Imax (NYSE:IMAX) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Summary

Imax Corporation delivered strong financial performance in Q2 2026, with revenue of $103 million, up 12% year-over-year, and adjusted EPS of $0.43, a 65% increase.

The release of 'The Odyssey,' shot entirely with Imax film cameras, has been transformational, generating $52 million in its global opening and achieving unprecedented pre-sales and occupancy rates.

Imax plans to further capitalize on merchandising opportunities, evidenced by rapid sellouts of themed merchandise like Imax popcorn buckets.

The company installed 38 new systems in Q2, signaling strong demand and network growth, with plans to continue expanding globally.

Future outlook remains positive with a strong film slate, including 'Dune Part 3,' and continued innovations in filmmaking technology, supporting long-term shareholder value.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the Imax second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone; you will then hear an automated message that your hand is raised. To withdraw your question, please press star one one again.

Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Jennifer Horsley, Head of Investor Relations for Imax. Please go ahead.

Jennifer Horsley, Senior Vice President, Investor Relations and FP&A

Good morning and thank you for joining us for Imax's second quarter 2026 earnings conference call. On the call today to review the financial results are Rich Gelfon, Chief Executive Officer, and Natasha Fernandez, 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 now turn the call over to Mr. Richard Gelfon.

Rich Gelfon, Chief Executive Officer

Thanks, Jennifer, and thanks everyone for joining us today. Just days ago, audiences around the world began to experience something we've been building toward for decades. Christopher Nolan's The Odyssey is the purest and most complete expression yet of the power of Imax — the first feature-length release ever shot entirely with Imax film cameras, a game-changing technical achievement, a massive launch campaign that from the very first tweet made Imax the centerpiece of the discussion, and a global fan frenzy for the Imax experience as well as a strong demand for Imax systems among theater owners.

Not since the original Avatar have we seen a global cinematic event like this, where filmmaking technology took center stage. Avatar established Imax as a force in entertainment, accelerated our network growth around the world, and permanently raised the bar for our box office. We believe The Odyssey is also a transformational event in many ways we can see and many ways we can't yet predict. The box office results are already exceeding our expectations.

Imax is the center of the cultural conversation like never before, and more than ever, Imax is the premier global platform for blockbuster content. At our investor day last year, we talked about how we've entered a new era of growth right now — that thesis on full display. All this comes on top of a quarter in which we delivered strong results, beating consensus across virtually every metrics, including revenue of $103 million, up 12% year over year; adjusted earnings per share of $0.43, up 65% year over year; and adjusted EBITDA of $48 million, at an almost 47% margin. Natasha will detail our results in a moment, but first I'd like to share what The Odyssey tells us about the future of Imax. The results for The Odyssey have been nothing short of tremendous. Imax delivered $52 million in its global opening, the biggest global opening weekend in our history on a like-for-like basis, given the film has yet to open in China, Japan, and South Korea.

That amounted to a staggering 20% share of the film's worldwide debut on less than 1% of total screens. Our occupancy was 75% across our domestic network — an unheard-of number. Our holds so far have been even more eye-popping. We delivered the highest grossing Monday in our history thanks to an $11 million performance for The Odyssey, an unprecedented 21% hold from the weekend. On Tuesday, we delivered another $10.6 million, notching our biggest Tuesday of all time.

And our presales for the second weekend would qualify on its own as one of our biggest opening weekends ever. These numbers help prove that we're just getting warmed up. Imax 70 millimeter film has become among the hottest tickets in the world. Our 41 Imax film locations worldwide delivered $6.3 million in weekend box office, a massive average of $153,000 per screen. The Odyssey will play in Imax 70 millimeter locations for months, and we've already recorded sellouts at these locations deep into the film's run — in some cases the seventh or eighth week.

And it's important to remember that the film locations drive more revenues for Imax than the digital locations. Overall, we remain on track to deliver a record $1.4 billion in global box office for the full year. The Odyssey and Dune Part Three give our ’26 slate a highly advantageous structure, with two mega tentpoles filmed with Imax cameras in the second half that fully deploy the power of Imax — both shot with Imax film cameras by two of the biggest filmmakers in the world, both presented in Imax 70mm with tickets to Imax locations selling out months, if not a full year, in advance, both stacked with an incredible cast, and both very highly anticipated. The level of fan frenzy around The Odyssey in Imax speaks volumes. We built one of the most passionate fan communities anywhere in entertainment and a global brand that represents unforgettable out-of-home experiences. Universal put select Imax 70 millimeter screenings on sale a full year in advance of the release, and those sold out in under an hour. The launch of presales for The Odyssey in Imax crashed every major ticketing platform in the United States, and The Odyssey clocked our biggest presales of all time by a multiple of three.

Fans are flying across countries, if not continents, to experience The Odyssey in Imax 70 millimeter, selling out screenings around the clock — 10 p.m., 2 a.m., 7 a.m. That level of consumer loyalty is difficult to build. It's even more difficult to replicate, and we're capitalizing on that loyalty in new and expanding ways, most notably merchandising. We continue to see Imax merch as a largely untapped opportunity for our business. Our first-ever popcorn bucket — a replica of the Imax 70 millimeter camera used to film The Odyssey — powerfully underscores that opportunity.

