IMAX CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Presented below is Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for IMAX Corporation (together with its consolidated subsidiaries, unless the context requires otherwise, “IMAX” or the “Company”) for the three months ended March 31, 2025 and 2024. MD&A should be read in conjunction with Note 13, “Segment Reporting,” in the accompanying Condensed Consolidated Financial Statements in Item 1. As of March 31, 2025, the Company indirectly owned 71.40% of IMAX China Holding, Inc. (“IMAX China”), whose shares trade on the Hong Kong Stock Exchange. IMAX China is a consolidated subsidiary of the Company. For the three months ended March 31, 2025, net income attributable to IMAX China is $20.4 million, of which $14.6 million is attributable to the shareholders of the Company (2024 — $7.5 million and $5.4 million, respectively). SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION Certain statements included in this quarterly report may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of Canadian securities laws. These forward-looking statements include, but are not limited to, statements regarding business and technology strategies and measures to implement strategies, statements about the Company’s belief and expectations, competitive strengths, goals, market opportunity and penetration, including opportunities in and expected growth from international markets, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), the Company’s technological capabilities and the differentiation thereof, brand equity and brand awareness and the benefits thereof, industry prospects and consumer behavior, future industry developments, including expected releases and the timing and effects thereof, plans and references to the future success of the Company and expectations regarding its future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States, Canada, and China, including with respect to escalating and uncertain tariffs and other trade regulations, as well as economic and trade tensions, trade wars, and geopolitical conflicts and the effects thereof; risks related to the Company’s growth and operations in China; industry conditions in China affecting both the Company and its partners; risks related to the failure of the Company’s exhibitors being able to fulfill their contractual payment obligations; risks related to the Company’s failure to attract and retain its employee population; the performance of IMAX remastered films and other films released to the IMAX network; the signing of IMAX System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to the Company’s inability to enter into new sales and lease agreements adversely affecting revenue; risks related to the Company’s operating results and cash flow increasing the volatility of the Company’s share price; risks related to currency fluctuations and foreign exchange controls; the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies; the failure to respond to change and advancements in technology; risks relating to consolidation among commercial exhibitors and studios; risks related to brand extensions and new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cybersecurity and data privacy; risks related to the Company’s inability to protect its intellectual property and to avoid infringing, misappropriating, or violating the intellectual property rights of others; risks associated with the Company’s use of artificial intelligence (“AI”) and exploration of additional use cases of AI; risks related to climate change; risks related to weather conditions and natural disasters that may disrupt or harm the Company’s business; risks related to the Company’s indebtedness and compliance with its debt agreements; general economic, market or business conditions; risks related to sustained inflationary pressure; risks related to political, economic and social instability; the failure to convert system backlog into revenue and cash flows; changes in laws or regulations; any statements of belief and any statements of assumptions underlying any of the foregoing; other factors and risks outlined in the Company’s periodic filings with the United States Securities and Exchange Commission (the “SEC”) or in Canada, the System for Electronic Data Analysis and Retrieval (“SEDAR+”); and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this quarterly report are qualified by these cautionary statements, and actual results or anticipated developments by the Company may not be realized, and even if substantially realized, may not have the expected consequences to, or effects on, the Company. The forward-looking statements herein are made only as of the date hereof and the Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise. 36 Table of Contents IMAX ® , IMAX 3D ® , Experience It In IMAX ® , The IMAX Experience ® , DMR ® , Filmed For IMAX ® , IMAX Live ® , IMAX Enhanced ® and IMAX StreamSmart TM are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. 