40 years ago, we were the pioneers of stadium seating. 30 years ago, as we mentioned, we developed the proprietary digitally mastering DMR process that transformed film into the IMAX format. And recently, we ignited the modern 3D revolution with titles like Avatar. And we continue to evolve today. We have worked every part of the IMAX experience over the years. We went from the design. We went from film projection to digital projection, to laser projection both for our iconic sites and for our commercial sites.

We actually went from film cameras to digital cameras and actually back to film cameras, which I explain later. And that evolution still continues today. As I said, with our DMR process, which again takes out the grain of every frame makes a sharper resolution, as I think Rich mentioned, we have moved it into the cloud. This has been a real catalyst. It gave us more creative control, quicker delivery and a real catalyst for our local language program. And we've talked a little bit about our NOC centers, network operation centers. But if you're in Mumbai or if you're in Springfield, Illinois, our NOC centers in Toronto and Shanghai monitor the systems 24/7, 24 hours a day, 7 days a week in real time.

They track the brightness, they track the performance, they track a calibration. And now recently, we've used AI to bring it together and to help us prevent problems better -- predict problems, and prevent solutions -- prevent problems sorry. This really has helped to reduce our costs. because, as I said, it's -- I think Richard mentioned this, but it helps us. We have depots all over the world, so it helps manage our [indiscernible].

We have technicians all over the world, so we can better organize them and have them ready for business when we need it to them. And that's really -- what's really transpired now is our system uptime is 99.92%. Now think of this, 99.92% in 1,800 theaters in 90 countries. It's just amazing. And that same spirit fuels our partnerships with filmers that really push and challenge us, pushes our technology forward and sets IMAX apart. And nowhere does that commit more evident than working with one of the greatest filmmakers of our generation. After the box office success and after success of Oppenheimer, Chris Nolan approached us.

He wanted to shoot his next film entirely with the IMAX cameras. Problem -- and it would be actually the first Hollywood production to ever do so. The problem was there was one catch our existing IMAX camera fleet couldn't do what Chris wanted. But we thought, hey, listen, if Chris wants to do it, let's try to make it happen. So Chris and his cinematographer [indiscernible] met with our engineers. And they worked over a 2-year period, especially engineers who want to try to develop a camera system that was quieter, that was lighter that was more flexible to allow Chris to show his artistic vision of his movie.

As I said, I've been there 29 years now. To me, the result was extraordinary what we did in 2 years. We developed a new generation of IMAX film cameras that not only kept the iconic quality and scale of our existing games. But there was more a modern design, modern software, smarter design and more flexible to allow Chris to shoot his next movie. But the break-throughs didn't stop there because even though we reduced our existing camera noise by 30%, it still wasn't quiet enough to shoot those intimate sounds in dialogue.

So our engineers got together again. And the same 2-year period, last time they built a film and closure system or what we call sound blimp [indiscernible]. And this substantially reduced the noise of the cameras. So the first time ever, our filmmakers could shoot in sync sound and capture clean, usable dialogue while filming. Ultimately, this breakthrough allowed Chris to use the IMAX film cameras to shoot his entire film Odyssey with IMAX. And in his words, he said, this is a game changer. I have to read this one. It allows intimate moments of performance on the world's most beautiful format.

So this same spirit and what's next drives everything we do at IMAX, the constant pursuit to make every part of the IMAX experience even better. We're advancing the next evolution of projection. We're looking at how do we make our sound mixes better and more efficient. But remember, we have to bring that into that purpose-built ecosystem. And all to ensure that every IMAX location delivers that same clarity that same brightness that power of the scale that I talked about earlier. And as we did with our film cameras, we're really looking at how to reimagine our film projectors. Can we make them smaller? Can we make them lighter? Can we make them scalable so that more audits and more filmmakers can experience a iconic format.

And what we've done with Odyssey by the time Odyssey is released next summer, we've actually now increased the number of film locations by 25%. So we'll Odyssey will be in 40 film locations next year. For nearly 6 decades, we have pushed the limits of sound MH scale and this legacy of innovation and quality will shape the future of IMAX going forward. Now let's take a look.

[Presentation]

Thanks to my colleagues who presented this morning. And now it's time for the most exciting segment, the numbers. And in IMAX's case, it really is true as we are in a record year with much more to come. Today, I'm happy to be here to share IMAX's financial strategy and outlook and underscore our unwavering commitment to sustainable growth and shareholder value.

Let's recap what you've heard today from the IMAX management team about the pillars of our business and our future. IMAX is a global entertainment technology company with 1,800 locations in 90 countries, setting the pace with industry-leading camera content remastering, projection and sound technology. Our iconic brand is fueling fandom IMAX inspires filmmakers and empowers exhibitors and studios to deliver the world's most immersive experiences.

Our asset-light model is a strategic advantage, driving high margins and low leverage. And with 700 employees worldwide, we achieved what others cannot, scaling impact without scaling costs. Our licensing and recurring revenue model provides a foundation of financial stability and predictability that gives us the confidence to invest, innovate and grow. And above all, we are laser-focused on delivering long-term shareholder returns through balancing investment in our future with returns through share repurchases.

Turning to our business model. We have 2 major operating segments: Content Solutions and technology products and services. Our Content Solutions segment captures revenues generated through our relationships with studios and content creators from Hollywood blockbusters to local language, alternative content and documentaries. And most of this revenue in this segment is tied to IMAX box office performance.

The Technology Products and Services segment, or TPS, captures revenues generated through our relationships with exhibitors. All of our IMAX systems, whether sold or leased are generally covered under 10-year agreements, which have a greater than 90% renewal rate. IMAX system sales arrangements represent systems sold for an upfront or fixed payment and a nominal box office percentage payment over the 10-year term. System rentals represents IMAX systems that are leased in exchange for rental payments and tied to box office performance. Included in all of our contracts are maintenance services, which reflect recurring revenues associated with the 24/7 location monitoring that you just saw in the tech video, over $60 million of fixed revenue annually and growing with our network.

Combined between content solutions and our TPS segments we generally translate 18% of every IMAX box office dollar to revenues. And outside of our 2 major segments, we have a nominal revenue stream in streaming and consumer technology. which we see as an upside opportunity as we bring IMAX quality to a whole new market. And our global revenue has good diversity, providing durability and stability and is fairly evenly split between domestic, Greater China and the rest of the world.

As an asset-light business, our operating costs do not significantly increase year-over-year creating a powerful opportunity for strong and increasing flow-through to earnings per share, EBITDA and cash flows, which we are focused on using to return value to our shareholders.

IMAX's riding and shaping macro trends, the blockbusterization of content is real, and IMAX is at the epicenter. Audiences crave premium event-driven experiences and we are increasingly the destination for those unforgettable moments. Demand for the IMAX experience is surging across filmmakers, studios, audiences and exhibitors.

Content with an IMAX release helps to deliver the best global monetization outcome. And higher demand for IMAX drives network growth, allowing us to penetrate further into existing markets and expand into new markets, as Gio highlighted.

And lastly, our content portfolio is more diverse and dynamic than ever with over 200 pieces of content that Heather described and a focus on programming to maximize the utilization of our global network. The bar is set high and we are raising it. Our priorities are clear: strong top line growth, visible margin expansion and increasing cash flow conversion.

For top line growth, we are focused on translating the increasing strength of the IMAX brand that Anne highlighted, which is growing the fandom among filmmakers and consumers into tangible box office and growing -- increasing our utilization rates and in turn, market share gains. This momentum is not just words, but it's backed up by the numbers with our market share up 46% since 2019 as we expect to end the year with 3.8% on for our global market share on just less than 1% of the screens, reaching our highest point in IMAX history.

We continue to show proof points of how our business model differs from that of exhibition. Year-to-date November, domestic box office is up 1% year-over-year. IMAX is up 27% in North America. And globally, IMAX is higher by 34%, with this top line growth comes visible margin expansion. And today, we will be walking through how the drivers and our ever-increasing scale is resulting in a significant operating leverage in a steady march higher in our margins.

And lastly, as margins expand to flow through to cash is a very high level and the increase in conversion to adjusted EBITDA to free cash flow, supporting higher levels of investing in the business and shareholder returns. This is not just progress, it is propelling us forward. Before I pivot to our outlook, let's take a minute to review our year-to-date results for September. They point to IMAX operating at a new level, exceeding expectations and capturing momentum in the business.

Strong growth in our operating metrics of IMAX box office, system signings and installations combined led to revenue growth of 10%, adjusted net income, up 32% and adjusted EBITDA higher by 26% and cash from operations up 65%. In short, we are achieving double-digit revenue growth and notably bottom line growth that is more than 3x that of revenue growth. Our year-to-date adjusted EBITDA margin is a substantial 45% compared to 39% a year ago. And these results are not just strong, they are a testament to the power of our model and the passion of our team to deliver.

For 2025, we set ambitious goals, and I am pleased to announce that we are exceeding them. Earlier this week, we officially achieved an annual record for box office of $1.13 billion. And when we set this guidance a year ago, many doubted us. But with more to come in Q4 and including the ongoing success of Wicked for Good and Zootopia 2 and the most anticipated film of the year, Avatar Fire and ASH, we are now tracking to more than $1.25 billion. And for reference, both Avatar 1 and 2 were released in mid-December with IMAX capturing over $100 million in the year of release.

To date, 133 system installations have been completed this year, and we are tracking to the very high end of our full year 150 to 160 system installation range. And lastly, for adjusted EBITDA margin, which we guided to the low 40s is expected to be at or above 43% for this year. And today, we are excited to announce guidance for 2026 that reflects strong growth across all metrics. Box office of approximately $1.4 billion with mega titles in every quarter, Avatar rollover in Q1, Star Wars Mandalorian in Q2, The Odyssey in Q3 and Narnia in June in Q4. With 9% to 12% IMAX box office growth in 2026, we expect these mega titles will be catalysts for growth in system installations year-over-year.

Our system installations guidance for 2026 to be between 160 to 175 systems and supporting this level of installations is a committed backlog of over 470 systems including detailed rollout plans with our exhibition partners. With this higher level of box office at $1.4 billion and continued network expansion, we anticipate positive flow-through to adjusted EBITDA margins in 2026, landing in the mid-40s and more specifically at or above 45%. Our brand, industry relationships, technology moat and executional track record provide us with the confidence that IMAX is leveling up for another record year.

A key tenet you've heard repeated throughout today is the increased visibility we have into our future financial drivers coming from 3 factors: first, greater content diversity providing both programming optionality and the ability to achieve higher levels of box office even in slower moviegoing periods.

Secondly, increased demand by filmmakers and studios for the prime real estate of IMAX windows, driving earlier dating and visibility to future film slates.

And third, the committed IMAX system backlog along with a proven history of replenishment through system signings. Considering these factors, we are providing a 3-year outlook for revenue, adjusted EBITDA and adjusted EPS and free cash flow conversion, reflecting both growth and profitability.

For revenues, cumulative average growth of high single digit to low double digits, this revenue growth will be driven by 2 inputs, high single-digit to double-digit box office growth and mid-single-digit expansion of the IMAX network. For adjusted EPS and adjusted EBITDA margin percent with revenue outpacing that of costs and expenses, we see margins steadily stepping higher and reaching over 50% adjusted EBITDA margins by 2028, and adjusted EPS expanding at twice the rate of that revenue growth.

For free cash flow conversion, we see our margin expansion translating to a higher level of operating cash flows and thus, adjusted EBITDA to free cash flow conversion reaching 50% by next year 2026 and climbing higher from there. Let's review our long-term targets, starting with revenue growth. Revenue growth is driven by 2 pillars: network size and IMAX box office, which comes from network size, utilization rates and ticket prices.

As Gio highlighted, we see tremendous global expansion potential with 4,500 possible zones and 1,800 current locations. Our model assumes mid-single-digit annual network growth. This expansion will drive box office growth alongside higher ticket prices and utilization. And while we don't set ticket prices, supply-demand dynamics for IMAX should naturally push prices higher, especially at our film locations.

On utilization, diverse content programming across our global network and increasing consumer demand for the IMAX experience will flow through to higher attendance levels. Notably, a 100 basis point increase in utilization at $75 million to $100 million in IMAX box office. Combining network growth, utilization gains and ticket price increases -- this supports our projected IMAX box office average growth through 2028. And while we do not have an in-house view of global box office growth over the next 3 years, recent estimates from PCs entertainment Outlook report showed box office growing to almost $37 billion by 2028.

Coupled with our modeling, IMAX share of box office could grow by 30% or more. Our business benefits from significant operating leverage reflected in steady growth in adjusted EBITDA margins with relatively fixed costs scaling our network and box office drive strong incremental flow-through to the bottom line.

Two key points on this. When annual box office exceeds $1 billion for each incremental IMAX box office dollar above this level, we capture an incremental margin of 85% after factoring in our average of 18% for our revenue take rate. In TPS, network growth delivered strong margin expansion with gross margins averaging about 50%, boosted by performance of the IMAX leased locations. This positive incrementality combined with disciplined SG&A growth in the low single digits positions us to achieve adjusted EBITDA margins above 50% by 2028.

Our path towards 50% free cash flow conversion by 2026 and expanding thereafter is anchored by expanding margins, disciplined capital allocation and a content strategy that fuels IMAX box office growth with operating leverage at scale and structural tailwinds in working capital, including improved timing of exhibitor collections and over $250 million of tax attributes that will significantly reduce cash taxes.

We are positioned to drive robust cash generation and enhance long-term shareholder value. Our capital-light model and execution have resulted in a strong capital structure. As of September 30, we held $143 million in cash and $261 million in debt with a net leverage of 0.7x. And this year, we strengthened our liquidity and reduced dilution risk through strategic transactions. We renewed and expanded our 5-year revolving credit facility to $375 million, adding $75 million of liquidity.

And just last month, we refinanced our 2021 convertible notes with $250 million of new notes at a very attractive 0.75% interest rate, only 25 basis points more, while in a much higher interest rate environment than the almost 0 in 2021. And through this transaction, we were able to simultaneously retire over 99% of the prior notes, which we did with cash of $46 million to ensure no dilution.

Importantly, we also took out a capped call on the new note raising the effective conversion price to $57 and more importantly, protecting our shareholders from dilution up to this level. Together, the cash payment for the outperformance in the old notes and the new capped call equates to approximately $70 million strategically spent to protect our shareholders from potential dilution and, in our view, is a kin in some respects to that of a share repurchase.

Our strong capital structure gives us the flexibility to meet all of our long-term priorities. First, investing in growth. We currently invest about an average of $35 million annually to expand the IMAX network under joint revenue sharing arrangements. And given our strong balance sheet and growing free cash flows we see an opportunity to strategically invest and increase the system-related growth CapEx by 30% to 35% or approximately $10 million to $15 million annually. -- through new deal structures that accelerate growth in high-return locations driving future revenues and cash flows.

Second, returning excess cash to shareholders we've returned over $175 million since 2020 and have a strong track record of opportunistic share repurchases even drawing on our revolving facility to do so when appropriate. The investment case for IMAX is clear and compelling. IMAX is built to outperform as global entertainment evolves. We are capitalizing on our unique tailwinds and leveraging our expansive moat and demonstrating financial strength that delivers for shareholders. We are entering a new era of growth. And in my 19th year at IMAX, I could not be more excited for what's ahead. and I believe our shareholders should be equally excited about the upside opportunity that IMAX will deliver. Thank you.

Thanks, Natasha, and thanks to all of our presenters today. Also thanks to the audience. both here in the room and on the live stream for dedicating time for this event and your attention. We're now, as you can see, going to set up for the Q&A portion of our of our day. A few things to note on the Q&A. In addition to today's presenters, we're going to have joining us for the Q&A, IMAX's Chief Technology Officer; Pablo Calamera, for the Q&A, we ask everyone to wait for us to get you a microphone to ask your questions. So those in the live stream can hear as well. Please direct your questions to Rich. He'll be the traffic Director up here on the stage. We also request that you limit yourselves to 1 question so that we can get to as many people as possible.

I'd also note that the management team will be with you at lunch, and so you will have the opportunity to engage with them at that point as well. One minute now, I think we can get the executive team now on the page. We'll have Mike runners on both sides. If you raise your hands, we'll get to you and I'll kind of point in direct as well.

Great. I think I see Eric there with his hand up. We'll get things started.

I was intrigued by -- in Gio's presentation, you talked about deal -- new deal structures, leveraging IMAX liquidity. You already have the JVs where you're putting forth the capital for your partners. There's -- you've got a hybrid and then the exhibitor can purchase outright. So where on that spectrum is there an opportunity for additional liquidity opportunities.

Do you want to answer?