The first drop of buckets sold out in under two hours on Imax.com. The second drop just five days later sold out in seven minutes. And our Chinese bucket release sold out in 63 seconds. We've sold over 10,000 units so far through our channels alone, and more buckets are available at theaters around our network, along with a full line of Odyssey merchandise at imax.com. We are very excited for the continued run of The Odyssey and the slate ahead. Christopher Nolan's previous film, Best Picture winner Oppenheimer, delivered more than $190 million in Imax box office.

Imax opening weekend for The Odyssey was 47% higher than Oppenheimer. The Odyssey is presented in almost 40% more Imax 70 millimeter film locations than we had with Oppenheimer and The Odyssey is arguably more commercially and internationally accessible. We also have a great lineup of filmmaker-driven, Imax-centric releases that follow — much stronger than what followed Oppenheimer — which will allow us to re-engage the die-hard and new fans alike that are turning out for Imax, including Brand New Day, which we've announced will play in China, Japan, and South Korea.

The box office has picked up dramatically in China in recent weeks and Spider-Man is tracking very well and there are strong pre-sales in China. Resident Evil, the first Film for Imax release from red hot horror auteur Weapons director Zach Krieger; Digger from our long-term partner Tom Cruise and Oscar-winning director Alejandro Gonzalez Inarritu; Godzilla -0, the first Film for Imax title from Japan and a sequel to the highest-grossing Japanese Godzilla film ever, Godzilla -1.

This will be a global release for Imax. Ramanyana Part 1 among the first ever Film for Imax titles from India. Our groundbreaking exclusive theatrical release with Netflix, David Fincher-directed and Brad Pitt-starring, the unofficial sequel to Quentin Tarantino's 2019 hit Once Upon a Time in Hollywood. And we believe there are several sleeper hits lying in wait, including Paramount's fresh take on the Street Fighter video game franchise and Don't Look Back in Anger, the concert documentary chronicling Oasis' massive 2025 reunion tour, and the year concludes with Denis Villeneuve's Dune Part 3, which was shot with Imax film cameras and will be presented in Imax 70 millimeter film, which will carry us into what already looks like a very strong first quarter of 27 with Greta Gerwig's Narnia, which opens exclusively in Imax before its wide global release. Three Film for Imax titles including Michael B. Jordan's The Thomas Crown Affair, which wowed exhibitors at the recent CineEurope conference, and a Chinese New Year slate that looks to be shaping up very nicely in the early going, and some very promising titles beyond that for the year including Star Wars, Starfighter with Ryan Gosling, and the sequels to Superman and Minecraft.

We also expect to have at least four films, including both new and re-releases, on our slate in 27 that will be presented in Imax 70 millimeter film. Our momentum continues to translate into demand from our exhibition partners. We're at 62 signings for new and upgraded Imax systems worldwide. Year to date we installed a very robust 38 systems in the second quarter, edging out the 36 we installed in the same period last year. The Odyssey provided another reminder to exhibitors that for the biggest, most anticipated productions from the best filmmakers, knockoffs and marketing gimmicks won't cut it and people are seeking out Imax.

You need Imax, and we expect that our momentum from The Odyssey, the strong second half slate, and anticipation for Dune Part 3 will continue to drive demand throughout the year. We have a very healthy sales pipeline for the second half comprised of talks with many of the smaller regional and often new partners that have helped drive our growth in recent years. And as a reminder, we have a very healthy backlog alongside larger potential deals with some of our biggest exhibition partners worldwide.

Now, none of this happens without continued innovation and the competitive edge of our unique end-to-end technology. On the heels of the massive success with Oppenheimer, Christopher Nolan wanted to use his clout to realize a lifelong dream — shooting an entire movie with Imax film cameras. And he challenged us to help make that dream a reality. In response, we designed our legacy film camera from scratch, retaining only the original mechanical movement.

In addition, we developed the most advanced camera sound blimp ever created to allow Nolan to shoot sync sound in Imax for the first time ever and get stronger performances out of his cast. Nolan shot 2.1 million feet of Imax in its production — the distance from New York to Toronto. Imax innovation made The Odyssey possible and gave Chris Nolan the tools to make one of the greatest movies ever seen. But this technology is also an investment in the next generation of filmmakers and the thriving art of filmmaking itself.

Since its launch in 2022, the Film for Imax program has emerged as a transformational, differentiating opportunity for Imax across production, distribution, and marketing that has fueled our dramatic market share gains. Thanks to Chris Nolan's advocacy and ambition, Imax film has emerged as an ultimate premium level that sits above even Film for Imax and is being embraced by the most exciting blockbuster filmmakers today, including Chris, Denis, and Ryan Coogler.