37 Table of Contents The Company makes available, free of charge, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to such reports, as soon as reasonably practicable after such filings have been made with the SEC and Canadian securities regulators. Reports may be obtained free of charge through the SEC’s website at www.sec.gov or the SEDAR+’s website at www.sedarplus.ca and through the Company’s website at www.imax.com or by calling the Company’s Investor Relations Department at 212-821-0154. The Company announces material information to the public through a variety of means, including filings with the SEC and Canadian securities regulators, press releases, public conference calls, and its website at www.imax.com. The Company uses these channels to communicate with investors and the public about the Company, its products and services, and other matters. Therefore, investors are encouraged to review the information the Company makes public in these locations, as such information could be deemed to be material information. No information included on the Company’s website shall be deemed included or otherwise incorporated into this filing, except where expressly indicated. All references to the Company’s website are intended to be inactive textual references only. OVERVIEW IMAX Corporation (together with its consolidated subsidiaries, the “Company” or “IMAX”) is a Canadian corporation that was formed in March 1994 as a result of an amalgamation between WGIM Acquisition Corp. and the former IMAX Corporation (“Predecessor IMAX”). Predecessor IMAX was incorporated in 1967. IMAX is a premier global technology platform for entertainment and events. Through its proprietary software, auditorium architecture, patented intellectual property, and specialized equipment, IMAX offers a unique end-to-end solution to create superior, awe-inspiring immersive content experiences for which the IMAX ® brand is globally renowned. Top filmmakers, movie studios, artists, and creators utilize the cutting-edge visual and sound technology of IMAX to connect with audiences in innovative ways. As a result, IMAX is among the most important and successful global distribution platforms for domestic and international tentpole films. The Company’s global content portfolio includes blockbuster films, both from Hollywood and local language film industries worldwide; IMAX documentaries, both original and acquired (“IMAX Documentaries”); and IMAX events and experiences in emerging verticals, including music, gaming, and sports. The Company leverages its proprietary technology and engineering in all aspects of its business, which principally consists of the digital remastering of films and other content into the IMAX format for distribution across the IMAX network (“IMAX Film Remastering”) and the sale or lease of premium IMAX theater systems (“IMAX System(s)”). IMAX Systems are based on proprietary and patented image, audio and other technology developed over the course of the Company’s history. The customers for IMAX Systems are principally exhibitors that operate commercial multiplex theaters, and, to a much lesser extent, institutional locations, including museums and science centers, and destination entertainment sites. The Company does not own the locations in the IMAX network, except for one, and is not an exhibitor, but instead sells or leases the IMAX System to exhibitor customers along with licenses to use its trademarks and ongoing maintenance services for which there are annual payments by the exhibitors to IMAX. IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of March 31, 2025, there were 1,810 IMAX Systems in 89 countries and territories, including 1,738 commercial multiplexes, 11 commercial destinations, and 61 institutional locations in the Company’s global network. This compares to 1,772 IMAX Systems in 89 countries and territories as of March 31, 2024, including 1,697 commercial multiplexes, 12 commercial destinations, and 63 institutional locations in the Company’s global network. (Refer to the table under “IMAX Network and Backlog” for additional information on the composition of the IMAX network.) IMAX Systems provide the Company’s exhibitor customers with a combination of the following benefits: • the ability to exhibit content that has been enhanced through the IMAX Film Remastering process, which results in higher image and sound fidelity than conventional cinema experiences; • advanced, high-resolution projectors with specialized equipment and automated theater control systems, which generate significantly more contrast and brightness than conventional theater systems; • large screens and proprietary auditorium geometry, which result in a substantially larger field of view so that the screen extends to the edge of a viewer’s peripheral vision and creates more realistic images; • advanced sound system components, which deliver more expansive sound imagery and pinpointed origination of sound to any specific spot in an auditorium equipped with an IMAX System; 38 Table of Contents • specialized theater acoustics, which result in a four-fold reduction in background noise than conventional cinema experiences; • ongoing maintenance and extended warranty services; and • a license to the globally recognized IMAX brand, as well as benefits from IMAX marketing of films being shown in its network and IMAX’s growing social media followership. In addition, select movies shown in the IMAX network are filmed using proprietary IMAX film cameras or IMAX certified digital cameras, which along with IMAX’s