Sure. So in my presentation, Eric, I actually talked about it as well that we would be up I think testing -- all right. Can you hear me? I talked about increasing our annual investment right now of $35 million by about 30% to 35%, another $10 million to $15 million a year. It would be our JV structure, but doing it in a much larger way in that right now, we only contribute the system and in very rare cases, a little more than that. But when you think about the balance sheet of the exhibitors and some countries or in specific locations where we feel like there could be a very high return for putting our investment in where that film rental rate could go higher as well and you think about a year like 2026, that's ahead of us with $1.4 billion and then continuing to grow after from that and growing our market share, that's where you can see that the return on that type of investment by doing the JV model and then putting up for some of the actual capital to build out the actual fit out of the theater on top of contributing the system.

In a way, Eric, there's like an imbalance of information because when they're looking at it, they're looking at the model going backwards we're looking at the model going forward. So the returns are very attractive for us to do that. And at the same token, we're certainly not going to bet our balance sheet on it.

Great. I think I see mic there.

Congratulations on an incredible year, a great presentation. Thank you guys for doing this. Very insightful. The -- I guess the question on Narnia, Rich, you said it was sort of transformative maybe to the industry and to your business. Obviously, we've seen big hits before when Avatar first released and what that did to your business.

Do you see a similar situation here in terms of that being an active catalyst to maybe installations or a new content strategy that can be incremental to your growth opportunity?

I'm going to let Gio give you his reaction when we left the set of Narnia.

Yes. I was -- I told Rich, this is going to be a game changer for our business. And look, of course, it's impossible to predict in detail. But we definitely see it as a catalyst. And as was I was trying to convey that there have been some pivotal points in next year with titles psychotic, but then I focus particularly on Narnia, I think that will be a game changer. Think about exhibitors, cinema operators that can have access to certain types of content overperforming content through an IMAX venue.

You obviously want more of those venues, and we want more of them as quickly as possible.

So Mike, when -- I don't know if any of you guys realize this, but right across the street, the old Spruce Goose hangar, which is now Google's big office here. Jim Cameron rented it to do a film called Avatar 1, and he invited me pretty early in the process. And he put up like 1 of those screens that you show the slides of your kids growing up -- and he showed me like, I don't know, 15 minutes of Avatar. And I call back some of my colleagues in New York and I said we're going to be in a different business when that movie came out. And I definitely have the same feeling about this.

And again, don't really right now want to talk about the financial model. But I think the way we could -- IMAX could evolve in that ecosystem, such as things like earlier release windows or different distribution patterns. I think we do think it could have a similar effect.

Great. Thanks, Mike. I think next question there with Omar.

Well, thanks for the presentation. Jonathan or maybe Natasha, you talked about implementing the dual programming strategy to drive capacity utilization -- can you elaborate a bit on the expected changes from this new strategy and the potential impact on capacity utilization and the flow-through to the bottom line and how that plays a role in the in the new guidance, obviously, in the mid-40s in the long term to your guidance of north of 50%.

Jonathan, I think why don't you just talk about the strategy and then Natasha, you could talk about the financial impact.

Sure. So thanks, Omar. Look, I think the opportunity for us is really to be as flexible and nimble as possible. So we will, as you heard, FFI is a key part of our building our slate and that does go with hand-in-hand with an exclusive window on those titles. But where we see real opportunities as well, we started in a meaningful way last Thanksgiving, and had our most successful Thanksgiving ever when we were programming Gladiator, Wicked and Moana.

And then this year, we just -- as you've heard, we beat that by 70% in programming Zootopia and Wicked for good. So I think the opportunity we see is to be nimble and to find the right mix -- so we will be doing a combination. We'll continue to lean into exclusive windows. But where there are those either non-FFI periods or real opportunities to maximize revenue, we'll do that as well.

And I think I think, Omar, what you've seen this year alone is the fact that, that strategy is working tremendously for us. And you think about where we are year-to-date of being up 34% and globally versus where domestic is just at 1% year-to-date. That's a big difference. And that comes from that programming agility that Jonathan is talking about in making sure that globally across our footprint, we are playing, whether it be in Indonesia playing an Indonesian title or in Poland playing a Polish title and then here in North America playing a Hollywood title, that's what's adding up to that box office and gives us the confidence to even go out with our guidance of 1.4 for next year.

One thing spend a lot of time talking about during the presentation was the use of analytics, including AI. So Hollywood is like talked a lot about the gut -- we've kind of had it with the gut. And one reason Heather was brought in was to use good hard data to increase that capacity utilization. So Heather, maybe you want to address kind of what you think the opportunity is?

Yes, absolutely. Natasha can I have your mic may Hello? Perfect. Yes. So in terms of increasing capacity utilization, so we know that the demand, not only just to see a certain film, but to see it in IMAX is stronger than ever. And when we've gotten data from our exhibitor partners to look at our capacity utilization in their auditoriums, we know that it's been increasing from pre-pandemic to current when you compare both weekdays and weekends. So we are already seeing this type of programming strategy increasing our capacity and fill rates in the auditoriums.

And it's simply because, as I mentioned, consumers want more variety of their films, and they want to see them in IMAX. So the more films and more events and more content we can play, we can keep the same people coming to the theater multiple times or capitalize on different demographics and psychographic groups.

Add in there a little bit, too. Actually, I'll just say that we've talked a little bit in a few of these sessions to about data. So data is a place that we've actually invested quite a bit. So while the data maybe has been there in the past, I think with Jonathan and Heather here actually surfacing that data to make more data-informed decisions on the programming was a major shift and I've seen it here. I've been here 6 years, but it's changed quite a bit already, and it was largely driven a lot by the talent, but also the data systems have evolved quite a bit in that time. And AI will be a part of that as well.

Thank you. Just to follow up on the last question. Do you see a place in other markets besides China for dynamic allocation of screens like they do in China, where if it does well on Thursday and Friday, they get more share of the screens. -- if you're going to balance 2 titles in a weekend.

Jonathan.

Yes. That is something we're already leaning into. So as we talked about, we are starting to more FFI titles in local language as well. But we've grown the local language volume. We will have 68 titles this year. Next year, we're going to grow that by let's call it, 15%, plus or minus. And part of that gives us the opportunity to be flexible to schedule within and around Hollywood titles that are working. So we're already doing that. And I think as we grow that volume of local language, we'll be able to increase that flexibility in local territories as well.

One thing you might surprised about is the studio's willingness even with exclusive windows to carve out some room for local language. So as you know, Japan has a very different distribution pattern than the rest of the world. And you'll find this a little shocking, but even Disney has been very open-minded about carving out time for local language films. So we should shout that out, that our studio partners have been just much more flexible, which helps a lot in expanding the China model elsewhere.

Talk a little bit about the success in China last Chinese New Year with that.

Yes, happy to. So during Chinese New Year, on any given year, we're we're programming 4 to 5 films at a time. We've continued that strategy actually through other windows throughout the year. We do that for a number of reasons. One, sometimes you don't know which film is going to break out. You may have 1 or 2 that you think have a really high possibility, but it enables us to really capture whichever film truly is going to break out.

More importantly, China is a big country. And a lot of films play differently in different territories. So we often find ourselves in positions where we're programming on local language title for the South for a genre that works really well there. And at the same time, we're playing another film that works much better in the north, capturing more box office and more market share as a whole. So it's a program that has worked for us really, really well in that territory.

Next question.

Thank you. It's David Joyce the Seaport. It's great to see the continued volume-based momentum in growing the network and taking more share at the box office and the operating leverage that emanates from that -- but what might the opportunities be on the pricing side? Like your take rate has been pretty static for a long time. What's your philosophy on that, either from your your desire to try to increase your take rate or your contractual ability given the demand for more and more exhibitors wanting to add your screens?

We have a fairly strong point of view on that question, which is that you really want to be part of this ecosystem and the team and pushing big studios, especially when the number is shrinking on higher take rates is probably not a great way to live a really long life -- so we've tried to use our leverage in different ways, such as what Anne was talking about the marketing and maybe an you'll follow on for a second and just talk about what we've been able to get but we've been able to use our leverage in very significant ways without playing with kind of the Holy Grail, which is the take rate.

So Ann, before you do the marketing, Daniel, though, has actually had some success in China in pushing the take rates because the dynamic is a little bit different. So explain that. And then the last point I'll add is we can't set the prices. The exhibitors do. But I think there is opportunity on the pricing side, and we could have discussions that are well within the balance of the antitrust regulations and doing that. I'll give you a very simple example. We don't -- the exhibitors don't charge more for film than they do for digital and they're sold out months in advance. And if I were pricing, I would think that would be a pretty good opportunity. So we've just -- I think that's where there are more opportunities than on the split. So Daniel, why don't you talk about that for a second?

So very recently, actually, we've closed 2 deals in China where our take rate has gone up significantly. It's not something that we publicly disclosed in the numbers, but it's a trajectory towards, I think, an area where we have a little more flexibility, and we can play a little bit more of a role in that. Also, I think it's important to note on our local language titles in China, our take rate is higher just by nature of those contracts. So I'll turn it over to Ann to talk about some of the other ways in which we're leveraging that. But I do see for that region in particular, there may be some growth potential there.

Yes. I think what Rich is talking about is we just have a totally unique deep partnership with the studios, and that is how we've been able to really create these great events. The results have been clear. So they have taken the approach of really integrating us into the marketing, of course, with our -- working very closely with them to get those campaigns up and out around the world. But we've seen a big win for both parties and our filmmakers as well, right, with increased indexing, increased opening weekends, general increase at the box office and more fans coming into the ecosystem.

So then we can remarket to them whether it's for a big studio release or all content or a music event that just keeps bringing more and more people back to IMAX and everyone benefits. So that has been the approach, and it has been working.

To get into detail on the context of that count down for the Mandalorian. But it's kind of incredible how it came about. But Disney came to us and said, we're distributing Avatar and Mandalorian is a big film for us next year. So could we design a special piece to market the Mandalorian given how many eyes will watch Avatar. And that thing caused a fortune to put together and to distribute and that was their initiative and none of our costs. So rather than playing around with take rates, those are a lot of the opportunities.

Thank for all insights. Just quickly, building on Mark's presentation. Going forward, do you change your strategy at all or in terms of all these innovations, these new products, these new capabilities you're doing for the directors? Does that increase your patent portfolio or so forth?

Yes. I'll touch on that a little bit. So I mean we do have a pretty -- there are some things that we are having is just trade secret because things that our patented are obviously fully disclosed and reverse engineering is not that hard. We do have a pretty I'll say, a strategic patent plan, the things that we do patent and things that we decided to just keep trade secret. So it is balanced.

All right. If there are no further questions, I'll just say a few words. But after I'm done, we have a really nice courtyard on a nice day in California to where we can sit outside. And we arrange the table. So you'll have the opportunity to sit with members of management, you might be interested into. So if China's your particular address, you could spend more time with Daniel and Natasha, I'm sure will be overwhelmed with questions, but -- and then you can move around a little bit. So we'll be available to follow up on that.

I hope we accomplished our objective today, which was, as I said at the beginning, to really show you there's been a complete reset in the IMAX business. And as I said, the other part of the objective is, I think, Natasha, Gio and I are people who meet with you all a lot, but there are a lot of talented people behind the scenes. So I was also when I was sitting there thinking, Mark's been here 29 years, Natasha has been here 19 years, Gio has been here 13 years. It's not a Johnny come lately, team. We've been around a lot of time.

And I think one of the last questions about leverage, I think you don't want to really talk about that that much because not a thing your counterparties enjoy hearing about. But given the relationships we have with the filmmakers and the exhibitors and our place in the ecosystem, and I'm sure you guys have read some of the press that says a lot of the filmmakers really insist that their movies be made in IMAX. So it's really put us in a unique and a very good place.

And turned out that this was the perfect time to lay all that in front of you. And we're grateful for you coming and we're grateful for your support, and we love to reward people who believe in us. So -- thank you, and we're happy to continue this outside.

So I think that now concludes the live stream. I'm going to give a couple of logistics details for those in the room. As Rich mentioned, there's going to be a lunch or overdo. For those who are interested, we will have a tool available at about 12:30, you can see now joining the Q&A.

Good day, and thank you for standing by. Welcome to the Third Quarter 2025 IMAX Corporation Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jennifer Horsley, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for IMAX's Third Quarter 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 on 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 a reconciliation to non-GAAP financial measures are contained in this morning'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 turn the call over to Mr. Richard Gelfond. Rich?

Thanks, Jennifer, and thanks, everyone, for joining us as we review an exceptional quarter for IMAX. We delivered our highest third quarter revenue ever with $106.7 million and our best ever quarterly cash flow with $67.5 million. We drove growth of more than 30% across gross margin, net income, adjusted EBITDA and earnings per share. Our third quarter earnings exceeded those of our first and second quarters combined. The third quarter of 2025 was our highest grossing Q3 ever at the global box office with $368 million, up 50% year-over-year. Signings of new and upgraded IMAX systems surge passed our full year total for 2024 with 142 through September. and we are approaching 100 installations year-to-date. We now expect to hit the high end of our guidance of between 150 and 160 installations for the full year.

You've heard me say that IMAX has been moving into a new position that we've been steadily building something bigger. Throughout the year, we've delivered operating results that exceed expectations and transcend the broader marketplace. Early on, many thought our full year guidance of $1.2 billion in global box office would be difficult to achieve. We're now very well positioned to deliver on that guidance. Following our Q2 earnings call, our stock dipped with many noting that the Q3 Hollywood slate looks soft on paper, and we proceeded to deliver a record quarter. IMAX is quite simply a different company than it was just a few years ago. This quarter is the latest and maybe the clearest example yet on how far we've come. We're consistently delivering a diversified dynamic portfolio across Hollywood blockbusters, local language titles and alternative content, and we further separated ourselves from exhibition as a result.

In Q3, domestic box office declined 11% year-over-year. IMAX was up 29% in North America. And globally, IMAX was up 50%. In prior years, when IMAX posted big results, you could usually point to a single defining title, Avatar, Top Gun, Oppenheimer. But now our performance is increasingly driven by the full breadth of our content strategy. In the third quarter, we had a big film for IMAX Hollywood hit in F1 for which we dramatically over-indexed. But we also had a powerhouse Japanese language release in Demon Slayer, Infinity Castle. We hosted successful music events from Print and -- the Grateful Dead. We flexed our muscles in horror, not historically a genre associated with IMAX with strong openings for -- the Conjuring and weapons. We even leveraged the IMAX experience to breathe new bi into legacy titles, most notably with our successful rerelease of Jaws.

IMAX is not just a premium format. We're a platform for event content that spans genres and the globe. And that diversified portfolio and the marketing prowess of the IMAX brand as a beacon of must-see theatricality make us much more valuable to our studio and exhibition partners than ever, which continues to drive strong installation and sales activity because audiences in 89 countries and territories around the world know that for all inspiring experiences, you must see it in IMAX.

The third quarter saw the conclusion of our record run of consecutive film for IMAX blockbusters through the summer, but it also demonstrated our ability to drive success beyond releases shot with our cameras. The halo effect of IMAX extends across a wider collection of films, events and experiences than ever. F1 -- the movie was our highest grossing Hollywood release of the year with $97 million worldwide to date, more than 15% of the film's total box office on less than 1% of the screens. Our success with F1 was powered by our deep collaboration with Apple on the film, the latest example of how IMAX has emerged as a premier partner for streaming platforms. We now have 4 blockbuster openings on the year, Sinners, Mission Impossible, F1 and Tron Ares, for which we generated at least 20% of the domestic opening at just over 400 North American screens. That's a feat we've achieved less than a dozen times in our entire history, and 4 of those came in the last 6 months.

It's also been a watershed year for our local language strategy as evidenced most recently by Demon Slayer. The global anime phenomenon has earned more than $73 million to date in IMAX. It's our biggest Japanese film of all time. It delivered our biggest September opening ever in North America and astounding feat for a foreign film, and we indexed 19% of its domestic debut. We're optimistic the film will secure release in China, too, where recent Japanese anime titles, including First Slam Dunk and Suzume have played very well for us. We've now generated more than $356 million in local language box office year-to-date, shattering our previous record of $243 million set for the full year 2023. And international films account for 36% of our global box office year-to-date, up from less than 20% last year.

As we look ahead to the stretch run of the year, the slate is significantly stronger than last year's Stripe depleted offering. November includes 2 IMAX-friendly releases in Predator Badlands and -- the Running Man. We've used our leverage to program another strong Thanksgiving slate locking in Zootopia 2 and Wicked for Good early. This put us in a position to get tickets on sale before most of the market with both titles looking strong and tracking. And we continue to round out our slate across music, sports, gaming and exclusive experiences. Building on our success with -- the Grateful Dead and Print in August, we have a concert event with Depesh Mode next week.