It's what the world's greatest filmmakers choose to create with. And today more filmmakers than ever are selecting Imax. To close, we posted strong results in the second quarter. We talked about building a company with enduring competitive advantages and an expanding moat, and a fiercely loyal fan base and a strong global brand, unrivaled creative partnerships, a diverse global network and growing demand among exhibitors worldwide. Technology that sets the standard for immersive entertainment and a business model capable of translating those advantages into strong long-term shareholder value, including a model that leverages very strongly when financial results come in. Right now we're seeing all those advantages working together and while The Odyssey is an extraordinary achievement, it doesn't sit in isolation. It both accelerates and illuminates the historically strong momentum we've been building at Imax and offers a preview of where this company is headed. We've never had a better visibility into our content pipeline, we continue to see tremendous runway for our global expansion, and we continue to innovate in ways that make Imax even more valuable to creators, studios, exhibitors, and audiences alike.

This is an incredibly exciting time for our business. We're focused on building that momentum, executing with financial discipline, delivering the world's most immersive entertainment experience, and creating long-term value for our shareholders. Thank you, and with that, I'll turn it over to Tasha.

todd bahel, Chief Financial Officer

Thanks, Rich, and good morning, everyone. As Rich said, we are focused on capitalizing on the transformational opportunity before us with the Odyssey, and our strong second quarter results demonstrate that we're successfully capturing near- and long-term opportunities to grow our business and maximize shareholder returns. These positive results strengthen our position entering the second half of 2026, where we expect substantial box office growth.

As Rich highlighted, the back half of the slate is exceptional, beginning with the Odyssey and concluding with Dune Part 3, which also makes complete use of the Imax platform and is very highly anticipated in its own right. Imax's Q2 financial results once again showcase the strength and diversity of our operating model and the benefits of our growing scale. With Q2 revenue growth of 12% and $48 million in total adjusted EBITDA, the double-digit growth in revenue supported strong profit incrementality resulting in an adjusted EBITDA margin of 46.6%, up 400 basis points year over year, and a record Q2 adjusted EPS of $0.43, up 65% year over year.

Overall, we delivered revenues of $103 million, 12% growth over the prior year's second quarter of $92 million, and achieved a Q2 gross margin of $63 million, which grew 17% year over year. This resulted in a 61% margin, which reflects a 270 basis point improvement driven by a higher number of Imax system installations and renewals in the quarter. Operating expenditures, which include R&D and SG&A expenses excluding stock-based compensation, was $29 million for the quarter compared to $30 million in the prior-year period, reflecting the strength of our continued cost discipline that resulted in lower SG&A year over year that more than offset modest growth in R&D expenses as we continue to invest in deepening our technology moat. As a result, second quarter adjusted EBITDA growth outpaced revenue, up $8.9 million year over year to $48 million, and adjusted EBITDA margin increased to 46 point, up 400 basis points from 42.6% in the prior-year period. This strength flowed to the bottom line with second quarter adjusted net income of $24 million, a growth of 66% year over year, and a record adjusted EPS of 43 cents, up 17 cents year over year.

To put in context, this quarter's strength—Q2 was not an exceptionally high box office quarter. However, our multiple drivers of revenue combined with operating leverage resulted in an adjusted EBITDA margin comfortably above our full-year guidance of mid-40s margin and strong EPS growth of 65% year over year. Turning to the segments, in our Content Solutions segment, revenues grew 2% to $35 million driven by growth in international markets excluding China, headlined by the breakout title Michael.

Looking forward, the second half of the slate looks exceptional with a rich mix of Imax-centric blockbuster, local language and alternative content, along with megatitles of the Odyssey, whose Imax box office is already north of $80 million in less than a week, Inaratu's digger featuring Tom Cruise, the untitled Cliff Booth, Netflix film, and Dune Part 3, the climactic conclusion of the globally acclaimed franchise that should only be seen in Imax.

On the profit side, Content Solutions delivered gross profit of $22 million, which was roughly flat year over year with a healthy gross margin of 63%. Turning to our Technology, Products and Services segment, Imax delivered revenues of $65 million, a growth of 16% from the prior year, driven by higher system installations, renewals and rental revenues. In addition, gross profit margin of 60% increased 600 basis points from 54% in the prior year, reflecting a positive mix shift to higher-margin revenue streams.

Looking at installations, we saw strong demand by exhibitors to open Imax locations and installed 38 systems in the second quarter compared to 36 in the year prior. For context, the 38 installations are the highest we've had in a second quarter since a decade ago, and of those 38 systems, 20 were joint revenue sharing, 18 were sales, and from a network growth perspective, 21 were upgrades and 17 were new locations. The new locations reflect our diverse and expanding network, with more than half of new locations coming in international markets and including Japan, Spain, Germany, Belgium, Malaysia and France.

And not captured in these installation numbers is all the work the team did to get the 11 new 70 millimeter projector locations up and running, including standout locations like Regal LA Live, which is our second highest-grossing U.S. site thus far in the Odyssey run. We signed agreements for 36 systems in the quarter, up from 28 in the prior year, with 80% in new locations, a strong indicator of future network growth. And similar to installations, signings came from a diverse mix of geographies, with the most notable being the 10-system Hoytz deal in Australia and New Zealand and the 5-system Georgia Theater deal in the U.S. We also had meaningful 3-system deals in underpenetrated countries of India, Turkey and Vietnam. All in all, momentum continues on the signings front with a strong pipeline of prospects. Turning to cash flows and balance sheet, cash flows from operations for the first half of 2026 was strong with $36 million as a net inflow compared to $30 million in the prior year, reflecting the higher net income actualized along with improvements in working capital.

