The first quarter of the calendar year isn't typically the strongest time of the year for Hollywood, and for companies like theater operator IMAX (NYSE:IMAX), the seasonal ups and downs of the movie industry are evident in quarterly results. Yet historically, IMAX has kept its eyes on the big picture, pushing hard to grow its global theater network and deliver its unique entertainment experience to new moviegoers around the world.

Coming into Thursday's first-quarter financial report, IMAX investors were ready to deal with declines in sales and earnings from the previous year's period, and IMAX did indeed report weaker numbers than it did in the first quarter of 2016. Yet the theater giant is taking steps to guarantee longer-term success. Let's take a closer look at IMAX to see what happened during the quarter and how it's planning for the future.

IMAX theater location.

Image source: IMAX.

IMAX treads water as it seeks growth

IMAX's first-quarter results once again made clear that the industry is going through some challenges. Sales plunged by a quarter to $68.7 million, which was even worse than the roughly 22% decline most investors were expecting to see. GAAP net income dwindled to just $75,000, but after taking extraordinary items into account, adjusted earnings of $0.06 were better than the consensus figure among those following the stock for $0.04 on the bottom line. Still, those earnings numbers were down considerably from last year's $0.22 per share figure.

What IMAX focused on, though, was its activity in boosting the size of its theater network. The company highlighted the 104 new systems it has signed up so far this year, which is nearly triple the number it had signed by this time last year. Most of those signings have come in April, with quarter-end figures amounting to 39 new theater signings. IMAX's backlog has jumped by more than half, to 589 theaters, showing the extent of the theater operator's popularity among new customers. Installation activity slowed considerably compared to recent quarters, though, with IMAX adding just 14 new theaters and making one upgrade.

Operationally, IMAX saw struggles. Box office from IMAX titles dropped more than 20% to $212.1 million, and per-screen average box office figures plunged by a third, to $189,300. The company blamed less attractive blockbuster attractions compared to 2016's first quarter for the declines. Segment by segment, the network business unit saw sales fall by a quarter, with both DMR revenue and joint revenue-sharing arrangements performing poorly. The theater business segment took about a one-third hit to its top line, with revenue from sales and sales-type leases dropping from $18 million a year ago to less than $7 million during 2017's first quarter.

What's ahead for IMAX?

IMAX CEO Richard Gelfond was nevertheless proud at the success of its efforts to grow. "Not only have we witnessed record signings to date," Gelfond said, continuing:

... we have also seen exceptional box office performance from titles such as The Fate of the Furious, which did $30 million in its opening weekend in IMAX and broke numerous box office records including our biggest opening weekend ever in China.

In other words, the CEO believes that when you look at how April has gone -- which is when the latest Fast and the Furious installment was released -- the first quarter's woes should evaporate in the long run.

The company also thinks its new deals should be helpful in building positive momentum. For instance, a 25-theater deal with AMC-Odeon is far from the largest strategic move IMAX has made this year, but Gelfond is convinced that by opening up key markets like Germany, Spain, Italy, and the Scandinavian countries, a stronger relationship between IMAX and AMC-Odeon will pay dividends far beyond the scope of the current deal.

Moreover, IMAX is looking for ways to capitalize on the rise of virtual reality. The company announced a content deal with Warner Bros. Home Entertainment to create three virtual reality experiences based on future films. If that concept takes off, it could lead to a lot of future business for IMAX.

Still, IMAX shareholders seemed happy with the news, and the stock rose 3% in pre-market trading following the announcement. As long as the theater company can become more popular worldwide, IMAX should prosper when Hollywood returns to its full level of popularity among theatergoers.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends IMAX. The Motley Fool has a disclosure policy.