In December, we'll host the long-awaited rerelease of our seminal Stones at the Max, the beloved 1991 concert film, which IMAX made with the Rolling Stones and the only concert film shot entirely with IMAX film cameras. In our second year, we'll expand our offering of the League of Legends gaming tournament next weekend in China with up to 219 locations. And we partnered with Netflix on a buyout promotional event in support of Guillermo Del Toro's Frankenstein. Of course, the year concludes with Avatar Fire and Ash. Our teams have been working with Disney on the launch for a year to ensure that the brand association between IMAX and Avatar that has yielded record-breaking success for our companies continues.

With our network continuing to grow and our market share surging worldwide, we expect to deliver another strong performance with the franchise. With the carryover of Avatar, 2026 look strong right out of the gate, highlighted by Christopher Nolan, the Odyssey, Greta Gerwig's IMAX Exclusive Narnia and Star Wars: -- the Mandalorian and Grogu, Super Mario Galaxy Movie, Toy Story 5 and Dune Part 3, which will have an IMAX 70-millimeter run in select locations.

Additionally, a very compelling 27 slate continues to take shape, including Joe Kosinski's Miami Vice, which will be filmed for IMAX, Star Wars: Starfighter directed by Sean Levy from Deadpool and Wolverine; Michael B. Jordan, the Thomas Crown Affair, Avengers Secret Wars and -- the Batman 2. Our team was in London last month, visiting the filmmakers and sets of many of these upcoming releases, including Narnia and Star Wars. And it's clear these are IMAX-sized productions leaning heavily into our technology and format. Our visibility into our Hollywood slate continues to grow even as we opportunistically program local language blockbusters and alternative content events and experiences throughout the year.

Turning to our networks business. signings to date have already surpassed the number of signings we had for the full year 2024. We're having a lot of success in international markets we prioritize for growth. In Japan, we're pacing towards our single best year for network growth ever as we expect to end the year with 10 installations, representing a nearly 20% expansion of our footprint. And in Australia, we expect to install 6 new systems for the full year, more than doubling our footprint to 10 locations nationwide. Year-to-date, we completed 60% of the installations we targeted for the full year 2025.

The level of activity in the sales pipeline is also strong. We just completed an agreement for 2 new locations in Singapore. We signed multiple agreements this year across 2 priority markets, France and Germany, and are in conversations for new locations in Italy and Spain. We're in discussions regarding new locations in the Middle East, and we continue to drive opportunity with new and existing partners alike across North America, including our recent agreement with Apple Cinemas and several potential new locations across the underpenetrated Southwest region.

Given our continued sales momentum and our backlog of 470 systems worldwide, we have clear runway for strong network growth in years to come. In sum, we delivered excellent financial results in the third quarter. As the year draws to a close, we look forward to hosting an Investor Day in December and sharing our strategy for how we grow our performance over the next several years. We continue to believe the best is yet to come.

As we look ahead to a year with no less than 4 massive tentpoles, the Odyssey, Narnia, Dune Part III and the Mandalorian and Grogu, for which IMAX is at the center of the filmmaking, marketing and distribution. IMAX has never been better positioned creatively, commercially or strategically. And we're focused on strengthening our position, executing with financial discipline, continuing to provide the most immersive entertainment experience on the planet and delivering for our shareholders. Thanks. And now I'll turn it over to Natasha to walk through the financials.

Thanks, Rich, and good morning, everyone. IMAX's third quarter was one of the best in our history, showcasing our global scale, our agility in programming and diverse content portfolio and in turn, the profit and cash incrementality in our business.

Third quarter IMAX box office of $368 million was 50% higher year-over-year and exceeded Street estimates by more than 25%. Signing for IMAX systems at the end of September was 142, already eclipsing full year 2024, and system installations are now tracking to the high end of our guidance range of 150 to 160 systems. From a profitability perspective, our operating leverage shine through in Q3 with an adjusted EBITDA margin of 48.6%, up a substantial 630 basis points year-over-year. and adjusted EPS of $0.47, up $0.12 year-over-year. Our profit incrementality flowed through, contributing to cash from operations of $67.5 million, which set a new quarterly record and was up more than 90% year-over-year.

As I said on last quarter's call, these are not just numbers. They are a direct result of growing demand by filmmakers, studios, exhibitors and consumers for the IMAX experience. Our Q3 global market share reflected that, increasing 49% year-over-year to 4.2%, marking a new IMAX high. Our goal, though, is not to just outperform the market, but to expand it, drawing more consumers to theatrical, eventizing content while opening the aperture to bring audiences more of the entertainment they seek, whether Hollywood, local language or alternative content. This works for us, but it helps our studio partners, it supports our theater customers, and it is responsive to consumer demand for the best possible experience. All of this has resulted in year-to-date performance that positions us to meet or beat every one of our full year guidance measures.

Taking a closer look at our Q3 results. Overall, we delivered revenues of $107 million, 17% growth over the prior year third quarter of $91.5 million and achieved gross margin in Q3 of $67 million, which grew 32% year-over-year. This resulted in a 63% margin, which is a 740 basis point improvement over the prior year period, reflecting high incremental profit flow-through from the stronger box office performance.

Looking at our results at the segment level, Content Solutions revenues of $45 million increased 49% year-over-year, driven by the significant growth in IMAX box office, which, as Rich described, was propelled by a diverse mix of content globally. I am especially pleased with the programming agility we demonstrated. We released 4 fewer Hollywood titles in the quarter than the prior year, and yet we were able to grow box office 50% by consistently capturing higher opening weekend market share and leaning more into local language while adeptly filling in with alternative content. Overall, this led to the third quarter global market share of 4.2% on less than 1% of screens, driven by a remarkable 6.1% share of domestic box office. And the setup for Q4 looks very positive with major titles in front of us, including Avatar Anchoring the year.

Content Solutions gross profit of $32 million showed tremendous growth, up 94% or $15.5 million year-over-year, while gross margin reached a record 71%, up a substantial 1,600 basis points from the 55% gross margin in the prior year, spotlighting the significant incrementality that results from higher levels of box office. Technology products and services revenues of $60 million was up $2.4 million year-over-year with gross profit of $35 million, resulting in a 58% margin, up approximately 250 basis points year-over-year, driven by both growth in our global box office and maintenance revenues that more than offset a lower level of systems installed under sales arrangements. System installations in the quarter of 38 systems compared to 49 in the prior year reflected in part the more balanced timing we're seeing this year with a higher level of first half installations. As of today, we are at approximately 100 system installations. And as highlighted earlier, we now expect to be at the high end of our system installation guidance for this year.

And the momentum for signings continues with 19 signings in Q3 and 142 September year-to-date, already exceeding the 130 for full year 2024. The diversity of signings is especially encouraging. We have achieved near record signings in Japan of 11 systems, many of them are in new and exciting locations in underpenetrated areas in the country, and they're performing exceptionally well since opening. We've built momentum in Germany with the successful release of our first-ever German language film in Q3 that resulted in a very strong opening weekend, and we expect we'll have 4 new German locations open by the end of the year.

We are very excited about the growth in Australia as well, where we have had signings with multiple customers and expect to exit the year with 10 open locations compared to 2 locations a year ago. And in the U.S., we expect to expand with new regional partners, including 5 signings with Apple Cinemas in the quarter with 1 in a highly desirable central area of Philadelphia. Operating expenditures, defined as research and development and selling, general and administrative expenses, excluding stock-based compensation, was $30 million in the third quarter which was consistent with the second quarter, however, increased year-over-year as the third quarter of 2024 benefited from adjustments to performance payouts related to our SCT business and from the timing of capitalization of film camera costs. We continue to focus on looking for ways to better use technology and scrutinizing work processes to find productivity opportunities across our business.

Overall, our strong operational performance led to a third quarter total consolidated adjusted EBITDA of $52 million, which increased $13 million or 34% year-over-year, driven by higher revenues, which mostly flow through to gross margin. This resulted in an impressive adjusted EBITDA margin of 48.6%, up approximately 630 basis points year-over-year and giving us a year-to-date adjusted EBITDA margin of approximately 45% relative to our full year guidance of low 40s percent. Third quarter adjusted EPS was $0.47, up $0.12 year-over-year, driven fully by strong profit growth as our Q3 tax rate of 19% was a headwind of $0.03 year-over-year. Our September year-to-date tax rate is 24%, which is consistent with a normalized effective tax rate and what we would expect for the full year.

Turning to cash flow and the balance sheet. Cash flow from operations of $67.5 million set a new quarterly record. This excellent result reflects the very positive incrementality in our model as well as the timing of collections of the larger first half box office titles. September year-to-date cash flow from operations was $98 million and has already exceeded by 40% 2024 full year operating cash flows of $71 million. Year-to-date free cash flow before growth CapEx is $87 million and equates to an adjusted EBITDA conversion of 68%, a very strong result through 9 months. As previously communicated, we expected operating cash flows to show strength and growth this year. Similar to total adjusted EBITDA, the dynamics of cash flows 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.

Turning to investing cash flows. We continue to prioritize use of our available capital to invest in the business, including $24 million spent on growth CapEx year-to-date related to partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue sharing arrangements. This represents an attractive return on investment opportunity as numerous large partners, including AMC, Wanda and Regal are ramping up investment in IMAX as they upgrade their complexes, including bringing IMAX in to replace other premium formats as they look to capture more of the market share gains IMAX is delivering through our film for IMAX program and the exceptional slate ahead of us in 2026, 2027 and beyond.

Our capital position remains very strong with a Q3 ending cash balance of $143 million, an increase of $34 million from the second quarter. In our capital structure is $230 million of debt 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 and the nature of the instrument, whether that be with our revolving credit facility or through new notes. Debt, excluding deferred financing costs, was $261 million, and our current available liquidity is approximately $544 million.

In conclusion, the team continues to execute well. We are successfully capitalizing on our strengthening position in the theatrical ecosystem and the growing contribution we can make to the industry. We are deepening partnerships with studios and filmmakers, programming with agility, our global commercial network of over 1,750 locations, connecting with our fan base to bring more of the Hollywood, local language and alternative content they're seeking out and partnering with existing and new exhibitors to bring the IMAX experience to more moviegoers. The model is working. The operating leverage we have discussed is coming to fruition. We are gaining market share and meeting or exceeding expectations across our guidance measures of IMAX box office, installations and adjusted EBITDA margin. But to be clear, we are not resting on our laurels, and we are focused on delivering results through the end of the year and beyond.

As we look past 2025 into 2026, there is good visibility into IMAX's future system installations as well as the film slate. We have a backlog of nearly 500 systems and an addressable market less than 50% penetrated with potential for additional zones. We also have an increasingly clear view into the film lineup for 2026 and beyond, including significant mega title catalysts on the horizon. We believe IMAX has never been in as strong a position, and we have scheduled on December 4, our first Investor Day since 2017 to share the compelling opportunity we see in front of us, how we will execute to capture it and in turn, deliver strong shareholder returns. We'll dive deeper into what we see as the next era of IMAX, expanding our global content pipeline, accelerating network growth and advancing the IMAX technology that continues to redefine the cinematic experience. With that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of Eric Handler of ROTH Capital.

I wonder if you could talk a little bit about your margin potential. I mean, 71% for Content Solutions off of a record box office. I'm curious, and you had 100% incremental margin off of that. So at what point does your box office-- where does the box office get to where all of a sudden you see just margins start spiking? And then as far as the costs are concerned, how stable are the costs in the Content Solutions business? And is that number going to have to grow as you continue expanding? Or is that something maybe with AI, you can keep flat or maybe even down?

Eric, thanks for the question. We're still pleased with the operating margin in the quarter. The 71% is a high for us. And we've talked about this many times about the incrementality in our model. And I think Q3 was the perfect opportunity to display exactly what we referenced when we talk about over levels of $250 million in quarter of box office and how the incrementality flows through at essentially an 85% rate. And it could be higher. It just depends on what our costs are for -- that we choose to do for marketing and some of the discretionary costs that we have.

But there is a lot of opportunity to continue to grow our margins and especially as you hit the even higher levels of box office, which is obviously a record year that we're trending to this year with the $1.2 billion. And from a cost basis, when you look at it, we actually don't have a significant increase in costs expected just because our -- the basis of our costs are pretty stable. We remaster and we find efficiencies and leverage -- operating leverage in that because as you distribute to more countries, it doesn't cost us any more money. We're already doing versioning and marketing in all of those countries. And on the SG&A side, we've been able to keep everything relatively flat with small amounts for inflation each year. And I think we've done a really good job on that front as well. And so overall, our goal is to continue to show increases in our margins and allow the flow-through to happen all the way down to cash.

Great. And then, Rich, as a quick follow-up. exhibitors can see that your market share is growing quite nicely. I'm just curious, as theaters see more film for IMAX movies coming, you have the halo effect raising the market share for non-FFI movies. How are -- is the volume of request for proposals just skyrocketing at this point? Or maybe you could talk about that dynamic a little bit.

Yes. I mean, as you know, we already beat last year in signings with a quarter to go. So we've actually delivered more signings. But yes, there are a lot of activity going on around the world. And I think it's not just looking backwards, Eric, what FFI was, but it's looking forward to '26 and also '27 and '28. We've never really had a backlog of films going that far forward. And I think if you're an exhibitor and you're looking at your return on investment and you look at the number of films that IMAX has coming out in the next few years. And I would even add to that, even FFI films, I don't remember the exact number. But I think for '26, we have double digits of FFI films already ready to come out and we're doing FFI films in '27 and '28. So I think the way you asked the question kind of answers itself. The fact we've done so well at '26, '27 and '28 are filling in in advance, have driven a lot of activity in the market.

Our next question comes from the line of Eric Wold of Texas Capital Securities.

I guess kind of following up a little bit on the last question on kind of on the exhibitor kind of demand side, think about from the other way, I guess as you think about the limited amount of real estate for content that you have each year and understanding that, for example, '26 is mostly spoken for with content already under contract. I guess what is the best opportunity to really drive from your end or work with the exhibitors to drive greater box office revenues on that content? For example, where can you further leverage marketing to drive attendance and drive people into the theaters on that content? And I know you can't necessarily push price from your end, but why aren't we seeing more ticket price leverage for IMAX films from the exhibitors given the clear demand from moviegoers, especially given the limited runs that most of your films have in their theaters. Why aren't they taking price even more so on IMAX films?

Eric, first of all, just to put it in context, when you said there are a limited number of slots, I just want to remind you that this year, we'll have 140 pieces of content. So it's not like we can't program more things or multiple things at the same time. In slower times of the year, we could have 2 or 3 films sharing screen time, and we've been doing that. So there is room to fit more content.

And in terms of price, as you saw with the Odyssey, we put some film tickets on sale a year in advance and the ones we put on sale sold out. So that's usually a sign that under price elasticity, you can raise the price. As you correctly said, that's a decision the exhibitors have to make, but not us, but particularly in a year that's heavy in film like '26 with Odyssey and Dune and other things that will be coming out. I wouldn't be surprised to see exhibitors press it a little bit, particularly in the film area. And then finally, obviously, the name of the game is capacity utilization, which is related to market share. And this year, as our market share has grown so nicely, capacity utilization has gone up. But still, capacity utilization is relatively low as it is in a lot of entertainment businesses. And I think there's an opportunity in that area as well.

Our next question comes from the line of Drew Crum of B. Riley Securities.

So I had a couple of questions on 2026. I guess you're likely to address this at your Investor Day, but any preliminary thoughts on 1Q and your ability to grow box office as you lap a tough comp from Neha 2? And then separately, I noticed in your press release and your prepared comments, you highlighted 4 massive tentpoles. Absent from that was the Avengers, which I think historically has enjoyed success on IMAX screens. Just curious if there's anything to read into that omission.

No, dating though, typically a year in advance moves around. So it's very hard to pinpoint exactly what the movies are going to be and what dates they are. So I think we're just trying to be conservative in what the slate is looking like. And I think the point we made was that we have 4 or 5 movies next year, which include in the first quarter, the carryover of Avatar, it includes Mandalorian, it includes Odyssey, it includes Narnia and it includes Zoom. So actually, the question you asked, we had a Board meeting yesterday about the comp of [indiscernible] next year. But I just named you 5 movies that I think will exceed whatever their comp was this year.

So as you know, we're a diversified portfolio. And you can always in any year, say, well, you have this really good film. How are you going to replace it? And the answer is you look at the whole slate and you look at how it's going to come together. And we'll, at our Investor Day, talk about guidance for '26. But suffice it to say that looking at it very early, we think it will be stronger than '25.

And our next question comes from the line of Omar Maj of Wells Fargo.