Our first half operating cash flows also include $10 million of incentive lease payments to exhibitors, most of which came in the first quarter. As highlighted last quarter, this investment reflects the continued prioritization of our use of available capital to invest in growth, including partnering with exhibitors to expand and upgrade the Imax 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 shape for the years ahead.

We maintain a strong capital structure thanks to our operating model and focused execution, and during Q2 we deployed $13.7 million towards share repurchases, opportunistically using our capital to drive shareholder returns. As of June 30, we held $160 million in cash and $292 million in debt with a net leverage of 0.7 times. To conclude, our strong financial results reflect our model and our momentum, which continues to build. The early results of the Odyssey shine a light on how Imax's end-to-end technology, filmmaker partnerships, and focus on quality deliver unique value to our stakeholders, from filmmakers and studios to exhibitors and consumers through to our shareholders. We've seen this moment approaching. We spoke to you about it at our Investor Day as well as through this year, and we are prepared to capitalize on it by expanding our network to penetrate more open zones, partnering with more filmmakers on using our film cameras and film prints to create an elevated experience, building out our merchandising program and creating more direct connections with our fan base, and managing our cost base and choosing our investments to ensure we remain disciplined and are driving profitable growth.

We firmly believe these actions together will help us not only achieve our 2026 guidance, but also set us up for even greater sustainable growth in the future. Thank you. And with that, I will turn the call over to the operator for Q&A.

OPERATOR

Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press star 11 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Michael Hickey with StoneX. Your line is open.

Michael Hickey, Analyst at StoneX

Hey, Rich, Natasha, Jennifer, congrats, guys. Great quarter and phenomenal success here on the Odyssey. Rich, I guess first question from us. Odyssey, again, a big success, a lot of records for Hugh, and you gave us a ton of sort of positive data points. What metrics do you think we should focus on that sort of best, I guess in your view, demonstrate both the power of the film, the Imax partnership, and sort of give you the confidence that, you know, you can continue your momentum here over the coming weeks.

Rich Gelfon, Chief Executive Officer

Well, there are a lot of metrics to focus on, Mike, some qualitative and some quantitative. So, starting with some of the qualitative, I mean, I'm sure you've done this, but go on social media. Imax is really the center of the discussion kind of wherever you go. And the comments, not only about how far they went to get tickets, but what they thought of the experience. Other qualitative things—it's a little bit of both—is looking at the pre-sales way in advance, and as I said, BFI is selling out shows in week seven and week eight.

I mean, I know those are statistics on an earnings call, but when have you ever heard of a movie selling out two months in advance? There's a lot of quantitative metrics, including the weekdays, which have been extraordinary. So a typical weekday in Imax over the summer or theatrical is—the Monday is about 10% of the weekend. And as you know, we did about $52 million over the weekend. So we were thinking maybe we'd do a little bit better. But the Monday number was around $11 million.

By the way, we've had the same number on Tuesday and the same number on Wednesday. So, you know, I think you could keep an eye on the sub data coming in—not only the overall number, but you learn from looking at that. I think you should look at a list of our top theaters. So, L.A. Live, for example, is a new theater. We just opened with Regal six months ago, and it did about $800,000 for the first six months, which is, you know, frankly, pretty good.

But in the first six days of this movie, it's done $400,000. So what it says is that a lot of people, new clients, are going for the first time, but once they go and they like the experience and they know what it is, you know, I believe they'll build on that. So the initial opening of the theater will be boosted. I think you can look at film releases, which we'll be announcing for next year. Some this year—there are at least four of them. I think there'll be more.

We're speaking to the studios and filmmakers right now about expanding it. And that's why, you know, kind of our conclusion, our premise that we don't know the ways it's going to benefit Imax yet because there are so many. That's why we worded it that way, because there are just—every day new little numbers are coming out and new directions.

Michael Hickey, Analyst at StoneX

Nice, Rich. Awesome. You kind of touched on this, but clearly you said it and now it's happening. Seems like Odyssey is certainly transformative for your business. We're really curious, sort of the feedback, since it's open now, from filmmakers and talent, where I know you have really great and strong relationships already. Just curious what you're hearing from the ecosystem, from them, and maybe the studios and your exhibition partners, and the best you can, you know, when you take that feedback and you think about, you know, how the film's performance could translate into future growth opportunities.

I mean, some seem obvious, some less. But just curious, sort of how you think it'll take shape for you in the future.

Rich Gelfon, Chief Executive Officer

So, Mike, the good news for you and other analysts and directors and exhibitors is that we didn't wait for the film to open to come up with a strategy. And in fact, as you know, because we spent time talking to you, we started putting a plan together to lean in before the film opened. And, you know, each area of the company has its own strategy, which we developed in advance and are implementing. So by way of example, in terms of studios and directors, we have a plan and a presentation already put together about what the Odyssey meant to this movie and why they should film going forward.

