The debate is raging about what IMAX
To answer that question we need to focus on how many theaters IMAX has, and how much money each one of those theaters generates on average and not a single quarter's results. We can start with the theaters count, which I have shown below along with the top end of estimates for theaters to end 2011, 2012, and IMAX's saturation point. IMAX has increased the number of theaters it is installing twice this year alone, so I think the top end of estimates is probably still conservative for our purpose. IMAX has also pointed to 1,300 theaters as a saturation point, although that number continues to grow as well.
Theaters |
End of 2010 |
Added Thru Q2 2011 |
Est. End of 2011 |
Est. End of 2012 |
Saturation |
---|---|---|---|---|---|
Joint Ventures | 171 | 33 | 252 | 297 | Est. 650 |
Sales Type | 202 | 23 | 238 | 293 | Est. 650 |
Total | 373 | 56 | 490 | 590 | 1,300 |
According to IMAX presentations the company's two-year average box office per theater is $1.2 million, and it expects to generate about $400,000 in ongoing EBITDA per joint revenue sharing theater and $160,000 in ongoing EBITDA per sales-type lease theater. Sales-type theaters also generate about $800,000 in one-time EBITDA, but we'll ignore that for now. Plus, operators like Regal Entertainment Group
If we multiply this EBITDA assumption times the number of theaters, we can get an idea of the ongoing EBITDA IMAX should generate each year from theaters. I've then taken the annual EBITDA times four different multiples to show possible valuations for this part of the business.
EBITDA Multiple |
2011 Value |
2012 Value |
Saturation Value |
---|---|---|---|
6x | $833 Million | $994 Million | $2.18 Billion |
8x | $1.11 Billion | $1.33 Billion | $2.91 Billion |
10x | $1.39 Billion | $1.66 Billion | $3.64 Billion |
12x | $1.67 Billion | $1.99 Billion | $4.37 Billion |
Remember, the value I have laid out in the table is ONLY ongoing EBITDA -- it doesn't include EBITDA from selling equipment or any other ventures IMAX is involved in.
It is also possible that IMAX improves per screen box office as it -- and movie studios -- perfect what is a successful IMAX film. For example, Paramount Pictures, which is owned by Viacom
IMAX also has investments in business like Laser Light Engines and a 3-D channel with Discovery Communications
IMAX also isn't tied to the success (or lack thereof) of 3-D the way RealD
Ex-Avatar
Investors need to keep in mind that IMAX is built for movies like Avatar, and the assumptions above were built excluding Avatar because it skewed the numbers heavily. To give an idea of what Avatar's impact was, the movie averaged $1.2 million in box office at IMAX theaters internationally, the same as IMAX averages for a full year. But IMAX lives for big movies like this.
We saw that again this month when IMAX theaters generated $23.2 million in box office for Time Warner's
What is IMAX really worth?
The stock market thinks IMAX is worth $1.13 billion right now, about eight times ongoing theater EBITDA at the end of 2011. Based on the numbers I've shown what do you think IMAX should be worth? Sound off in our comments section below.
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