Maybe just more broadly, you recently announced the first IMAX Investor Day since 2017. And I'm just curious, why is now a good time to get together and share what's ahead for IMAX? Just if you could share what you're most excited about for IMAX in the years to come, that would be great.

I mean, Omar, not to be kind of an a hole about it, but I think we have a lot to talk about in terms of how '25 performed and how '26 will perform. Then it kind of close off my answer to Eric Handler's question. I mean there's never been a film backlog the way there is now. And even like I said to the last question, I think we'll provide a lot of context around some of those movies in which we've seen a lot of them, and we know a lot about them. And I think just putting titles on a slide is different than giving a context.

But I think if IMAX is in a 1 year or a one trick pony, I mean, we think we have sustained growth going for years ahead. And I think we thought it was really important. I mean, we believe we have a new level set for IMAX. So as you probably know, films that we used to do 10% of the box office, blockbusters, we're now doing 15% of the box office. Again, a question that was just asked about the activity on the on the theater side and signings, what's going on. We just think it's the right time to put the story together and put numbers to it. And obviously, our stock has had a nice little run. But from our point of view, we think it's the beginning of the run. And I think we have a lot of data to support that.

And then I'd say one other thing would be since '17, we have a lot of new talent in management that a lot of investors have never met. And I think it's just a good idea. I know Natasha and Jen and I have met a lot of investors, but we have a pretty deep bench, and we think it's a good time to let the investors talk to that bench and get their color on things.

Great. And maybe just a quick follow-up on the global opportunity set. You obviously have momentum in the business and a great 4Q slate ahead that ends with Avatar Fire and Ice. What countries or regions do you think IMAX has the biggest opportunity to drive incremental installations and grow the network? And any color on that would be helpful.

So the reason that's a hard one to answer is because of my last answer, which is that there's been kind of this reset in what the box office could look like. And when you start to put in numbers in that reset, the ROIs look differently and our ability to invest in JVs and make a better return look differently. So I think we're really assessing how to generate more growth around the world. So if you look historically, this year, Japan has been very strong. Western Europe has been very strong. Even North America has been very strong, and we announced a couple of deals there. And I think there's more to come in North America. But I don't want to be constrained so much by the past, and that's the kind of thing we'll go into more detail on Investor Day because I think the performance and the numbers open up different opportunities.

[Operator Instructions] And our next question comes from the line of David Joyce of Seaport Research Partners.

In thinking about your programming strategy, how do you weigh the pros and cons along with the various economic impacts of running concert films or rerunning a recent release like Formula 1 or an old one like Jaws Grand is the 50th anniversary versus showing a new theatrical release like Jurassic World that you were not able to show earlier in the summer?

Yes. Well, just to get the facts straight, Jurassic World came out the same week as F1 did, and we had committed to F1 already. So I mean that's the first rule is that when we commit to something, we sign a legal contract and we can't change that, although we could try and fill it in from show to show. But for the core part of your question, not every week has films that are going to break out. So we try and use alternative content or local language films more in the slower periods or bring back as you asked about. So we look at our calendar for this year and next year. And for example, we know that on July 17, Odyssey is coming out. So obviously, we're not going to bring back a film or show a concert film on that weekend. But on other weekends, there's just no big releases coming. So we know that way in advance, and we'll make plans for how to fill in the schedule.

And one thing, another context to put it in is we recently hired someone who has experience doing programming on the exhibitor side, and they're working with our distribution team to try and maximize the box-by-box programming with our Chief Content Officer, Jonathan Fisher. And if you look at the third quarter, that's the perfect example where we plugged in a lot of things and we mix and match. So just one example because it comes to my mind is the weekend with weapons open, we played weapons a lot, but not everywhere, and it did really well. But Formula 1 still had a lot of gas in the tank and to use a bad analogy. But that's now close to $100 million. So we're able to mix and match a little bit more and particularly in the periods where there's no obvious winner. And Q3 was the perfect example of that. That's what really drove the outstanding box office.

And is there a margin differential? Like is there marketing on some sorts of content that tilts the scale for you one way or the other?

Not really because, for example, we brought back Jaws, but we timed it to the 50th anniversary of Jaws. So we didn't have to put up a lot of the marketing. The studio put it up in connection with the 50th anniversary. This weekend, we're playing on the Springsteen concert. And what we did was that was timed to the theatrical release of the Springsteen movie. So it comes with a lot of marketing. So as we try and figure out what slots to put them in, one of our considerations is not having to put up significant incremental costs.

Our next question comes from the line of David Karnovsky of JPMorgan.

Maybe just 2 quick ones for Natasha. The full year guide implies a little bit lighter of margin in Q4. Just wanted to understand the puts and takes there in terms of install mix, box office or whether there's any kind of marketing consideration for Avatar. And then just similarly for working capital, how should we think about the balance of the year given those big titles sitting in the final weeks?

Sure. David, I'm not sure I heard the first part of your question, but I think the second part was about SG&A and then box office, correct?

No. The question was basically about margin in Q4, the guide implying that being down a little bit from what you've done year-to-date. Just wanted to understand the puts and takes there and then the outlook for working capital given Avatar is sitting late in the year.

Yes. So our guidance for EBITDA margin was updated to low 40s in last quarter. Year-to-date, we're at just under 45% at 44.9%. And the first half was at about 43%. So I think the individual quarters, obviously, we see they drive different margins. But we have said this before that Q4's margin, we expect that we'll have incremental dollars for Avatar marketing, which we will spend in Q4, but the Avatar box office will come in not only in Q4, but then we'll get it in Q1 as well. So you'll have lower cost in Q1 with respect to marketing on Avatar. And then -- from a cost perspective, we'll hold a few more events versus Q3, for instance. We obviously attend several conferences along with our Investor Day that we're planning in Q4. But other than that, there would be nothing that significantly hinders the margin from continuing along its pace towards our guidance of low 40s percent.

Working capital?

And on working capital, I mean, from a cash flow perspective, this was a record quarter for us. And as we look at cash flow, and we've talked about this before, but when you look at cash flow on an annual basis, that's essentially what we're aiming towards continuing to grow that conversion rate and hitting at above 50% and continuing to grow that on an annual basis is essentially where we keep moving, and I'm sure we will work towards updating and providing more insights and guidance into our cash flows in the future as well at Investor Day.

[Operator Instructions] Our next question comes from the line of Mike Hickey of -- the Benchmark Company.

Rich, Natasha, Jennifer, congratulations guys on a great Q3. First question from us, just looking at your market share here year-to-date, Slide 11 in your deck, 3.8%, definitely setting a record. It looks like domestic 5.2%; China, 5.3% and rest of world, 2.4%. So I guess the question, Rich, is how you're thinking about rest of world market share gains relative to your forward growth targets. It seems like rest of world could be a great unlock opportunity for you. Or is there something structural holding you back from achieving sort of the market share that you're seeing in the U.S. and China? And then I have a follow-up.

The only thing holding us back, Mike, is more theaters. So obviously, in growth markets like Vietnam and Indonesia and places like that, we have much less penetration in India. So you have lots of screens, big populations and not as high a percentage of IMAX theaters. So obviously, we'll target those, which ties to an earlier question and try and build up the theaters. But there's nothing endemic about those markets, just there's not as many IMAX theaters. And by the way, it a little bit goes the other way because as we double down on local language films like we've had local language in Malaysia, in Indonesia, in Saudi Arabia, as we step up our local language, that will obviously increase our market share in those territories. So there's nothing broken. It's just an opportunity that we need to fill in more.

And then last question, I promise I'm not being a wise guy here, Rich, just on your installation growth potential for '26. Curious your thoughts there just given the extreme success you guys have had in 2025, which might be slightly a pull forward or not. But just curious your confidence here on '26 and the signings have been very strong.

So let me be clear. There's no pull forward there. It's a result, the reason at the high end is we had really good signings here, and we have such a good slate and good slate ahead of us in '26. that I feel very good about where we are this year. Obviously, we raised the range of our guidance. And for next year, Mike, if you look at the correlation between film slate, film for IMAX and the large movies, it should be a positive year. Again, however, we're in the middle of our budgeting process. And hopefully, by Investor Day, we'll be able to give you more concrete guidance.

Our next question comes from the line of Pat Scholl of Barrington Research.

I just had a question on alternative content. I mean you laid out your visibility for the broader Hollywood sleep. Can you maybe just talk about the visibility that you have into the alternative content to sort of even out those box office periods?

We have some visibility, but a lot of it arises in a couple of months before it comes out. And we're doing -- I think it was in my script, I don't recall, but we're doing the League of Legends in China, which came about. It got finalized, I don't know, 2 weeks ago, and we're doing over 220 theaters for the finals and then we're doing the semis in the quarters. So it's both. Some things will be -- like we have a music, 2 music projects, one in February and one in May, which we're in the middle of documenting right now. But on the other hand, there will be other projects that will come up more or last minute and some of the live events where directors speak around those -- their movies, that tends to come together a little bit later. On the sporting things, I think, come a little bit later. The music -- especially the music docs, they come more in advance because the studios know when they're being released. So it's a combination of the type of content.

We have time for one last question. And our last question comes from the line of Steven Frankel of Rosenblatt.

Rich, you guys have pointed out that local language has consistently been over 50% of the box office mix in China over the last couple of years. Do you think that's a permanent change that your penetration into Tier 3 and Tier 2 markets means more local language? And can you do things to kind of accelerate that local language growth in China going forward if you think maybe Hollywood has peaked as part of the mix there?

Yes. I mean I wouldn't get pinned down to an exact percentage, Steven. But I do think that local language is permanently going to be a bigger part of the box office than it was before. And I think you put your finger on one of the answers, which is because of 2 or 3 and 4 markets and our increased penetration there. And I also think, and this is important, that we've done a better job of penetrating the local markets there. So our CEO there, Daniel Manwaring, is extremely connected in the film industry there, and our team has done a very good job, and the results speak for themselves. With that said, I wouldn't give up on Hollywood box office.

So for example, Avatar traditionally does very well in China. It's getting in the same day as it got in the U.S. So I would expect to see strong results there. Zootopia at Disneyland in Shanghai, there's a separate part of it called Zootopia Land. So it's a very big franchise over there, looking into '26. The Nolan movies do very well. And obviously, the Odyssey is a very high profile one. Dune has done well there in the past. So again, that's why I'm not sure about particular numbers and percentages, but I do feel like local language will continue to be strong, but don't give up on Hollywood quite yet. I mean -- and you should just be reminded in that context that our take rate on local language is higher than our take rate on Hollywood films in China, and that's because of the theatrical split. It's not an IMAX anomaly. It's just Hollywood films get a lower split than local language. So financially, that's a pretty good thing for us to keep in mind.

This concludes the question-and-answer session. I'd now like to turn it back to Rich Gelfond for closing remarks.

Yes. Thank you very much, operator, and thank you all for joining us today. I met some pre-pandemic was on a tremendous growth curve. And as you know, '19 was our best year ever at that point. And then unfortunately, not just for IMAX, but a lot of the world, the pandemic slowed it down. And we've been using the time since the pandemic to build up a lot of different pillars for future growth, and they include things like local language content, different ways of looking at marketing, alternative content, not just local language in one country, but across many countries, rationalizing our cost structure. And I think in 2025, I mean, we saw good years in '23 and '24, but all that really came together. And we kind of broke out. And I think if you want to find a quarter that epitomizes that more than anything else, it's the third quarter we just finished.

And I said this during my remarks, but I think you can't summarize it any better than to say the North American box office was down 11% in the third quarter and the IMAX box office globally was up 50% in the third quarter. So if that doesn't show how we've separated ourselves from people in different businesses that some people confuse, I think this quarter painted a very clear picture. And as you could tell from Vikash and my tone on the call, when you look at the slate and you look at a number of other factors, I think we're very optimistic that we can maintain kind of that momentum going forward. So thank you all very much, and we'll talk to you -- hopefully see many of you at Investor Day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Welcome to our 32nd Annual Media and Telecom Conference. We're thrilled to start the day with Rich Gelfond, CEO of IMAX, and Rich has a lot to talk about today.

So you've clearly managed your business extremely well and what is only -- can only be described as a very challenging box office environment post pandemic. What impact has your global programming strategy had on your business?

A really significant impact, Jessica. As a matter of fact, if you look at the theatrical industry, in general and particularly North American box office, it's having a very challenging year.

For IMAX, this will be a record year. And we've guided to $1.2 billion in box office revenue, and we're tracking very well against that number. As a matter of fact, the only reason I'm going to reveal this is because online at the end of every month, we post our box office, so we're going to post it today. So quarter-to-date, we're at about $270 million, and consensus is $286 million, and we have a month to go.

So while others in theatrical have kind of been negative and saying the box office is terrible, not to go too overboard with it, but quarter-to-date, we're up 40% from last year. And the North American exhibitors in North -- with their box office is down14% quarter-to-date. So we're just in a completely different business. And we've been saying that for years. And this is -- last year, I guess, the first year investors really understood that much more, and our stock has been on a tear, and we're close to a 5-year high on a consistent basis. But who cares about that? What I care about is how the business is doing, and it reflects very much reality. So some of the key points, I'm sure we'll get into this, is we've really pivoted where we do not just North American movies, but global content.

So 1/3 of our box office year-to-date is foreign language film. We're doing a film now called Demon Slayer, which is a Japanese film, and it has already become the biggest film in Japan in the history of IMAX. I don't remember exactly the number offhand, but we're releasing it in 40 other countries. And this movie will do really high numbers for us. And I bet most people here never even heard of the movie.

And I think one of the bigger issues with Hollywood is that they have a mantra, which is streaming, streaming, streaming, and they've been just so focused on streaming. So pre-pandemic Hollywood's market share was 80% of content. Last year it was 60%. So if I were running a company, I think I'd have a lot to answer for losing 40% market share over that period of time, but everybody seems to be doubling down on streaming whereas the only ones I can think of are IMAX and Netflix that have really been looking globally for box office and it's been really...

I was going to say that you sound like the Netflix of theatrical. So you take a lot of local content and it translates.

Yes. And it's not just in the country, it plays in. Demon Slayer is a good example because we're showing that in 40 other countries. And then just briefly, we also do alternative content. So in the last week or 2, we've done a dead rerelease of a film, a Dead live concert from Golden Gate Park. We have prints playing right now. Later in the year, we have the Stones. So we all -- we program it like almost like, someone who owned a box would program it. We did League of Legends in China, the final and it's sold out in 160 theaters, pretty quickly.

So we have a totally different view. We think -- we know we have a platform and we're in 90 countries, and it's just a different business.

All Right. We will get back to some of those, the comments that you made. But in a world where premium or demand for premium is so great. How do you think about the positioning of IMAX in the overall landscape?

Well, I think your point about premium applies beyond theatrical. So if you look at sporting events, things like F1 or Formula One or you look at concerts, the public post pandemic seems to really be seeking out premium experiences. And we have competitors, their biggest similarity is they have an X in the name that's how they compete with us.

But the public really wants premium experiences, and they're willing to pay extra for them. And our market share has gone up consistently. We have a 40% higher market share than we had pre-pandemic. And one of my favorite statistics is in indexing in the United States in our 50-plus year history. Before this year, we had 5 films where we did over 20% of the box office on 1% of the screens.

In the last 3 months, we've had 3 films that have done over 20% of the box office on 1% of the screens. And when you look at the demand, because part of your question was how do you sustain that? The ecosystem really gets numbers. So the studio is really leaning in. The directors are certainly leaning in. And what we do is we have a film for IMAX program where we use IMAX Cameras both film and digital to capture images.

And for 2026, we already have 11 films committed, which is about the number we had for all of this year and '27, '28, we even have films for '29. So I think it's become like a virtuous cycle where I talked to one director last week who called me up to talk about the next few films he was making. And he said, well, I need dates for '27 and '28. And he said, we got to talk about it now because I'm not going to release the film if it's not released in IMAX.

So on that topic films for IMAX films, I think you've more than doubled the number of titles this year since -- in the past year or almost doubled. Can you talk a little bit about how you're able to drive studios and filmmakers to use the technology in production?

Yes. As a matter of fact, I like to think about how much content we put through the network. And this year, we'll have 130 separate piece of content. So that includes Hollywood films or local language films or alternative, all that. We don't have to push it through this demand. So this anecdote, I was telling you about the filmmaker, I mean, he called me last week on vacation to make sure that he gets these dates. And there are projects out '28, '29, where the filmmakers are driving it and the studios are driving it.