Another plan was in our sales area, where our exhibitor clients, people in the middle of the organization, know the numbers, but people running them don't. So on a daily basis, we're communicating that outward. And, you know, it involves PR, it involves every aspect of our business. So obviously we're getting good feedback, but we're not really leaving it at that. We have targeted goals that we're trying to make as we roll out our response to the Odyssey.

You know, it's early, but people are very positive.

UNKNOWN Analyst

Nice. Thanks, Rich. Good luck. Great to hear your voice. Take care.

OPERATOR

One moment for our next question. Our next question comes from Eric Handler with Roth Capital. Your line is open.

Eric Handler, Analyst at Roth Capital

Yes, good morning. Thanks for the question. Rich. I know it's been many, many years since Imax has manufactured a 70 millimeter film projection system. You know, given the response that you're seeing, not just for the Odyssey, but in recent times as well, is there any way to double the number of 70 millimeter film projection systems out there? Is it, you know, financially feasible? Is it, from a manufacturing point, even feasible?

Rich Gelfon, Chief Executive Officer

So, Eric, certainly we could have more of them, and we're exploring ways to do that. But in a way, it's like a Rolls Royce. The economics are very difficult to meet, and only certain people could afford a Rolls Royce. So if you wanted to broaden the market for a Rolls Royce, you know, you really have to engineer down the cost. But. And the reason for that is you need a particularly big box with the aspect ratio. It's very expensive. You need film prints, not only the projector, which cost $50,000 apiece to put in your theater. You need logistics like a forklift to lift them. So you need a very big projection booth without boring you and everyone else with the answer. When you get through the numbers of it, there are a finite number of locations that really can support the economics of it.

And one thing that's really great about this release, and some of the notable ones we've done, is they play for a really long time. So when you play for a really long time, you can make the numbers work. But if you wanted to create more and you wanted to open film releases for a weekend, the numbers just wouldn't work for that. You need a long play time. And by the way, we help subsidize the prints and we participate in the economics around the prints, so we get a significantly higher take rate in those film theaters than we get in regular theaters. So I think economically that will inure to our benefit, but it's finite. You just can't say, why don't you build hundreds of them? Because there aren't hundreds of places where it would work.

Eric Handler, Analyst at Roth Capital

Okay. And then as a follow up you touched a bit on this with the prior questions, but, you know, given that the Odyssey promotion, it was just Imax and the movie were so intertwined. How is that changing power or what discussions are taking place with, like, Greta Gerwig, Michael B. Jordan for, you know, Narnia and the Thomas Crown Affair and future movies that are filmed with Imax?

Rich Gelfon, Chief Executive Officer

Well, there's no question that the more a filmmaker leans in, the more it helps the box office. And Chris Nolan and Universal were incredible in the way that they embrace the movie. And, you know, I think it's kind of a model of how to really make it work. I've told this story before, but it's worth noting. When Creed opened, our team met with Ryan Coogler, and we said it's not just that it's filmed in Imax, but it's the way you lean into it. And we met with Michael several times with.

I'm sorry, with Ryan several times. And Ryan really leaned in. And sure, you remember Eric, he made his own book about aspect ratios. He was incredibly responsive and innovative. And, you know, Creed broke out in its category at that time. It was quite successful. So back to the question Mike just asked. We already have a plan which we're implementing, going to the filmmakers who have things scheduled in Imax film and kind of briefing them on how to be involved with the rollout and capitalize on that.

So it's worth noting that, you know, we had a call with Warner yesterday, who's distributing Dune 3, and they're already there. I mean, you don't have to convince them. They sold out some of the shows for that almost a year in advance. They did a trailer release live in 10 Imax theaters. And Denis obviously been very successful with Imax before, so he understands that. But I think the answer is to meet with filmmakers and studios as early as you can and try and replicate what Chris and Universal did.

Eric Handler, Analyst at Roth Capital

Thank you.

OPERATOR

Ladies and gentlemen, in the interest of time, we ask that you limit yourself to one question. One moment for our next question. Our next question comes from Eric Wald with Texas Capital Securities. Your line is open.

Eric Wald, Analyst at Texas Capital Securities

Thanks. Good morning, everybody. So my question, I guess, Rich, as you think about the increasing demand that you're seeing from Imax systems, from exhibitors, as well as kind of the expectation that purchasing averages should continue to move higher. I know in the past you've talked about not looking to change kind of the revenue share with studios, but kind of lean in more with kind of marketing help from them, et cetera. What about on the exhibitor side, what have you seen in your kind of current discussions and maybe what's in the recent backlog on new system installations to come in terms of your ability to kind of price those a little more advantageously for Imax, either both on a sales type of spaces or in the revenue share percentages you get from the exhibitors.

Rich Gelfon, Chief Executive Officer

So I think the current model working very well, Eric. And you know, I think there's no reason to snatch defeat from the hands of victory. So I think, you know, our pricing structure, you know, works pretty well. We get a good return, the studios get a good return, the exhibitors get a good return. You know, we're not going to be pigs about it. That's not the way we conduct our business. It's more collaborative and partnership and I just don't think that's, you know, we've been doing this for almost 60 years so we're not going to take advantage. The one place I think, you know, there is room to make the model better is in, on, on price and in fact the exhibitors set the price and frankly, you know, with tickets at Lincoln Square being scalped for $1,000, I think there's room to move up the prices for a film.