customized guidance and a workflow process, provide filmmakers enhanced and differentiated image quality and an IMAX-exclusive film aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen. In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image. The Company believes that these components cause audiences in IMAX locations to feel as if they are a part of the on-screen action, creating a more intense, immersive, and awe-inspiring experience than a conventional cinematic format. As a result of the engineering and scientific achievements that are a hallmark of The IMAX Experience , the Company’s exhibitor customers typically charge a premium for films released in IMAX’s format versus films exhibited in their other auditoriums. The premium pricing, combined with the higher attendance levels associated with IMAX films, tends to generate incremental box office receipts (“box office”) for the Company’s exhibitor customers and for the movie studios releasing their films to the IMAX network. The incremental box office generated by IMAX films combined with IMAX’s leading global network footprint and scale has helped establish IMAX as a key premium distribution and marketing platform for Hollywood and foreign local language movie studios. The Company achieved a box office record in the first quarter in 2025 of $298.2 million, including booking fees, from 33 new films and other content released during the quarter, highlighted by the performance of Ne Zha 2, a Chinese local language animation film. The Company continues to evolve its platform to bring new, innovative events and experiences to audiences worldwide. During the first quarter, the Company partnered with Sony Pictures for the exclusive release of Becoming Led Zeppelin. In addition, the Company continued to partner with A24 for a monthly one-night-only IMAX releases of classic A24 titles, including in the first quarter Talk to Me , Moonlight, and Spring Breakers. The Company partnered with NBC universal for the SNL50 The Homecoming Concert screening in five North American IMAX locations. The Company also partnered with DAZN for the PSG v Marseille Le Classique Match screening in select IMAX locations across France. As of March 31, 2025, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound. Furthermore, the Company can deploy its StreamSmart TM technology to deliver live events to virtually any theater around the world. As a premier global technology platform for entertainment and events, the Company strives to remain at the forefront of advancements in technology. The Company offers a suite of laser-based digital projection systems (“IMAX Laser Systems”), which deliver increased resolution, sharper and brighter images, deeper contrast, and the widest range of colors available to filmmakers today. The Company further believes that its suite of IMAX Laser Systems is helping facilitate the next major renewal and upgrade cycle for the global IMAX network. The Company utilizes AI for image enhancement, streaming technology, and data analysis to improve various aspects of its business. Furthermore, the Company is actively exploring other global use cases for AI to save costs and to improve its products, operations, and efficiency. SOURCES OF REVENUE The Company has organized its operating segments into the following two reportable segments: (i) Content Solutions, which principally includes content enhancement and distribution services, and (ii) Technology Products and Services, which principally includes the sale, lease, and maintenance of IMAX Systems. The Company’s activities that do not meet the criteria to be considered a reportable segment are disclosed within All Other (See Note 13 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1). 39 Table of Contents Content Solutions The Content Solutions segment earns revenue principally from studios and other content creators for IMAX Film Remastering. To a lesser extent, the Content Solutions segment also earns revenue from the distribution of large-format documentary films and IMAX events and experiences, including music, gaming, and sports, as well as the provision of film post-production services. Film Remastering and Distribution IMAX Film Remastering is a proprietary technology that digitally remasters films and other content into IMAX formats for distribution across the IMAX network. In a typical IMAX Film Remastering and distribution arrangement, the Company receives a percentage of the box office from a movie studio in exchange for converting a commercial film into the IMAX format and distributing it through the IMAX network. The fee earned by the Company in a typical IMAX Film Remastering and distribution arrangement averages approximately 12.5% of box office (i.e., gross box office (“GBO”) less applicable sales taxes), except for within Greater China, where the Company receives a lower percentage of net box office receipts for certain Hollywood films due to an import tax. IMAX Film Remastering digitally enhances the image quality and/or resolution for projection on IMAX screens while maintaining or enhancing the visual clarity and sound quality to levels for which The IMAX Experience is known. IMAX Film Remastering is completed for the image of films released to the IMAX network, creating a unique IMAX