And one of our most difficult nuts to crack not surprisingly, historically was the Walt Disney Company because they're so -- their brand is so strong, and they lean into their brand, but they observe that IMAX was doing all this over-indexing. So really, it started on their own they said we want to lean in heavily to the IMAX brand, and they do it really way in advance. So Avatar is the end of this year, we already with them have great brand campaign centered obviously around Jim Cameron in the movie, but IMAX is a really big part of it. So it's much more their ability to read the financial results and then they're coming to us.

Right. So what is the typical difference in how these films perform, the films in IMAX versus call it a regular film like...

Well, in IMAX, we used to be about 10% of the domestic box office for kind of a blockbuster sort of like a Marvel film or another kind of action film. But this year, we're doing 15% on those kinds of films. So if you're dating a blockbuster film, it kind of sounds hard for me to believe, even though I'm saying it is a lot of the studios plan their release schedule around the availability of IMAX screens. And a lot of behind the scenes trading takes place where a studio is saying, "I'm going to release a film on this date," but we're booked with someone else, and they move the date.

There were 2 films dated on the same day, Predator from Disney and Running Man from Paramount this year and that we were going to share screens for both of them, but they worked it out, so they moved the dates. So now we have a full week to play Predator and a full week to play Running Man. So it's kind of ironic because all this is very much in the background, but where we play a strong role in curating how these films fall together, like it's not an accident that a lot of blockbusters aren't dated on the same date because the studios really want an IMAX release.

And do you envision a point in time where most or all of your films across your network are filmed for IMAX?

I don't think so, Jessica. And the reason is we like to do special films. So obviously, coming up in '26, one of the most special is The Odyssey that Chris Nolan is doing. And Chris approached us, I don't know, 1.5 years ago to say, could I have July 17, 2026. And we usually don't make this bigger commitment, but we committed 3 weeks to him to do that. And increasingly, that's very much what happened. So in '26, we're playing the new Star Wars, the Mandalorian film. We locked that down. I don't know, 6 months, 8 months ago.

If you think of the real Avatar we locked up a long time ago. So the studios and the filmmakers recognize the incremental box office. And also, this kind of sounds weird, especially at a financial conference because you would think it's all about the money. But for the filmmakers, it's about more than the money, it's about painting on the biggest canvas on the planet, and it's the way they want their movie shown in the way they want to do it.

So when they work with us, and they have really good financial results. And we've done tests where you ask how much the audience likes a film after they've seen it in IMAX and you ask how much they like the film seeing in a regular theater. And by the way, it's -- we -- they are separate groups who ask, but that you get a much higher like score. So it actually -- it makes the film better for the audience and going back to one of your earlier points, especially at a time where people are leaning into premium and especially coming off a time when they got a little tired of watching everything on the couch and taking all kinds of breaks and their kids coming in and out, this has become a much more popular way to watch movies and the filmmakers really know that.

So there's a lot going on. We've kind of alluded to streaming or talked about streaming a little bit already. But -- so I'm going back to that. There's just so much going on in theatrical production and distribution even with the streamer. So you have Amazon, MGM with coming releases, Mercy and also Project Hail Mary. Apple released Formula F1. Netflix, K-Pop Demon Hunters went from streaming to theaters. So now with the streamers coming to theaters, could you talk about the implications for this on your business and theatrical overall?

Well, first, at a very high level, what drives IMAX are the slots that we have. So even though I said there's 130 pieces of content, the main blockbuster slots, I don't know, there are 15 of them that drive a lot of the box office during the year. And you have the studios competing for those slots. Well, now you have the streamers competing for those slots. So if there are 5 people competing for these slots, you now have 8 because you have Apple and you have Amazon and you have Netflix. So like in any business, having a stable supply but more demand. I mean that's a really good thing for your business in the most simple terms. And we made a particular push into streamers.

A lot of people have treated streaming or theatrical as like a religion. I'll never show something streamed or I'll never take my product and put it in a theater. But we have a much more pragmatic view and I really think we're going to succeed at. It's the new model, it's going to be some kind of hybrid. And we figured out that we want to be part of that hybrid. So a couple of very quick examples. In F1, which was produced by Jerry Bruckheimer and Joe Kosinski directed it, both of whom did Top Gun and they did Top Gun with IMAX, where we're really successful.

A year or 2 before they started the movie, they came to see us. And they said, tell us what an IMAX date could be because we haven't succeeded theatrically and we want to lean into theatrical. So we were a part of it. Their distributors were Warner Bros, but they didn't hire their distributor until about 6 months after we reached a deal. So they did an unconventional route. They didn't go through a studio. They want us. And we're close to $100 million in IMAX in F1 and the film has done about $600 million worldwide. So we're about 15% of the global box office. And it's a different movie in IMAX. So I wouldn't say that about every movie, but if you see it is just a completely different movie. And then I don't know.

As you know, I could talk about this for a month, but Narnia is coming out the end of '26 and that's a Netflix film. And everybody knows that Netflix has had kind of a bias against theatrical and everybody is fighting with everybody else. So Greta Gerwig is the one who really started it. She felt that she was really making an IMAX movie. And she always wanted to make an IMAX movie and she and we came up with a plan, where we talk to Netflix. And so -- in Thanksgiving of '26, the film is coming out in IMAX a month before it comes out on streaming. And the agreement we made, which -- you understand, we didn't have to do that movie. So we're not like a theatrical North American exhibitor that needs the content we have more demand than we have supply. So we were able to drive a deal that worked for IMAX, which is one where we said. Okay, we'll do it, but we want theatrical marketing.

We want Greta to do her interviews, real premiers, you'll see the marketing, which we're already working on, much of which is going to say, see it on IMAX and in Netflix and it's exclusive to the IMAX network. So our roughly 1,800 theaters worldwide. So if you're not in the IMAX business, you're not showing that movie. So I think that's a tremendous opportunity.

And we saw this weekend even with the K-Pop movie that Netflix released that despite at a high level, people fighting, the audience is really happy to see the right movie which you could stream in a theatrical way. And it's really worked. And Netflix can see it for themselves, but at Netflix, I think there are a lot of people, including Ted to some extent, that think this is a good experiment and are looking forward to the results of it. And I know it's hard to believe, but we get along really well. We're working together. And I do think the other part of your question had to do a traditional exhibitors. I do think over time, there's going to be a model where theatrical and streaming work together, I think this weekend was just the beginning of it. And I do think not only because of the slots, but because the filmmakers will be significant beneficiaries of that.

No, all things definitely seems to point to theatrical even with Netflix, which is a huge change. But there's also other stuff going on in the industry. It seems like finally, after years and years of expecting this, that media consolidation is just seems inevitable. And we're starting to see the beginning with Paramount and Skydance and this ramp in speculation about legendary and Lionsgate or Lionsgate and somebody, likely sale of Warner Bros, post the split from Warner WBD. Are there any implications of all of this on your business?

Yes. I think they're mostly good ones because I think what you do is you bring more capital to studios or entities that are undercapitalized. So Paramount guidance is a really good example. So David Ellison announced that, I guess, some conference recently, that he's going to do, I think, 20 blockbusters sorts of films rather than Paramount was doing 80 a year just because of the capital constraints that they were operating under. And I don't remember the number, but we've done probably 15 movies or more with Skydance over the years. We have a great relationship with David and with Jeff. And we're already discussing more movies that they could do in IMAX. So that's kind of one example.

And then your other part about consolidation, another place I would go is like Amazon MGM. So Amazon was very kind of leaning away from theatrical, and then they bought MGM. And on the list, you mentioned Hail Mary and Mercy and a number of other movies, they're very interested in IMAX release.

And then there's the numbers. I mean, despite what some people say, you can't deny the fact that a theatrical release enhances the value of streaming. And in fact, we did a study. I don't talk that much about it because it's not the most scientific thing, but I think directionally is important, where we showed consumers, movie posters and some of them said, see it in IMAX and some didn't. And we said, how likely would you be to want to see this movie in streaming. And again, one reason I want to push it too hard because it was almost too good to be true. But when you put the IMAX name on the poster, so many more people said they want to see the streaming version. I think F1 is going to be a great test right now because Apple really held a fairly long window originally, they made it for streaming.

But I think we're going to see great streaming numbers. And I think it's going to work for them. And then I think the exhibitors like we just saw this week and are just going to decide how is it better for me not to play that content? I mean I just think it's like kids in a sandbox. But when people kind of get real about what's best for their business, they're going to converge in a way that's going to be good for everyone.

So maybe moving on to markets outside of the U.S. I mean you generated the majority of your revenue outside of North America. How much more runway is left for growth in these markets where you still seeing somewhat underpenetrated?

So we give out kind of guidance about what the addressable market is. And the last time we did that was 3 years ago, where we're going to have an Investor Day later this year. We're going to give out a new or revised version. But we're about 50% penetrated now of our total addressable market. Even the U.S., which is one of the most penetrated, we made deals with 8 new different chains last year.

In Australia, last year, we had 4 screens and the year before, we had 2 by the time Avatar opens this year, I think there'll be 10. So it's the kind of thing. It's a very weird dynamic because people say, well, it works in Malaysia and Korea and Japan, but it's never going to work in Australia. And then surprise, it works in Australia. And then you have the theater chains compete with each other, and that's what's going on now in Australia. So that's why it's grown so rapidly.

Another really rapid growth market is Japan, where we've had 11 signings so far this year for new theaters and the most we've ever had, I think, is 12. Western Europe is still very underpenetrated. Obviously, the Middle East is really good growth area for entertainment in general. And for IMAX, the disposable income is high. The IMAX ticket premium, they could afford it. So that's a very good market for us. A little ways probably a little farther back is South America. There are a lot of -- I hate to use the word at a conference like this, but there are a lot of tariffs coming from South America, and it's really hurt our growth in the region because they're so high. And obviously, that world is changing fairly rapidly. So we'll see what happens there.

Most of our growth will come outside of North America. And by the way, 2/3 of our revenues are outside North America now. And before anyone asked the question, the economics are virtually the same, anywhere in the world. So it's not like a subsidized thing. And Formula One, I think that 2/3 of its business outside of North America. So I think again, for a relatively small company, were really global, and I think that will really sustain our addressable market over the next number of years.

I don't want to front run your Investor Day, but have you said what your network potential is?

We haven't and we probably will do that at our Investor Day. Other than to say it's about double where it is now, we haven't said that.

So in the first half of this year, your local language box office is already over 50% higher than in '24. How do you view local language content evolving as a percentage of your mix?

So if you go back to a pre-pandemic around in '19. In China, local language did pretty well for us. But that was about it. And I don't remember the number. I think it was probably 10% of our box office local language. In '23 and '24, it was around 20% of our box office. And as I said, this year, we're about 1/3 right now. But earlier in the year, as you know, there was a Chinese film called Ne Zha 2, which did over USD 2 billion, mostly in China, but globally. So we were -- it was 40% of our box office. So now it's settled down to around 33%. But as I said, Demon Slayer is going to be a pretty big movie. I think 40% is a reasonable goal over the next couple of years, but it could be a lot more than that.

So a little anecdote that's right up to date is, we had a very good second quarter. We beat on almost every line and our stock went down 15%. And the reason was, everybody said, "Oh, August, it's going to be a terrible month, Fantastic Four is the last of the blockbuster movies coming out of Hollywood. And we tried to say we have Demon Slayer, we have alternative content this that. But investors are very much in this North American mindset. And had they sold off the North American exhibitors that would have been right because as I said, they were down 14%.

Well, we're back higher than we were then because we're quarter-to-date, up 40%. And I think that's one of the biggest disconnects as people think of our business like they think about North American exhibitors, but the local language business is huge. And there's been a huge change in the local language business in the last couple of years, which is that we did very well in the country where the film was from. So if we did a Japanese movie, it did very well in Japan or a Chinese movie in China. But they've started to migrate. So a lot of the box office. So I don't want to remember the name of the movie, but Anime is very successful globally. So some of the anime movies we've done give us more box office in China than they give us in Japan. And that's a trend. I definitely see happening.

And again, I think eventually, it's an opportunity for Hollywood, but they're still so obsessed with this streaming narrative. And again, nobody asked my opinion so they can run their business the way they want. But I think that's an obvious way to go. And I think you'll see more of that.

Right. How do you think about allocating capital across regions? Do you see opportunity here in the U.S., China? Or is rest of the world more interesting?

Well, we have 2 models for our theaters. One is where we sell our equipment and one is where we do joint ventures and just a high-level version of our model, when you blend it all in addition to upfront payments for our systems, we get around 18% of the box office. So if somebody buys a ticket, we get paid by the studio and we get paid by the exhibitor. We get paid more if it's a joint venture because obviously, we've gotten less money upfront, whereas if that's called a sales-type lease. So we've been a little bit cautious about our capital.

So a bad story probably, but one not so bad for us is we had 60 theaters in Russia, which are all closed now, but we didn't joint venture any of them. We sold them. So we got cash upfront. So when that happened, it didn't really have a dramatic effect on us. So Jess, it really depends very much on the territory. So in China, we used to do more joint ventures, but we've cut it back as the global situation has changed a little bit. So I think since we're generating more cash. I think you'll see us allocating more to JVs in the right territories. We did a pretty big deal with AMC this year and a pretty big deal with Regal, where we did a number of theaters in the U.S. and some foreign markets.

So we think about it less by region and more by country. And again, Japan is one. We love doing JVs with because their per screen averages are so high. Again, we get a percentage of the box office. So you'd rather do a joint venture in Japan than you would in India because the box office is so much higher. So I think that's maybe a better way to think about capital allocation.

Okay. And then maybe moving on to some of the things on the content. For years, franchises in Superhero films dominated the box office, but more recently, they've had big success at best. And we've seen some of the original IP do really well. How do you view these dynamics?

So I think it's good for IMAX because of Warner's 7 movies in a row that have been #1, every one of them was an IMAX film. So Sinners is a pretty good example. For those of you who haven't seen it, I'm sure you know, it's basically a vampire story about the Jim Crow South. And you wouldn't -- that doesn't scream IMAX to you. But Warner Brothers and we both really leaned into the fact that it was filmed with IMAX film, and it was the first movie after Oppenheimer, which won the Academy Award and did a $1 billion -- close to $1 billion.

And Odyssey, which is the next one being filmed with IMAX film cameras. And the narrative was Autumn filmmaker, filmed with IMAX film and Ryan Coogler really leaned into that narrative. So it broke out in the first week and obviously, it was a great movie by a great filmmaker that's not a formula that works. So if it's not a really good filmmaker. But I think it kind of says to the public that this is a special movie. It was shot with IMAX film cameras. And I'm sure most people here heard the anecdote that we and Universal put tickets on sale for Odyssey, a year in advance. And we only put some on for the film ones, and it completely sold out a year in advance. So that's kind of the power of the IMAX brand to have something -- I mean no one had seen a trailer and no one -- Chris Nolan is notoriously secretive about his product, but it's sold out.

And like in New York, I think it's sold out in 1 minute. So I think for original IP, it helps us because us we can really help distinguish it from other IP. I also think the media is way too quick to generalize. So yes, Superhero movies haven't done quite as well. But if you look like one example, Fantastic Four, this was the best Fantastic Four in the franchise ever. So I think you have to scratch a little below the numbers to see what's really going on. And who would have thought that this year, Horror, I guess that's another example like Conjuring opens next week. It's tracking extremely well and final destination, which Warner did really well. And Sinners did really well. So I think people's taste change, obviously, Westerns used to be a big deal and they're not anymore. So I think the studios are just going to be flexible and understand that they need to go in different directions.

Right. And you -- over the years, you've experimented with a lot of different kinds of content. I mean you mentioned earlier, some of the concerts, prints and the rolling stones, et cetera. You've done live events, you've done some sporting stuff, you have experimented. Can you -- what's been successful and how big of an opportunity is this for IMAX?

So as I said, I was really surprised by League of Legends. By the way, we not only sold out, but at a higher ticket price than the regular IMAX ticket price. But the other thing that was good about it was it brought a completely different audience in who learned what IMAX was. So they came back presumably to do other things. This recent run of films we just did. So we did prints over a couple of days of rerelease and we did $2 million this weekend on it.

This week -- prior weekend is a really interesting example. We did about close to $15 million over the weekend, and we did $3 million on a 50-year-old movie Steven Spielberg's Jaws. I was worried about it because I thought the Shark might not look so good, 6 stories high, but apparently, it looked okay. And then we did the Sinner movie, we brought back Formula One, which still has playtime in it and did well. There were 3 or 4 local language movies together. But as a way to give you context, this year was really a rapid change we've been building to this year. And IMAX was on a great trajectory until the pandemic came and then obviously, the pandemic affected us.