And you know, we've let that be known to the exhibitors in the film area, but it's their decision and you cover the industry, you know it well. It takes a while for people to change what they've done, but hopefully they'll see the results here and make good decisions.

Eric Wald, Analyst at Texas Capital Securities

Thanks, Rich.

OPERATOR

One moment for our next question. Our next question comes from David Karnovsky with JP Morgan. Your line is open.

David Karnovsky, Analyst at J.P. Morgan

Thank you, Rich. It'd be great if you could update on China and the moviegoing trends in the first half and more recently, how do you see performance as being impacted by film quality or consumer trends and just kind of your near term outlook on the Odyssey and Spider-Man and then just a separate one for Natasha. Gross margin in tech products and services was over 60% even with rental contribution relatively low to recent quarters. Can you just talk to the better gross profit margin there?

Rich Gelfon, Chief Executive Officer

So David, China's first half as you know, was disappointing. Their performance in the last couple weeks it's actually started to pick up and Natasha reminded me the names of the films. Kung Fu Soccer, maybe a promoter of the World Cup, but that did pretty well. In addition to some other films, some of the films moved out of Chinese New Year we believe will come out in the second half. The pre sales for Spider-Man in China have been pretty good. They've been consistent with kind of what Avatar 3's pre sales were.

I think we're over 50% of the pre sales in China for that movie. So we're cautiously optimistic about that. I think it was a smart move in China by opening Odyssey a month later than it opened in the rest of the world because I think the rest of the world's results will bleed over and will give the moving momentum going in. And they did that with Oppenheimer and that worked pretty well. So that's another one. I would say cautiously optimistic. As you know, we're doing Avengers Doomsday in China and you know that the other Endgame did incredibly well in China.

Our opening weekend was something like $45 million. I'm not predicting it's going to do that, but I think that could be a strong title for us. And again, the local language titles. So our forecast is for better second half than the first half. And you didn't ask this, but in next year 27, they have a much more promising slate that they had this year. I think there are two Wandering Earths in 27 and a number of other titles that have done well coming back.

So, you know, it's the movie business. But again, there is some more optimism creeping in.

Natasha Fernandez (Chief Financial Officer)

Hi, David. For the gross margin for tech products and services, I mean overall, just the level of box office, 284 million a box office, we exceeded our standard of where we talk about the incrementality that starts to kick in over 250. So of course tech products and services gets to benefit from that. Another part of that is we have talked about, particularly in last quarter's call, about our contribution of lease incentives to exhibitors and that we would be taking an additional take rate from them. And so you're seeing part of that flow through as well on the tech products and services margin, which we believe will continue as we continue to invest in helping the rollout of systems worldwide.

And on top of that, part of our margins just simply comes from box office projections and predictions and based on historical performance. And our box office over the past few years has continued to grow and that helps towards increasing the average sales price of a system as well, which all flows right to the bottom line.

OPERATOR

One moment for our next question. Our next question comes from David Joyce with Seaport Research Partners. Your line is open.

David Joyce, Analyst at Seaport Research Partners

Thank you. In thinking about your network evolution, it seems like you did have greater system sales than is typical here in the second quarter. Is there any pull forward or is there an acceleration or is this an indication that you'll be closer to the high end of your install guidance for the year? And at the same time though, it did look like you invested less in the JV screens than you did last year at this point. Is that also a timing factor because you did allocate some of your capital towards share repurchases? Just wondering what your thoughts are on building up the JV side of your exposure. Thanks.

Rich Gelfon, Chief Executive Officer

I think it's hard to predict in a quarter what the mix will be and I think it's dangerous to assume 1/4 is a trend. I think the trend, if I had to defend why it is a trend even though I don't think it is. As you know, we've lowered the amount of JVs that we're willing to do in marginal territories. So for example, in China we used to do a lot more JVs, but we've stopped doing them in some part and also have a more stringent criteria about what the ROI is coming out of China based on performance. So that could skew it. But I really don't think yet that it's a trend. I'd say maybe. The other thing is the GBO has been so strong that our partners have said, you know, why don't we own it instead of joint venture to capture more of it.

But again, I would be cautious about making much of it. I think Natasha wants to add something.

Natasha Fernandez (Chief Financial Officer)

The other part that should be considered there is last year, and we talked about this last year, we front-loaded the JVs because of certain tariffs and taxes, and we wanted to make sure that we shipped them ahead of time. But even as you look at this year, David, we've installed 31 JV systems year to date. So it is more than the sales systems. We continue to lean into JVs where the incrementality can kick in and really flow through, especially domestically where you're seeing that happen and in the rest of world region.

So we are continuing to invest. Also, we've talked about this, that our cost of sales — we are always finding more efficiencies and looking for that in keeping our cost of sales flat to slightly down as well.

UNKNOWN Analyst

Appreciate the color.

Natasha Fernandez (Chief Financial Officer)

Thank you.

OPERATOR

One moment for our next question. Our next question comes from Stephen Leschick with Goldman Sachs. Your line is open.