version that is optimized for IMAX’s proprietary digital projection systems and format. In addition, the original soundtrack of a film to be exhibited across the IMAX locations is remastered into a unique IMAX digital audio format. IMAX sound systems use proprietary loudspeaker systems, designs and proprietary surround sound configurations to ensure every seat in an auditorium is an optimal listening position. IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film. Collectively, the Company refers to these enhancements as “IMAX DNA”. Filmmakers and movie studios increasingly seek to infuse more IMAX DNA in theatrical releases to realize a filmmaker’s creative vision more fully, while generating interest and excitement among moviegoers. Such enhancements include shooting films with IMAX cameras to increase the audience’s immersion in the film and to take advantage of the unique dimensions of the IMAX screen by projecting the film in a larger aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen. In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image. The Company’s Filmed For IMAX ® program enables filmmakers craft films from their inception to optimize The IMAX Experience and provides incremental and bespoke marketing support. The box office metrics demonstrate audiences respond extremely favorable to Filmed For IMAX ® titles, resulting in a higher market share for IMAX. Management believes that growth in international box office represents an important growth opportunity for the Company. The Company’s strategy to capitalize on this opportunity includes expanding the IMAX network into underpenetrated international markets and growing the number of local language films released, particularly in China, Japan, India, France, and South Korea. As the popularity of local language films has continued to increase, the Company has extended its content strategy to distribute local language content beyond native markets. During the three months ended March 31, 2025, local language films exhibited across the Company’s global network generated over $202 million in box office, representing 68% of the Company’s global box office, including the Chinese local language film, Ne Zha 2 , which became the highest grossing IMAX release of all time in China. 40 Table of Contents The following table provides the number of new films and other content that were released to the Company’s global network during the three months ended March 31, 2025 and 2024, respectively: Three Months Ended March 31, 2025 2024 Hollywood film releases (1) 7 7 Local language film releases: China 6 4 India 5 2 Japan 3 3 South Korea 2 1 France 2 — Vietnam 1 — Indonesia 1 — Total local language film releases 20 10 Other content experiences 6 2 33 19 (1) For the three months ended March 31, 2025, the films released to the Company’s global network include one with IMAX DNA (2024 — two). The films distributed through the Company’s global network during the three months ended March 31, 2025 that generated the highest IMAX box office totals were Chinese local language films Ne Zha 2 and Creation of the Gods II: Demon Force and Captain America: Brave New World. In addition, during the three months ended March 31, 2025, a number of alternative content films and events were distributed, including Becoming Led Zeppelin, Seven, Parasite, SNL50: The Homecoming Concert in partnership with NBC Universal , PSG v Marseille Le Classique Match in partnership with DAZN, and monthly A24 mid-week film series. In addition to the 33 IMAX films and alternative content experiences released on the Company’s global network during the three months ended March 31, 2025, the Company has announced the following additional 34 films and alternative content experiences to be released throughout the remainder of 2025: Title Studio Scheduled Release Date (1) IMAX DNA Seventeen Right Here World Tour (2) Hybe April 2025 — One and Only (2) Wanda April 2025 — A Minecraft Movie Warner Bros. Pictures April 2025 — The Amateur Walt Disney Studios April 2025 — Warfare A24 April 2025 — One to One: John & Yoko Magnolia Films April 2025 — Yadang: The Snitch (2) PlusM April 2025 — Sinners Warner Bros. Pictures April 2025 Filmed for IMAX Detective Conan: One-Eyed Flashblack (2) Toho April 2025 — Ambulance (2) Muvi Studios April 2025 — Pink Floyd at Pompeii - MCMLXXII Trafalgar Releasing April 2025 — The Dumpling Queen (2) Maoyan April 2025 — The Open Door (2) Wanda May 2025 — Thunderbolts Marvel Studios May 2025 Filmed for IMAX Final Destination: Bloodlines Warner Bros. Pictures May 2025 Filmed for IMAX Mission Impossible - The Final Reckoning Paramount Pictures May 2025 Filmed for IMAX How to Train Your Dragon Universal Pictures June 2025 Filmed for IMAX F1 Apple Original Films/Warner Bros. Pictures June 2025 Filmed for IMAX Jurassic World: Rebirth Universal Pictures July 2025 — Superman Warner Bros. Pictures July 2025 Filmed for IMAX Demon Slayer: Kimetsu No Yaiba The Movie: Infinity Castle (2) Toho/ Sony Pictures July 2025 — The Fantastic Four: First Steps Marvel Studios July 2025 Filmed for IMAX 41 Table of Contents Weapons Warner Bros. Pictures August 2025 — The Conjuring: Last Rites Warner Bros. Pictures September 2025 — Him Universal Pictures September 2025 — One Battle After Another Warner