And last year was -- '24 was our best domestic box office ever. So it's not like this is overnight, but it's been happening over time in this way. And we shifted our focus a little bit to how to program these theaters a little bit better than just blockbuster films coming out that weekend. We have a different philosophy about doing it. So our original budget for this weekend was $4.4 million, our internal budget. And we did $15 million. So I'm using that as an example of just how much our business has changed and the way we're managing it has changed.

Diversified portfolio. So given the strength -- I have to ask this question because everyone has to ask an AI question. But I mean given the strength of your brand, the reputation is the most premium offering with leading technology, what are the opportunities and the challenges of AI for IMAX. Then just maybe talk a little bit about how you're currently integrating AI in the business and how you think that might even change over time?

So the most obvious example, which we're doing is just how to make our business systems better. So whether it's how to make programming decisions by getting more data and analyzing more deeply how things play, you'd kind of be surprised or maybe you wouldn't be by how data a lot of the analytics are. Well, we're playing a film that's kind of similar to Mission Impossible 2. So it will do the same as Mission Impossible 2. But you could use AI tools to be a lot more sophisticated than that and we're doing that.

We monitor every IMAX theater in the world in real time. So whether you're in Shanghai or you're in St. Louis. When you go to an IMAX theater, we know how whether the bulb is getting old, we know whether the sound is loud enough. I know a lot of people think IMAX, wow, it's a brand, how exciting, use your brand. But it's -- the brand is the sum of the parts. The brand isn't something that exists outside. But we get tons of real-time data, and we're trying to figure out ways to better capture that data and could we control our inventory better by understanding something is going to break 2 months from now, so save costs.

We're obviously using it the way a lot of other companies are in the finance area, finance marketing. And then we're using it in the image enhancement area to some extent. But remember, we don't only film with our cameras, but we take other content, and we blow it up. And obviously, Jaws would be one example. It wasn't filmed last week. And there are a lot of tools out there that help you clean it up again, as I said, I was really personally afraid of what that chart would look like but there are a lot of tools available that can make it better.

And then, of course, there's a whole question of the software aspect and what it does to filmmaking. And I know there's a lot of controversy over what role it's going to play. And I would say, we're not trying to invent new allocations but we're -- we pay close attention to it and where it's going and how it's going to change filmmaking. And actually, I was on the set of the Mandalorian, the new Star Wars movie, that Jon Favreau is using in. And by the way it's not AI, but the way they have new tools that can help film and IMAX version at the same time you can film a regular theatrical version is completely different than you could have done years ago.

For those of you who don't know, we have a different aspect ratio. So IMAX is much more vertical than the letter box and horizontal. So you would take one version and then you would blow it up or you wouldn't. And Favreau and the Disney team invented a tool ironically, they'll talk more about this using the Vision Pro, where at the same time, he could shoot an IMAX version to a different aspect ratio and shoot a regular version. So these kinds of tools of filmmakers, whether they're strictly AI or they're more coming out of the innovation that's coming out I think will help us further differentiate our content.

Okay. So in the less than a minute we have left, I just want to -- I have to ask the question, but as you look out over the next 12 months or through '26, what are you most excited about? What do you think the surprise will be?

So those are 2 different questions. What are we excited about? And what could the surprise be? So you cannot be excited about Odyssey. It's the first film ever shot completely with IMAX cameras, and we spent a fair amount of money and we developed a new generation of cameras, which has a lot more features and is much more flexible. And the principal photography is pretty much done. And as you know, the cast is like red carpet in itself. And Chris' track record in Emma is obviously quite enviable. So very excited about that. For this year, very excited about Avatar. I've seen, I don't know, 20 minutes of the footage and I think it's dumb to bet against Jim Cameron. I think he -- guy knows what he's doing and extremely excited about that.

And then again, next year, the new Star Wars movie coming out really excited about. And then surprise ones, I'm trying to think about that this year, my pick was Formula One. And I think it was the surprise of this year. I'm just not going to go out there, Jess, because I hate to -- and as you know, I like saying whatever I think, whatever the consequences. But I just think it's a little too early to say what it's going to be, but there are a lot of kind of original content. And again, I'm not naming these, but one of them like Amazon MGM is do a Hail Mary, which has gotten a lot of positive views around it.

And I think Disney always comes up like this year it was Lilo and Stitch, they always have things that you haven't thought about it before. And how could you bet against Warner with the Winning Street they're on right now. And I've looked at some of the Paramount stuff coming. So I'm quite sure there will be, but it's too early to identify them.

Great. With that, we're totally out of time. But thank you so much.

Okay. Thank you.

Good day, and thank you for standing by. Welcome to the Q2 2025 IMAX Corporation Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Jennifer Horsley, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for IMAX's Second Quarter 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 on 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 those 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 a reconciliation to non-GAAP financial measures are contained in this morning'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?

Thanks, Jennifer, and thanks, everyone, for joining us as we review another outstanding quarter for IMAX. We delivered strong financial results in Q2, highlighted by installation growth of 50%, box office growth of over 40% and an adjusted EBITDA margin of 43%.

We've opened a total of 57 new and upgraded IMAX locations year-to-date compared to 39 during the same period of 2024. Given the demand for IMAX systems, we're moving higher in our range for full year installations to between 150 and 160 systems worldwide. And we've now completed agreements for 124 new and upgraded IMAX systems worldwide year-to-date compared to 130 in all of 2024.

Q2 was our highest grossing quarter ever at the domestic box office as we remain on track to achieve our guidance of $1.2 billion for the full year. This is a direct result of our strategy to increase our global market share, which at 3.6% of total box office on less than 1% of screens is up 19% year-over-year in the second quarter, and to ensure that IMAX is the platform of choice for filmmakers and studios who want to deliver the best experience for the greatest films from around the world.

Coming into the second quarter, we are focused on an unprecedented run of 8 consecutive film for IMAX releases this summer. Films shot with our cameras, featuring exclusive IMAX expanded aspect ratio designed every step of the way to be experienced on our screens.

With all 7 of these films to date, we've averaged about 15% of the North American box office on opening weekend on just 400 IMAX screens, soaring as high as 20% on Mission Impossible - The Final Reckoning, Sinners and F1.

That's a feat we've only achieved 8 times in our entire history and 3 of those milestones came in this second quarter. And with Superman, our 16% opening weekend indexing marked our highest market share ever on a domestic debut over $100 million. It's becoming increasingly clear that we're raising the floor for our market share. 10% used to be the high end of what we delivered on major tentpole releases.

Now thanks to our film for IMAX strategy, the higher level is business as usual. In May, a New York Times feature posed a question, "Why is IMAX suddenly everywhere?" And the preponderance of film for IMAX releases this summer, along with our outsized share of the global box office demonstrates the importance of IMAX across the global cinema business.

More filmmakers are wielding our technology to create films designed to be experienced on our screens. Studios are competing more fiercely than ever to secure IMAX release windows and make IMAX a centerpiece of their marketing campaigns to eventicize their films.

Audiences are responding, demonstrating a strong preference for seeing films in IMAX and exhibitors are clamoring to get more IMAX systems into their networks and fully capitalize on the very IMAX friendly slate rolling out over the next several years.

We're seeing that our strong system signings and installations this year, which is a powerful catalyst for our business. The more we grow our network, the more we grow sales and box office revenue. And we maintain a strong capital position.

Our recent renewal and expansion of our revolving credit facility demonstrates the continued confidence in our financial growth model. Simply put, this is a fantastic time to be in the IMAX business and we have good reason to believe it will only get better.

Looking at our global network, installs came in at the high end of our projection with 36 systems in the quarter. The full year is set to yield several milestones, including our largest single year expansion ever in France with 7 expected installations, 5 of which have already been completed.

Our largest single year expansion in the Netherlands with 4 expected installations, close to doubling our network in that country. And our largest single year expansion ever in Japan with 8 already installed and at least 4 to go, representing network growth of over 20% in that country from last year.

Our recent agreement with Regal will see us expand into our first new location in Manhattan in 15 years as well as a new location in the iconic L.A. LIVE entertainment complex with an 80-foot screen and an IMAX 70-millimeter film projector.

With 8 new domestic exhibition partners in 2024 and our record domestic box office in the second quarter, we remain keenly focused on growth in North America, one of our highest per screen markets in the world.

We also recently completed another agreement with Wanda that will see IMAX systems replace existing premium format auditoriums in up to 27 locations, a sign of our dominant competitive position in China. And we continue to do brisk system sales in Australia, where recent agreements with EVT, Hoyts and Village will help satisfy strong consumer demand and high PSAs for the IMAX experience.

The second quarter offered strong evidence of our ability to elevate box office hits and drive results through our diversified global slate. One of Hollywood's biggest hits in years, it's easy to forget the questions that surrounded Sinners in advance of its release. As long-time partners of Director Ryan Coogler, we encouraged him to make IMAX a centerpiece of the marketing.

IMAX drove 21% of the film's global box office during its 2 weeks IMAX run, even bringing it back weeks later for an encore run in IMAX film locations.

Mission Impossible - The Final Reckoning made similar use of IMAX from the production through the marketing and the launch of the film. Final Reckoning includes more IMAX exclusive expanded aspect ratio than any Mission film and premieres from Tokyo to London to New York were hosted on IMAX screens.

We far outpaced our projections in delivering over $75 million in global box office, our best result ever of the Mission Impossible franchise and a double digit percentage of the film's overall gross across its entire run.

The third quarter is already off to a great start. F1 the movie was designed from top to bottom for the IMAX experience, shot entirely in IMAX expanded aspect ratio by our long-term partner, Joe Kosinski. And we exceeded our internal projections in delivering more than $80 million and counting a whopping 22% of the domestic box office and 18.5% of the global box office for the film.

Superman will conclude its IMAX run this week with well over $50 million in global box office. And in local language, the Demon Slayer sequel delivered our biggest opening weekend ever in Japan this past weekend with $3 million and an incredible $48,000 per screen average. And in China, the much-anticipated film for IMAX release, [ Don J Rescue ] opens next month.

Our year-to-date local language box office stands at nearly $230 million, just shy of the $244 million full year record we set in '23. At the current pace, we expect to set a new record within Q3.

The second half slate looks promising. This weekend, Marvel's long-awaited Fantastic Four opens worldwide. The Rotten Tomato scores and presales are pretty strong.

Our film for IMAX slate continues into the fall with Tron: Ares and Mortal Kombat 2. There are several IMAX-friendly genre releases, including Predator: Badlands and The Running Man. Zootopia 2 is shaping up to be another big sequel for Disney Animation and holds significant global appeal, particularly across our Asian markets.

And the year concludes with the second installment of Wicked and finally, with Avatar: Fire and Ash, which will be proceeded with an IMAX rerelease of Avatar: The Way of Water in October. 2026 kicks off the year with the Avatar carryover and features Christopher Nolan's The Odyssey as well as Avengers, Star Wars, the Mandalorian and Grogu, Super Mario Brothers movie sequel, Toy Story 5, Greta Gerwig's Narnia and Dune Part 3 and a very compelling '27 slate continues to take shape, including Star Wars: Starfighter from Deadpool and Wolverine, Director Sean Levy; Avengers: Secret Wars, The Batman 2 and Spider-Man: Beyond the Spider-Verse.

We continue to deepen our relationships with tech companies in the theatrical space as well. Our partnership with Apple has yielded excellent results to date on F1 and we're rereleasing F1 on August 8.

Amazon will release its first-ever film for IMAX title next year with Ryan Gosling's Project Hail Mary. And we were very pleased by the announcement that Dune Director Denis Villeneuve, a long-term partner of the company who has called IMAX "The Future of Cinema" has been tapped to direct the next James Bond movie for Amazon MGM.

And we are working closely with Netflix on the rollout of next year's IMAX exclusive theatrical run of Narnia from Greta Gerwig. Furthermore, we continue to offer diversified content, including films for music fans, including concert documentaries for the Grateful Dead, Prince and the Rolling Stones.

To close, the fundamentals of our business are strong. The strength and impact of our brand across the entertainment landscape has reached new highs and we have tremendous runway with a strong slate and network growth prospects ahead. And we're focused on building on our momentum to strengthen our strategic position, executing with financial discipline, continuing to provide the most immersive entertainment experience in the world and delivering for our shareholders.

Thank you. With that, I'll turn it over to Natasha.

Thanks, Rich, and good morning, everyone. IMAX's second quarter demonstrated the strength of our model and the discipline of our execution. IMAX delivered another quarter of record-breaking results, driven by a 41% year-over-year increase in global box office, strong installation growth of 50% and an adjusted EBITDA margin exceeding 42% for the second straight quarter.

These results are not just numbers. We believe they reflect the scalability of our platform, the momentum in our business and the growing demand for premium cinematic experiences. We believe we're not just outperforming the market, we're expanding it.

We're attracting more audiences to choose the theatrical experience, capturing more value per screen, expanding our global footprint and delivering consistent returns, all while maintaining a sharp focus on capital efficiency and long-term shareholder value.

Our results through the first half place us on track to meet or beat guidance for the full year, including on box office, system installations now expected to be between 150 and 160 for the year and adjusted EBITDA margin now expected to be in the low 40s.

Taking a closer look at our Q2 results. Overall, we delivered revenues of $92 million compared to $89 million in the prior year second quarter and achieved gross margin in Q2 of $54 million, which grew 22% year-over-year. This reflects a 58% margin or over 900 basis point improvement year-over-year, reflecting high incremental profit flow-through from the stronger box office performance, along with a more profitable mix of revenue.

Looking at our results at the segment level. Content Solutions revenues of $34 million reflected the significant growth in IMAX Box Office of over 40%, while the prior year benefited from the downstream sale of the Blue Angels documentary to Amazon.

Content Solutions gross margin of $22 million increased $6 million at a 66% margin, up 2,000 basis points year-over-year, driven by strong incremental margins coming from the higher box office. Overall, box office outperformed the industry, resulting in Q2 global market share of 3.6% on less than 1% of screens, driven by a remarkable 5.3% share of domestic box office and 6% share of China's box office.

Technology Products and Services revenues of $56 million was up 9% year-over-year with a gross margin of $30 million, up 17% year-over-year and at a 54% margin, up 360 basis points year-over-year, driven by growth in box office and system sales.

The quarter saw strong growth in installations, 36 systems versus 24 in the prior year, which included a higher mix of sales-type arrangements. Moreover, installations included 8 systems that were signed earlier this year and already installed in the second quarter of 2025.

This is a good indicator of the robust demand by exhibitors to install IMAX systems in advance of the exceptional IMAX slate in 2025 and beyond. For instance, in Japan, year-to-date, we have installed 8 new systems, increasing our network there by 15% since the beginning of the year. And domestically, our backlog of 131 systems is up 46% year-over-year.

And the momentum for signings continues with 28 signings in Q2 and 124 year-to-date. We are only halfway through the year and are close to equaling the 130 systems signed in 2024.

We are seeing good geographic diversity in signings, including higher per screen average countries such as Australia, France, the U.S. and Japan. These signings are not only replenishing, but growing our committed backlog, feeding the pipeline for future network expansion.

Turning to operating expenditures, defined as research and development and selling, general and administrative expenses, excluding stock-based compensation, was $30 million in the second quarter, which decreased $3 million year-over-year, reflecting our continued focus on gaining operational efficiencies and looking for better ways to use technology and scrutinizing work processes to find productivity opportunities.

We continue to take proactive steps, which led to year-to-date restructuring costs of over $840,000 to enhance operational efficiency and reduce annual costs while optimizing IMAX's organizational structure, including eliminating redundant roles, leveraging technology for efficiency and centralizing select functions, which positively impacts both margin and OpEx.

Overall, our strong operational performance led to a second quarter total consolidated adjusted EBITDA of $39 million, which increased $8 million or 26% year-over-year, driven by the higher revenues and gross margin. This resulted in a strong adjusted EBITDA margin percentage of 42.6%, up 780 basis points year-over-year and giving us a first half adjusted EBITDA margin of also 42.6%.

Second quarter adjusted EPS was $0.26, up $0.08 year-over-year, driven fully by strong profit growth as tax expense year-over-year was a headwind of $0.09 given the tax benefit recognized as a result of the internal asset reorganization in the second quarter of 2024.

Turning to cash flow and the balance sheet. Cash flow from operations continues to build and is just over $30 million through the first half, which is up 25% from the prior year period, a very good first 6 months considering the cash flow has yet to capture collections on the larger box office titles this year and cash expenses around compensation and events tends to be first half-weighted.

We expect cash flows to continue to grow and 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 arrangements, where the capital expenditure is at the beginning of an average 10-year contract term.

Turning to investing cash flows. We continue to prioritize use of our available capital to invest in the business, including $15 million spent on growth CapEx in the first half related to partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue sharing arrangements.