Stephen Leschick, Analyst at Goldman Sachs

Hey guys, thanks for taking the questions. Maybe as a follow-up to that last question just on the mix of sales-type versus the JVs. Natasha, curious if you just update us on your latest thinking around EBITDA-to-free cash flow conversion for the year, if any of that outlook is changing or is remaining similar, and then perhaps related to that, just as you look ahead, would be great to get your updated sense for how you're thinking about capital allocation and capital returns more broadly.

Thank you.

Natasha Fernandez (Chief Financial Officer)

Yeah, I mean, for the quarter, we had strong results in most of our business areas. I think you heard in our prepared remarks, our adjusted net income and EPS are up over 65%. And all of it comes down to just the box office performance. It was a strong quarter, our biggest Q2 in the past decade. So that's a pretty big achievement. And I think the other part is we're continuing to install based on our guidance. We have the range of 160 to 175 and we're aiming towards that.

We do look at our year as a whole annual performance of growth year over year. And so we are continuing to lean into that. Our cash from operations is very strong, as you can see, over year over year has grown significantly as well, and continuing to use that in the business as well. Our cash from ops of 36 million actually would have been 10 million higher, but we've decided to invest through those lease incentives as well. So we are highly vested in growing our network and continuing to, as we grow the network, then realize that incrementality through our model and create growth each year for our financial metrics.

We're not changing any of our metrics for the year. Our guidance for the year on EBITDA and overall, we're using our cash to essentially invest in our network to grow the network, which will then create more cash for us in our cash flows. And of course, as you've seen, Steven, whenever we have excess cash flows or find the stock price is being underappreciated, we do then take that cash and invest right back into the business through share repurchases as well.

Stephen Leschick, Analyst at Goldman Sachs

Great. Thank you very much.

OPERATOR

One moment for our next question. Our next question comes from Drew Crumb with B. Riley Securities. Your line is open.

Drew Crumb, Analyst at B. Riley Securities

Okay, thanks. Good morning, everyone. So Rich, a lot of prognosticators have pegged Spider-Man as one of the top grossing films for ‘26. Given the presale figures for the Odyssey you shared with us, can you discuss how you're managing Spider-Man across your system? I know you mentioned exhibiting the film in some Asian countries. Do you intend to, or do you have the ability to, incorporate programming in any Western markets?

Rich Gelfon, Chief Executive Officer

Thanks. So, Drew, just — it's a nuanced point, but you said some Asian countries and we're playing it in China, Japan, and Korea, which are the largest markets in Asia. So that gives us a really strong footprint. Unfortunately, Sony dated Spider-Man right on top of Odyssey. And Odyssey is one of the strongest titles — and you're right, the prognosticators are saying — but we modeled out Odyssey where it can end up, and we had a pretty aggressive ultimate for it, which I'm almost certain will be.

We're going to be at 100 million or very close by the end of the day today. So that's a week into it. So, you know, I think we look at the big picture and what's the most advantageous thing for us to play, and we're very happy with our footprint with the Odyssey.

Drew Crumb, Analyst at B. Riley Securities

Got it. Thanks.

OPERATOR

One moment for our next question. Our next question comes from Patrick Shaw with Barrington Research. Your line is open.

Patrick Shaw, Analyst at Barrington Research

Hi. Thanks for taking the question. Kind of a follow-up on your comments on talking to filmmakers earlier in the process. I'm curious on how you feel these studios are utilizing just the overall calendar and how much more opportunity there is to kind of expand that release calendar to better optimize box office, but specifically Imax's box office.

Rich Gelfon, Chief Executive Officer

Thank you. That's a great question and it's a great macro question. And the right person to answer is probably the studios. But from a close bystander point of view, I think I agree with what you're alluding to. I mean, did Spider-Man have to date on the third week of Odyssey or was there a better date? Could Avengers have dated differently than right on top of Dune? I think historical trends and what are good weeks and what are bad weeks kind of are too much in the zeitgeist of the entire entertainment network.

And some studios have taken bold steps. I remember Marvel and Disney dated a big movie on Labor Day a few years ago and it did really well. It broke out. And frankly, I'm a little surprised studios haven't done that to a greater extent and films have done really well in April and other times. So I think what you're suggesting is actually a good idea and certainly we would support that.

Patrick Shaw, Analyst at Barrington Research

Thank you.

OPERATOR

One moment for our next question. Our next question comes from Omar Amijas with Wells Fargo. Your line is open.

Omar Amijas, Analyst at Wells Fargo

Good morning and thanks for the question. Rich, you mentioned occupancy was at 75%. That sounds like a staggering number. Can you give us some perspective how that compares versus a normal quarter? And how do you expect that to trend over the next few weeks given your improved visibility with pre-sales? Thanks.

Rich Gelfon, Chief Executive Officer

So I don't have comps in front of me, Omar, but it's much higher than we typically see for an opening weekend. But, you know, as I said in my prepared remarks, I mean I feel very confident about the legs of this movie. What I said — the weekday note — it was the best Monday, the best Tuesday, the best Wednesday. I think we'll have the best Thursday. And as I said, the pre-sales for this coming weekend are as good as they are for a really good first weekend number.

