October 28, 2010 / 5:35 PM / 7 years ago

UPDATE 3-Imax predicts rapid growth as earnings jump

* Adjusted EPS $0.15 vs forecast $0.09

* Revenue rises 17 pct to $51.1 mln, beats mkt

* Signs deals for 100 new theaters in quarter

* Shares up 4.2 percent (Recasts with executive and analyst quotes, adds details; in U.S. dollars unless noted)

By Alastair Sharp

TORONTO, Oct 28 (Reuters) - Big-screen movie company Imax Corp IMX.TOIMAX.O posted sharply higher earnings on Thursday and forecast a rapid expansion of its theater network, especially in emerging markets such as China.

The company said it signed contracts to open 100 new theaters in the quarter, a leading indication of revenue growth. That compared with 13 signings in the same period a year ago.

“Consumers are coming to Imax in record numbers and paying a premium, and the exhibitors are doing extremely well,” Imax’s Chief Executive Richard Gelfond said in an interview.

He also underscored the growing importance of box office receipts from international markets, with international receipts per screen topping North American levels in the quarter. He cited China as a particularly promising market.

“China has this rapidly growing middle class with disposable income for entertainment and is willing to pay for affordable luxury goods,” he said.

The company is “leading the pack” in a growing global cinema industry, according to Marla Backer from Hudson Square Research, who has a “buy” recommendation on the stock.

“China is the fastest growing cinema market in the world and for them it will be a very strong source of growth,” Backer said.

Following on from the strong theater signings, Imax said it expects to install between 22 and 24 joint revenue-sharing systems and 15 to 20 new sales-type lease systems in the fourth quarter.

Gelfond said that 85 percent of new signings in the year so far have come from existing customers.

Earlier this month, Imax and its joint venture partner extended their agreement by three years and plan to install 16 to 25 big-screen theaters in the United States. [ID:nSGE6900HD]

As of Sept. 30, the company had 144 theaters in operation under joint revenue-share arrangements.

For the third quarter, adjusted net income more than doubled to $9.8 million, or 15 cents per share, from $3.9 million, or 6 cents per share, a year ago. Revenue rose 17 percent to $51.1 million.

The Toronto-based company increased its gross margin as revenue from high-margin commercial films jumped 68 percent to $21 million of the $51.1 million total.

Analysts on average had expected Imax to earn 9 cents per share on revenue of $48.8 million, according to Thomson Reuters I/B/E/S.

In the July-September third quarter, Imax installed 29 theater systems, compared with 19 last year. Its order backlog at Sept. 30 stood at 257 theater systems.

Imax shares were up 4.2 percent at C$20.20 by midday on the Toronto Stock Exchange. (Reporting by Alastair Sharp, additional reporting by Abhiram Nandakumar in Bangalore; editing by Rob Wilson)

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