This represents an attractive return on investment opportunity as numerous large partners, including AMC, Wanda and Regal are ramping up investment in IMAX as they upgrade their complexes, including bringing IMAX in to replace other premium formats as they look to capture more of the market share gains IMAX is delivering through our film for IMAX program.

We are also making progress strengthening further our capital structure with a significant announcement last week of our amended and enlarged credit facility, which we expanded from $300 million to $375 million with a term that extends into 2030 and at an approved borrowing rate. This is a very positive development that not only increases our liquidity and strengthens our capital structure, but also reflects the recognition of the momentum in our business, long-term trajectory and support from our banking partners.

Included in our capital structure is $230 million of debt 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 and the nature of the instrument, whether that be our revolver or through new notes.

Our capital position remains very strong with cash at $109 million. Debt, excluding deferred financing costs, was $280 million and our current available liquidity is approximately $490 million.

In conclusion, our team is executing well and our first half of the year exceeded our expectations on all of our guidance measures, IMAX Box Office, installations and adjusted EBITDA margin. We are focused on execution and the second half has started off strong with July box office pacing to one of our highest July's on record, driven by the mix of Hollywood and local language blockbusters, including the standout performance of F1 and Superman runs as well as the record Japan opening of Demon Slayer this past weekend and several larger budget local language titles in China and other countries, along with our first German and Brazil titles later in this year.

And looking beyond 2025, there is good visibility into IMAX's future installations as we have a significant and replenishing backlog with a clear path to years of network growth as IMAX location zones are less than 50% penetrated globally with potential for even more zones to be added to our addressable market. Similarly, the demand to secure an IMAX release window continues to grow, resulting in filmmakers and studios building deeper and earlier partnerships. This is affording us a clear view into IMAX's film slate for 2026 and beyond.

In short, the model is working. Filmmakers and studios are partnering with IMAX to deliver the best movie experience. Consumers are noticing and choosing IMAX. Exhibitors are looking to meet that demand by adding more IMAX systems to their circuits and is translating to growth and expanding margins, profits and cash flows for IMAX that, in turn, will generate greater shareholder returns now and into the future.

With that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from Omar Mejias with Wells Fargo.

Maybe first, Rich, given the strong demand for IMAX slots from studios and filmmakers, do you see a future where all or almost all films you play across your circuit are film for IMAX films? Just curious on how you see the evolution of the number of film for IMAX movies across your network.

I don't think it will evolve to that point, Omar. We want to make film for IMAX something really special, including the right kind of content, the right visual, the right sound.

So there are certain movies while they might be really good movies, they just don't demand that kind of treatment. And as you know, when it's a film for IMAX, it gets a 2-week minimum run. And I just don't think that all the movies will be suitable for a 2-week run.

As you know, the slots are what's really valuable, like the IMAX playtime. And it's a little bit of a trade-off. When you do film for IMAX, you get higher indexing, you get the right property, but you're agreeing to 2 weeks before you've seen the movie.

However, obviously, as this quarter shows, the results were so strong and the indexing was so strong. So just to give you a sense, in 2026, we already have 9 film for IMAX titles. And for 2027, we already have at least 8. So it is something we're going to lean into for the right content, but we won't make it ubiquitous.

No, that's very helpful. And maybe switching to some recent media reports that have been stating that U.S. theater chains are under talks about jointly marketing their PLF screens to better compete with the growing influence of IMAX. Do you view this as a competitive threat to your business or more of an opportunity to partner with U.S. exhibitors to potentially work together and grow the pie? Just curious on your thoughts on that.

Yes. So Omar, we've indexed an average of 15% on our FFI films this year on opening weekend and more than 20% on 3 of them. That's a real aha moment for exhibitors who haven't been in the IMAX business before and they're kind of scurrying to come up with a strategy.

A lot of people have tried to create competitors to IMAX over the years, but the fact is that our brand and relationships with filmmakers are unmatched and our technology is superior and audiences know. Two of the three exhibitors mentioned in the story you're referring to have told us that they're not part of any discussions.

We just signed a renewal for 40 locations with Regal and are opening new locations with them in L.A. and New York City. And if you miss the boat, it's getting a little late. And I think these are kind of pathetic attempts to try and take a stand that is highly unlikely to work.

Our next question comes from Chad Beynon with Macquarie.

Nice results. I wanted to piggyback on the back of that last question, maybe from a slightly different angle. Rich, I recall from Investor Day several years ago, you laid out the IMAX difference in terms of the economics and the benefits of your partners that would earn your PSAs versus the PSAs they would earn on a non-IMAX screen.

And I think the math was pretty compelling then. It seems like the results are diverging even further given the indexing and some of the results that you're talking about. So my question is, in the future, could there be opportunities to improve pricing similar to what we see in the hotel industry as they've increased royalty rates, showing their partners that it helps to be with the brand that has bigger scale and marketing benefits?

Thanks, Chad. I would say it definitely gives IMAX a stronger hand in our negotiations with the content providers, whether it's studio or live content. But I think we're going to use that carefully.

So you could see in the quarter that the 3 of the biggest movies, Sinners, F1 and Mission Impossible, the studios really leaned into the IMAX of it all. And we have Fantastic Four opening this weekend and Disney has really leaned into that.

And I think it's more beneficial for our overall results to get them to lean in more. And when people ask -- do a film for IMAX release or they want extra time in IMAX, we've really used our negotiating style to look for things like IMAX premieres, IMAX tagging, the filmmakers getting more involved in the shout-outs, which has really been happening.

And I think it's a dangerous game to get into kind of different pricing for different movies. I think you send signals that audiences will get that studios want to give -- don't want to give. And I think overall, we think it's a fair result for both the studios and us.

And you probably know that the entertainment business is one very driven by precedent. And I think we're happy with where the rate is now and we'll use whatever extra negotiating power we might have to try and make the experience better marketed and more accessible for people.

Okay. And then a quick housekeeping for Natasha. You mentioned the tax -- or the tax impact from this quarter that was related to something last year. Is there anything else in the back half of the year? Or should we assume kind of a normal tax rate as that flows into free cash flow for the back half of the year?

Yes, Chad, I mean, our internal asset reorganization that we did last year, that's essentially what you're seeing come through this year. Q1 had a higher tax rate. Q2 has come down significantly and we're aiming towards just simply having an effective tax rate for the entire year, as we've said before. And so that's our goal as opposed to where we've been historically.

And our next question comes from Eric Handler with ROTH Capital.

Rich, a big picture question for you. As you think about your ultimate product mix between Hollywood movies, local language, alternative content, like where are you with alternative content in like the number of events that you're doing a year?

How are you seeing like the average revenue per event scale higher? Just the opportunities there with those? And where would you like to see the local language percentage be for overall box office as well?

Yes. So so far, Eric, this year, our percentage of local language content is around 40%, which is much higher than historically. It's been closer to around 20% in the prior couple of years.

But obviously, Ne Zha 2 distorted that to the upside a little bit. But if you think about that, look at like the North American exhibitors, for example, it's close to 0, their percentage for local language content.

And I think one of the superpowers of IMAX is our ability to get these films from all over the world. And your timing is good for the question because Demon Slayer just opened in Japan and we set an all-time record for Japan. And we're actually releasing Demon Slayer in 40 other countries. And the last Demon Slayer did $30 million and this one is a broader release pattern than the last one.

So local language is a really important part of our diversity of content. And in a way, you see how Netflix has used it really intelligently to grow their network. And I think we're going to continue to lean in, in a big way.

Alternative content, while important, is less of a game changer and there are a few reasons for that. One is it generally has a shorter playtime. And it also could conflict with studio offerings.

So for example, again, back to this coming weekend with Fantastic Four opening, if we had a live event or a different kind of alternative content, the studios are obviously going to want to play what they've contracted to get. So it's more of a filler than it is kind of something that's going to carry the programming.

With that said, I think we have something like 7 music events coming up in the next few months. So we have the Dead & Company coming up in the next few weeks. We have a Prince concert we just announced.

I believe we're going to -- we haven't announced it, but we'll likely rerelease a Rolling Stones movie later in the year. There's just a lot of high-quality content. And there's a lot of interest in the music community to have more of it.

So I think it's good. You know last year, we did League of Legends in China. I think you'll see us do some other gaming things around the world now. And I think we're still in somewhat of a test phase. So we look at what the ROI is on each event. We are leaning into it for the right events. But I just don't think it will have the same financial impact that either the Hollywood slate does do or the local language slate.

That's helpful. And also, I mean, since you mentioned Demon Slayer, I mean, you've had good success with several anime movies in the past, but it seems a bit sporadic. I have no idea how big the global market is for anime annually.

But given the success you have, have you started talking with some of the anime companies about collaborations in the future and maybe increasing the amount of anime that you're seeing on the screens?

Well, Eric, in going through the past, you didn't mention Ne Zha 2, which did $160 million in IMAX and was an animated film as well. So you're right, we have had a lot of success, particularly with anime on a global basis.

So it originates in Japan or most of it does. And then we've been successful not only in Japan, but in the U.S. and China and a number of other markets with it. So we do have a pretty good track record. But again, we've done pretty well even with some Hollywood movies, the Illumination ones, we've done very well with Despicable Me and movies like that. And we've done really well with some Pixar, Disney movies and others.

So I think we're leaning into the right kind of animation. I don't -- when we look at a movie, we don't say, "Oh, that's an animated one. Let's go for that." I think it depends on the kind of content. And we have pretty good relationships with the anime studios and the animated studios globally. And we've always valued it. And for the right movies, we'll continue to lean into it.

[Operator Instructions] Our next question comes from Eric Wold with Texas Capital Securities.

Rich, a quick question for you. I know there's been -- at least there was at CinemaCon and a little bit since then of some call for lower pricing by some of the studios on tickets and we've had the move by AMC recently to kind of add to the discount Tuesdays and move to the 50% off on Wednesdays.

Just want to get your thoughts on what you think that could do kind of for IMAX going forward. I think it's early. I know that their 50% just went into effect at the start of this month or on the 9th of July. But do you think moving to lower pricing, if that becomes kind of more the norm midweek across the board, not just with AMC, but with more of your exhibitor partners, does that give more of an incentive to maybe that cohort of moviegoers that may have been more not willing to pay up for IMAX previously and now need more incentive to try out IMAX given that the baseline price is cheaper and maybe the adding on IMAX may be more agreeable to them and maybe you can kind of tap into a moviegoer base that you may not have been able to before and that could be maybe a little bit of a tailwind towards your market share potential kind of moviegoer awareness kind of longer term?

So Eric, I think the IMAX consumer over the years has shown that it's willing to pay a premium price for a premium experience. And look at this year right now.

I mean, I know we reported the quarter, but our business has been extremely strong since then. And we're around $700 million now and it's not even the end of July yet.

So I think our pricing formula is working pretty well for us. And especially another example I would give you is that, as you know, the Odyssey tickets went on sale for certain of the film theaters and this is for a movie that's opening a year from now. And especially film is something that the exhibitors don't really like to discount and it virtually sold out within 24 hours, in some cases, much shorter time than that, minutes.

So I just don't think that the premise that lower prices or that -- I'll rephrase it. I don't think the price we charge is keeping people away. I think people recognize it's a premium experience and they're willing to pay for it.

And you look at analogies such as sports ticketing or concert ticketing or other kinds of entertainment. And I think the trends go the other way. I think -- I understand why the exhibitors do it. They have huge capacity. And in fact, in certain cities, probably overbuilt, and I think they're competing with other exhibitors for traffic in those markets and that that's what's driving rethinking the discount days.

But IMAX has exclusivity zones. We have IMAX film, we have filmmakers leaning in, extra cost in making an IMAX film. And I just don't think discounting is likely to change the dynamic.

Our next question comes from Steven Frankel with Rosenblatt Securities.

I want to go back quickly to the alternative content discussion. You had wired a group of theaters for live events. Maybe give us an update on how many are able to do that today? And do you have plans to grow that network any further?

So we wired, I don't remember exactly the number, it's around 200 theaters, I think a little bit more because that was the way to distribute alternative content. Since we acquired SSIMWAVE using their technology, we came up with an alternative way to deliver alternative content.

And that way is by streaming. And it's a much more cost-effective way than wiring it. You don't have the upfront cost of having to put all that -- put the special cabling in. And in fact, for the event we did in China around the League of Legends, that was a completely streamed event and we did over 150 theaters and we were able to put that together really quickly and that one virtually sells out at a higher price.

So it's a long way of saying, I think we are going to do it for more theaters, but I don't think we'll have to put up the capital like we did at the beginning because we were able to find a more cost-effective way of doing it. And I think you'll see the base expanding, but not with a large cost associated with it.

And our next question comes from Mike Hickey with The Benchmark Company.

Congrats on a strong Q2, Rich. Just 2 from us. Film visibility, Rich, is, I think, probably the best it's ever been for you. Just curious, as we sort of get into the second half of '25, your confidence level that you can grow your GBO in 2026? And I have a quick follow-up.

Yes. Mike, I mean, I have an incredible amount of confidence in that because our '26 slate is almost all filled up. And just some of the high points, we have the Avatar carryover in early '26 and got a number of other good films there, including Project Hail Mary from Amazon MGM.

In the second quarter, we've got Super Mario Brothers 2. We've got the new Star Wars, Mandalorian. We've got Toy Story 5, Super Girl in the third quarter. Obviously, the most anticipated one is the Odyssey from Chris Nolan. We've got Milana, back to Eric's question. We've got Minions 3. In the fourth quarter, we have Narnia, we have Avengers, we have Dune Part Three. So this far in advance, it's unusual to have it virtually all locked in.

And then for '27, I think I said this earlier, we not only have a number of films locked in, but we have at least that are film for IMAX films in that. So I would say there hasn't been a point in history where we've had this much locked in 1 and 2 years in advance.

Obviously, we have our theater backlog as well. And as we talked about in our remarks, signings and installs are going very well. So I think all of those things give us confidence about '26 and beyond.

Nice. And that's a good sort of segue to installations. It looks like you raised your installation guidance for '25, obviously, your signings have been spectacular. Also nice to see some installation growth from the U.S., which is obviously your strongest market.

Do you think this momentum here, Rich, in installations can continue into '26? Or are you sort of maybe pulling forward some demand here from your exhibitor partners just given the strength of '25, certainly the buzz of Avatar 3 and as you just highlighted, an exceptional '26 home slate?

I think both in a way, Mike. So I think, yes, some people are installing earlier because they see the back end of the year, which obviously Avatar stands out, but also Zootopia is there, which especially internationally has a strong following and then Wicked, Predator, Running Man. There's a lot of things still to come.

But by the same token, we've almost equaled all the signings we had for the whole year last year. So while some are being pulled forward, the backlog is being replenished with the new theaters coming online. And this -- the pace we're on is certainly very strong. So I think it's both. I think it's new ones coming into the queue as well as ones moving forward.

Our next question comes from Drew Crum with B. Riley Securities.

So you made a subtle upgrade to your adjusted EBITDA guidance for the year. You're sitting at just under 43% year-to-date. Can you discuss what the puts and takes are for margins in the second half and the drivers for achieving or perhaps exceeding that low 40s threshold?

Sure, Drew. When we look at adjusted EBITDA, I mean, for the first 2 quarters, we've been very consistent at our 42.6%, but there's puts and takes that go into each quarter and whether that be the incrementality we get from the box office as a positive and then our decision-making on how much to spend on marketing or a nature of mix between local language content and Hollywood content and the remastering costs that occur.

And so Q1, for instance, was heavy on local language, which costs us less and creates -- and leads to a significant EBITDA margin, whereas you come to other quarters like we'll have Avatar in Q4. And so there's an opportunity as we've done before, where we would want to spend more on marketing for Avatar as it's such a huge film. And not only is it a 2025 impact, but it has a '26 impact. And so all of that comes with the decision to simply make on ebbing and flowing your marketing and how much content you push into each quarter.

And our next question comes from David Karnovsky with JPMorgan.

Maybe I'll just go back and ask one more about kind of the press report last week on the PLF. I suppose one of the takeaways from that report was that there's this undercurrent of tension between exhibitors and IMAX specifically around studios marketing towards the IMAX performance or even kind of your decision to play the Narnia film next Thanksgiving. I just want to give you a chance to respond. Is that a fair assessment? And kind of how would you gauge your relationship with the kind of domestic exhibitor community currently?

I think it's excellent. Our biggest client, AMC, just signed a deal with us for additional theaters, including a bunch of new ones and they're leaning in. And I talked to Aron after that story ran to get his perspective and he basically felt that it was remote that any consortium was going to be put together in any way.

And he certainly said he had 0 interest in that. We also spoke with a number of the other big exhibitors that were in North America and they reassured us that they're either in the IMAX business or want to be in the IMAX business. Regal just signed a big deal for us, 30 or 40 theaters.