And our pre-sales for the film network — I think virtually the whole network is sold out on the film site for around a month. And tickets are on sale now weeks five, some places seven and eight. So I'm extremely optimistic that the occupancy will hold up. And if you look at our slate going forward, Omar, we have room to play Odyssey for a pretty long time. There are other films in the schedule, but we started discussions earlier about sharing the network with strong Odyssey places where it's performing really well.

So, you know, when I said there were unforeseen benefits coming modestly, one of them is, you know, we haven't seen a weakening yet. Of course it will at some point. But the go-forward numbers are very strong. That's super helpful. And maybe on that point, I think you expect to over-index on your 70 millimeter screens. What is the next contractual obligation for a film to play on your 70 millimeter screens? Or maybe just ask differently, how long can you extend the Odyssey's run on your 70 millimeter screens?

It doesn't really work that way, Omar. But the next film release we have is Dune 3, sorry, which is around Christmas time. And that was shot in film in part by Denis Villeneuve. And as I said, advanced ticket sales there are extremely strong. So I think kind of the twin pillars of Odyssey and Dune 3 are going to keep those film theaters running pretty high capacity for a long time.

Omar Amijas, Analyst at Wells Fargo

Thank you very much.

OPERATOR

One moment for our next question. Our last question comes from Chad Baena. I'm with Macquarie. Your line is open.

Aaron, Analyst at Macquarie (for Chad Baena)

Hey, good morning, this is Aaron on for Chad. Thanks for squeezing us in here. A lot of our questions have been asked, but maybe we can talk about some of the more early-stage opportunities. So when it comes to the merch opportunity, can you just talk about how fast you think this part of the business could accelerate? And then also, real quickly, you recently announced a pretty interesting partnership to develop an Imax in-vehicle entertainment system.

Maybe just talk about the commercial model for that and how large you think the addressable market could be there. Thank you.

Rich Gelfon, Chief Executive Officer

Okay, I'm going to do it pretty quickly because we're running out of time. So in terms of the merchandising opportunity, one of our goals this year was to prove out merchandising as a concept for us. And as you know, a lot of studios — it's a huge number — and even for some exhibitors, it's a pretty big number. So we put a plan together and we were rolling out that plan, but the popcorn buckets really broke out. As I said in the text, we keep adding more and more and more.

We're selling thousands and thousands more as we add them. We just can't make them fast enough. I think for this year we suffered a little because we didn't see how big it would be. But, again, the goal this year was more to prove out the model than to execute in a big way. But we are taking follow-up steps already. There'll be more merchandise dropping around the Odyssey that you'll see online than we originally allocated. We put together a fairly aggressive pattern for Dune and merchandising because we think that's going to be, you know, a very successful movie.

And we're doing work on next year and modeling out what we could do with it. But I definitely think it's a significant opportunity for us. In terms of the AV partnership we announced in China, there are really two things. In the short run, in China in particular, auto manufacturers sell their cars based on the AV system, especially the high-end cars. And Gower saw an opportunity in doing that and dealing with those manufacturers to help them, you know, achieve more market share.

And then the second thing is, over time, as autonomous vehicles come in, people will be sitting in cars with not a lot to do other than look out the window. And consumers will differentiate their purchases based on what the entertainment systems are. So I think GO is just getting ahead by implementing that now. The best part of that is there's no R&D expense or capital expense for us. The way the deal is structured is most of that is absorbed by our partner.

So we like not only the opportunity, but the structure of the deal.

Aaron, Analyst at Macquarie (for Chad Baena)

All right, thanks, Rich. Appreciate it. Congrats on the quarter.

Rich Gelfon, Chief Executive Officer

Thank you.

OPERATOR

And I'm not showing any further questions. Turn the call back over to management for any further remarks.

Rich Gelfon, Chief Executive Officer

Thank you very much, operator. You probably could tell from our reactions that we're — I was going to be very corporate and say very excited, but we've been blown away. We had really high expectations. You know, people at Imax thought I was a lunatic. But we've exceeded our high expectations. By the way, it's open and, you know, we were really pleased with the weekend, but then we saw the weekday numbers and, you know, our highest expectations didn't get us there, and the pre-sales — and, you know, I use as an example LA Live.

But there's so many examples. I mean the media is using the word frenzy around Imax ticket sales. Filmmakers are very excited where it's gone. A lot of you understand Hollywood — where something works, studios lean into it — and this has really worked in a big way. I think we're coming off of the power of our platform. You know, if one movie doesn't do well — like I know a lot of our investors or analysts were in a craze because Grogu did X instead of X plus this — but we're pretty calm about it.

We have a portfolio and my lawyers Don't like me saying forward-looking statements, but there's no question in my mind Odyssey is going to do better than what we had budgeted for it. So we're really relaxed and happy and building a company for the long term and grateful that Chris Nolan made this masterpiece, leaning so hard into Imax. And we really look forward to the next quarter when we can talk about the results of all this. Thank you.

OPERATOR

Ladies and gentlemen. We thank you for your participation. And this does conclude today's presentation. You may now disconnect and have a wonderful day.

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