So I think it's really good. I mean, how could it not be good? I mean, first of all, look at AMC's market share as everybody reports this week and their market share is going to be excellent because they're in the IMAX business.

And I think look at the box office that we brought in for our partners. So I think what the story did was it found people who aren't in the IMAX business. And obviously, if you were losing market share and losing money, you would be disgruntled. So if I were them, I'd get into the IMAX business rather than make up stories to try and convince investors they're going to compete with IMAX.

One little one and I don't mean to pick on anybody, but there's an exhibitor in Europe called The View that's actually been in 2 restructurings in the last 3 years and missed the PLF boom and they're launching their own PLF, which they announced in the trades is going to be a threat to IMAX.

So I mean, good luck with that. I mean, people have been trying this. IMAX has been in business for 55 years. And we have technology, we have relationships. We have lots of competitive advantages. And it's almost like with no disrespect to Coke, if I came out and I said, I'm going to start a new soda brand and I'm going to band together with others and we're going to compete with Coke. I mean, the good news is if you're Coke, it doesn't work that way. And if you're IMAX, it doesn't work that way.

And our next question comes from Patrick Sholl with Barrington Research.

I just had another question on like the backlogs and signings. With the Regal agreement that you announced in May, you mentioned the 70-millimeter film projector. I was just wondering how many of those are in the backlog? And like how those types of screens have performed for the -- with the film for IMAX initiative? And what other, I guess, maybe puts and takes might go into that growth of that?

So the film theaters have done extremely well when there's IMAX film releases. So this year for Sinners, I mean, the numbers were incredibly strong because Ryan Coogler film with IMAX cameras and Warner Bros. put out film prints and they were extremely high capacity. And remember, we did over 20% in each of the 2 weekends on that initial weekends that we played it. So -- and obviously, Oppenheimer last year, we all know how that movie performed very good. And I mentioned the presales on pre-ticket sales for Odyssey.

So we're always looking for -- now we don't produce new film projectors because it's an older technology. And even though it brings in a lot of audiences, there are costs associated with it. However, we've been scouring the globe. And I do think for Odyssey, we'll have more film theaters than we had for the last film release, Sinners or Nolan's last movie, Oppenheimer. So we're trying to address that issue, but there's a limited supply and the economics are terrific around it.

Our next question comes from Stephen Laszczyk with GS.

Maybe just one for Natasha on cash flow. Could you update us just around your latest thinking for cash flow conversion this year, maybe relative to EBITDA? I appreciate there's been some timing dynamics in the first half of the year that you called out in your prepared remarks. Just be curious how you think about that trending into second half. And then as you look ahead on cash conversion, just be curious how you're thinking about cash generation as the business hits stride in '26 and beyond?

Cash flow continues to strengthen. I mean, we're looking -- as we look at the targets, we're looking more similar right now to pre-COVID cash conversion levels. Our first half operating cash flow was $30 million, it's up 25% year-over-year.

Our free cash flow continues to improve as well. We were historically at around 50% and we're trending towards that as well. And as you start to think about just the operating leverage in our model, that's what starts to push through straight down to cash. And we've talked about this before, but exceeding box office levels over $250 million in each quarter, essentially, every dollar beyond that flows right through down to EBITDA and to cash at about an 85% conversion rate. And so that's what will continue to generate the cash flow.

And even as we start to think about it, we have -- we already know Q3 will be a strong cash flow because China's cash flows come in a little later on their film content because they just generally have a cycle where films have to close and then you get paid your cash. And so imagine the Ne Zha 2 that still sits out there and the cash will come in, in Q3. So even with our strong first half cash flow, we already know Q3 is going to be strong with the Ne Zha receipts coming in then.

And we have time for one last question, and it comes from David Joyce with Seaport Research Partners.

It's great to see the operating leverage really showing through. But I had a question on trying to understand the puts and takes of the take rates. Film remastering distribution was up year-over-year, but system rentals take rate compressed by 40 basis points. What would explain that, please?

There's always different puts and takes, David. Sometimes you can have upgrades of theaters. And so when you're upgrading a theater, you'll have to write off the old asset and put in the new theater, but you know that the incrementality will come within the very early stages of the 10-year term on that location as you upgrade to new technology.

So it's a very good investment. It all comes down to the mix in relation to whether we're putting in sales deals or JV deals as well. And so that kind of ebbs and flows your margin take rate.

But overall, the operating leverage, as you can see from the Content Solutions, we've done really well and that $1.2 billion guide that we're working towards this year is flowing through. You can see it in Content Solutions, 66% margin with a very strong return and our overall gross margin of over 58% flowing right through to the EBITDA margin of 43%. It's been a great quarter and a great first half of the year and we expect good things from the rest of the year as well.

And this concludes the question-and-answer session. I would now like to turn it back to Rich Gelfond for closing remarks.

Thanks, everyone, for joining us. I want to leave the call with a few final thoughts.

IMAX has reached a new inflection point in our business and is poised to achieve new levels of success. Filmmakers and studios want to release their best films in IMAX. Consumers overwhelmingly prefer to see those films in IMAX. And as a result, theater operators want to be in the IMAX business.

All of this is creating a virtuous cycle that leads to growing revenue driven by higher box office, more systems signed and more installations. This means more value generated for consumers, our partners and for you, our shareholders. This simply has never been a better time to be in the IMAX business. Thank you all.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Hello, and welcome to the Annual General Meeting of Shareholders of IMAX Corporation. Please note that today's meeting is being recorded.

It is my pleasure to turn the meeting over to Rich Gelfond, Chief Executive Officer of IMAX Corporation. Mr. Gelfond, the floor is yours.

Thank you, operator. I would like to call this Annual General Meeting of Shareholders to order. I want to welcome all of you to this year's meeting, which is being conducted via live webcast and to thank you for joining us. Ken Weissman, Corporate Secretary, will act as Secretary of the meeting and Computershare Investor Services, Inc., through its representatives, will act as scrutineer. Other members of our Board of Directors and management are present on today's webcast as well. I will chair the formal part of the meeting today, and then I will have some comments on the business and operations of IMAX.

I would now like to ask Ken to briefly go over some of the procedural and administrative matters.

I have confirmed that we have not received any shareholder nominations or proposals for business at today's meeting. Questions can be submitted by any registered shareholder or duly appointed proxy holder by selecting the Q&A icon at the top of your screen. If you submit a question, please include your name and your affiliation and indicate the question relates to a specific agenda item. We will address questions relating to specific business items when those items are before the meeting, and we will address other questions during the Q&A session at the end of the meeting.

Before the formal part of the meeting begins, please keep in mind that comments and answers to your questions might include statements that are forward-looking and that they address future results or occurrences. Actual future results and occurrences may differ materially from these forward-looking statements. Please refer to our SEC and SEDAR filings for a discussion of some of the factors that could affect our future results and occurrences.

I have received from Computershare a list of the holders of the corporation's common shares as of the close of business on April 14, 2025, the record date for this meeting. I have also received a statutory declaration as to the due mailing of the notice of meeting, the proxy circular and proxy statement, the former proxy and the annual report that contains the 2024 financial statements of the corporation. These documents will be available for review during the meeting by selecting the documents icon at the top of your screen. I have also received the scrutineer's report on attendance which indicates that sufficient shareholders are present to constitute a quorum pursuant to the corporation's bylaws.

Thanks, Ken. I direct that the statutory declaration of list of shareholders be kept by the Secretary with the records of this meeting. Notice having been duly given and there being a quorum present, I declare this meeting to be properly constituted. The formal agenda for this meeting as set out in the notice is to receive the consolidated financial statements for the fiscal year ended December 31, 2024, together with the auditor's report; to elect directors; to appoint the auditors of the corporation and to authorize the directors to fix the auditor's remuneration and to conduct an advisory vote on the compensation of the corporation's named executive officers.

Ken will now discuss the voting procedures.

Thanks, Rich. Voting today is limited to shareholders of record on April 14, 2025, the record date of this meeting as well as duly appointed proxy holders for such shareholders. Voting will be conducted by electronic ballot. We now ask that the balloting be opened. If you are a shareholder and you have already voted your shares ahead of the meeting, you do not need to vote your shares again. But if you use a control number or invitation code to log into the meeting and you accepted the terms and conditions, you will be provided the opportunity to vote by online ballot. If you vote by online ballot during the meeting, your previously submitted proxies will be revoked. The polls are now open and all registered shareholders and duly appointed proxy holders who wish to vote can click on the Vote icon at the top of your screen. You will be able to see all motions being brought forth at the meeting, and you can select a relevant option next to each proposal. Voting will end after all items have been brought before the meeting.

Rich, we are now ready to proceed with the formal business of the meeting.

Thanks, Ken. The first item of business is the election of 10 directors. The meeting is now open for nominations.

Mr. Chairman, my name is Robert Lister. I'm a Chief Legal Officer and Senior Executive Vice President of IMAX Corporation and a shareholder. I nominate Gail Berman, Eric A. Demirian, Kevin Douglas, Rich L. Gelfond, David W. Leebron, Michael MacMillan, Steve R. Pamon, Dana Settle, Darren D. Throop and Jennifer Wong as directors of IMAX Corporation, to hold office until the close of the Annual Meeting of Shareholders in the year 2026 until their successors are elected or appointed or until the date of their resignation or termination.

Thank you, Rob. I motion to close the nominations and for the election of those nominated is now in order.

Mr. Chairman, my name is Robert Lister. I move that nominations be closed, and that the persons nominated as director be elected directors of the corporation to hold office until the close of the Annual Meeting of Shareholders in the year 2026 until their successors are elected or appointed or until their resignation or termination.

Thank you, Rob. May we have a seconder, please? .

Mr. Chairman, my name is Ken Weissman. I'm Deputy General Counsel and Corporate Secretary of IMAX Corporation and a shareholder. I second the motion.

Thank you, Ken. Jennifer Horsley, IMAX's Senior Vice President of FP&A and Investor Relations is receiving any questions that are submitted during the meeting. Jennifer, can you please advise if there are any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

May we now have a motion reappointing the corporation's auditors, PricewaterhouseCoopers LLP and authorizing the directors to fix their remuneration.

Mr. Chairman, my name is Robert Lister. I move that PricewaterhouseCoopers LLP be and they are hereby appointed auditors of the corporation to hold office until the close of the next Annual Meeting of Shareholders at such remuneration as the directors may fit.

Thank you, Rob. May we have a seconder, please?

My name is Ken Weissman. I second the motion.

Thank you, Ken. Jennifer, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

The next proposal, commonly known as say-on-pay proposal, gives the corporations the opportunity to express their views on the corporation's named executive officer's compensation program. Although the vote is advisory and nonbinding in nature, the Board and the Compensation Committee will review the voting results and will consider shareholders' views in connection with our executive compensation program. May we have a motion to approve the corporation's named Executive Officer compensation program.

Mr. Chairman, my name is Robert Lister. I move that the corporation's named executive officer compensation program be approved.

Thank you, Rob. May we have a seconder, please? .

My name is Ken Weissman. I second the motion.

Thank you, Ken. Jennifer, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

We have now completed the motions related to the items to be voted upon at this meeting. we will pause here to provide one final minute to allow everyone to complete their voting. Your votes will automatically be accepted once the balloting closes.

[Voting]

The electronic balloting has now closed. I ask that the scrutineer compile the results of the votes on all business matters into a report. Results will be published on a Form 8-K on EDGAR as well as on SEDAR.

This concludes the formal business of the meeting. At this point, I would like to make some comments, and then the meeting will be open for questions.

At last year's meeting, we spoke about 2025 as a transformative year for IMAX, a moment where the full potential of our strategy would begin to materialize. Now as we reach the halfway point of this pivotal year, I'm pleased to report that we're well on our way. The momentum we've generated across our business has been exceptional, and the industry has taken notice.

We began this year with our highest grossing Q1 ever, nearly $300 million at the box office, driven by a record-breaking Chinese New Year, led by the animated film which earned more than $165 million in IMAX. April, followed with one of our best performances on record, powered by titles like Minecraft and Centers, the ladder shot with IMAX film cameras and shown in IMAX 70-millimeter film. IMAX represented 20% of global gross during its 2 weeks IMAX run.

As summer kicks into high gear. We've surpassed our ambitious expectations for our 3-week run of Mission Impossible, the final reckoning, which has grossed more than $70 million in IMAX to date, and there's much more to come. Starting with the live action How to Train Your dragon and F1 this month and culminating in the highly anticipated Avatar, Fire and Ash, the sequel to the 2 highest IMAX and grossing films of all time at Christmas.

IMAX is not just thriving. We're among those setting the pace for global media and entertainment. And we continue to deliver on the strategic pillars that power our growth. First, expanding our global network. In 2024, we delivered year-over-year growth in system signings, and we're already on track to surpass that in '25 with over 105 signings secured before the halfway point of this year. That includes a renewed agreement with AMC, which will upgrade nearly the entirety of its North American IMAX footprint to IMAX with Laser, as well as signings with key partners across priority markets like Australia, Japan, the Middle East and Western Europe.

Second, we're opening the aperture of the IMAX Experience. We're redefining what it means to be an IMAX Experience with all-inspiring filmmaking and events from around the world. This year, we are releasing the most diverse slate of film Primax titles in our company's history. From international blockbusters to groundbreaking documentaries from exclusive events to live sports, the range and depth of our content has never been greater.

We're also investing in local language storytelling with debuts in Vietnamese, Arabic and continued strength in China, Japan and India. Our documentary business is also set to expand with our first foreign language feature documentary in production in France, a direct extension of the successful launch of the Blue Angels, which continues to perform across platforms.

Next, strengthening our industry partnerships our position across the industry has never been stronger. You may have noticed IMAX is playing a bigger role than ever in studio marketing campaigns. Campaigns for tentpole releases from powerhouse studios like Disney and Warner Bros, often showcase our brand more prominently than the title of the film itself. We've worked more closely with our partners to get them to lean into IMAX, which is driving our indexing and overall box office for movies like and Mission Impossible, and helping to sustain and grow our significant market share gains of recent years.

Influential filmmakers like Tom Cruise, Ryan Kugler and Joe Kazinski, are also wielding IMAX technology for their biggest releases, again with exceptional results. And Christopher is committed to making the Odyssey, the first feature film ever to be shot entirely in IMAX 70-millimeter film.

More streaming platforms are also embracing IMAX as a key differentiator. IMAX granted a groundbreaking IMAX exclusive release with a 28-day window for Graded Girling Narnia. Apple prioritized an IMAX first strategy for F1 ahead of even securing a studio distribution partner. Amazon acquired our original documentary, The Blue Angels, and has committed major titles like Project Helmer and Mercy to the film for IMAX program.

We continue innovating across content and format. We're also expanding the breadth of what IMAX audiences can experience. Music lovers pack theaters for the IMAX exclusive debuts of becoming lead -- and pinkie at Pompe. We brought the remastered Princess Montanoki to audiences worldwide, achieving our best local language opening ever in North America with a nearly 30-year-old film. In France, we sold out a live sports test, a low class SEQ, a partnership with DAZN, that demonstrated the potential appetite for live events and sports in IMAX. And in China, we're encouraged by events such as last year's sold out broadcast of the legal Legends e-sports finals and our exclusive broadcast of the Formula 1 Spanish Grand Prix. Speaking of China, we're optimistic about this year's promising local language film slate, including a writer's Odyssey

Now looking ahead, 2025 is shaping up to be among the most successful years in IMAX's history. We are on pace for a record-breaking $1.2 billion in global box office. Our brand stands at the intersection of technology, creativity and culture, and that makes us uniquely positioned in today's entertainment landscape. Consumers, studios, streamers and exhibitors alike are aligned in their desire to partner with IMAX.

Our technology powers unforgettable experiences and demand for those experiences is growing across every corner of the globe. IMAX is a premier global platform and ready to seize the opportunity ahead of us. Thank you to our shareholders, partners and team for your continued belief in IMAX.

With that, I will take questions from registered shareholders and duly appointed proxy holders. Please limit your questions to topics relating to today's subject matter. Will answer as many questions as time permits. Jennifer, are there any questions?

I can confirm that no questions have been submitted.

Thank you, Jennifer. This completes the business of the meeting. A motion to conclude the proceedings is now in order.

Mr. Chairman, my name is Robert Lister. I move that the Annual General Meeting of the Shareholders of IMAX Corporation be concluded.

Thank you, Rob. Do we have a seconder?

My name is Ken Weissman. I second the motion.

Thank you, Ken, and thank you all for joining us today and for your continued interest and support of IMAX. The meeting has now concluded.

You may now disconnect. Everyone, have a great day.