Bros. Pictures September 2025 — Michael Lionsgate/Universal Pictures October 2025 — Tron: Ares Walt Disney Studios October 2025 Filmed for IMAX Mortal Kombat 2 Warner Bros. Pictures October 2025 Filmed for IMAX Predator: Badlands Walt Disney Studios November 2025 — The Running Man Paramount Pictures November 2025 — Wicked: For Good Universal Pictures November 2025 — Zootopia 2 Walt Disney Studios November 2025 — Avatar: Fire and Ash Walt Disney Studios December 2025 — (1) The scheduled release dates in the table above are subject to change, may vary by territory, and may not reflect the date(s) of limited premiere events. (2) Denotes local language release. The Company remains in active negotiations with studios for additional films to fill out its short- and long-term film slate for the IMAX network. The Company also expects to announce additional local language films and exclusive IMAX events and experiences to be released to its global network throughout 2025. The Company has announced that a record number of over 14 Filmed for IMAX titles will be released in 2025. The Company’s Hollywood film slate beyond 2025 has started to fill in, including major films such as: Avengers: Doomsday , The Mandalorian and Grogu , Toy Story 5 , The Odyssey , Moana , Supergirl Woman of Tomorrow , Avengers: Secret Wars , The Batman 2 , Frozen 3, and Dynamic Duo. Additionally, in January 2025, the Company announced an agreement with Netflix, Inc. to debut Oscar ® -nominated director Greta Gerwig’s upcoming film, Narnia , exclusively across the IMAX network with a two-week run beginning Thanksgiving 2026. Other Content Solutions The Company distributes large-format documentary feature films through its global commercial network and institutional theaters. Traditionally, the Company receives as its distribution fee either a fixed amount or a fixed percentage of the theater box office and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. In the first quarter of 2025, the Company released the institutional 3D version of Blue Angels across select IMAX locations in North America, Europe, and Australia. Upcoming documentaries, which are currently in production, include Stormbound , a feature documentary produced by Academy Award ® -winning producer, Adam McKay, The Lost Wolves of Yellowstone , and Patrouille de France, all of which are expected to be released in 2025, and The Elephant Odyssey , a documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which is expected to be released in 2026. The Company continues to believe that the IMAX network is a valuable global platform to launch and distribute original content, including documentaries. The ownership rights to such films may be held by the film sponsors, the film investors and/or the Company. As of March 31, 2025, the Company had distribution rights with respect to approximately 65 films, which cover subjects such as space, wildlife, music, sports, history and natural wonders. In addition, the Company continues to evolve its platform to bring new, innovative IMAX events and experiences to audiences worldwide. As of March 31, 2025, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia, and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound. In the three months ended March 31, 2025, the Company partnered with Sony Pictures for the exclusive release of Becoming Led Zeppelin. The Company also partnered with NBC Universal for the SNL50: The Homecoming Concert screening in five theaters in North America, and DAZN for the PSG v Marseille Le Classique Match screening. In addition, the Company continues to partner with A24 for a monthly one-night-only IMAX release of classic A24 titles, including Talk to Me , Moonlight, and Spring Breakers in the first quarter of 2025. The Company provides film post-production and quality control services for films, whether produced by IMAX or third parties, and digital post-production services. In addition, the Company also provides IMAX film and digital cameras to content creators under the IMAX certified camera program. 42 Table of Contents Technology Products and Services The Technology Products and Services segment earns revenue principally from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems. To a lesser extent, the Technology Products and Services segment also earns revenue from certain ancillary theater business activities, including after-market sales of IMAX Systems parts and 3D glasses. Sales and Sales-Type Lease Arrangements The Company provides IMAX Systems to exhibitors through sale arrangements or long-term lease arrangements that for accounting purposes are classified as sales-type leases. Under these arrangements, in exchange for providing the IMAX System, the Company earns initial fees and ongoing consideration, which can include fixed annual minimum payments and contingent fees in excess of the minimum payments, as well as maintenance and extended warranty fees (see “IMAX Maintenance” below). The initial fees vary depending on the system configuration and location of the IMAX System. Initial fees are paid to the Company in installments typically between the time of signing the arrangement and the time of system installation. Once an IMAX System is installed, the initial fees and the present value of future annual minimum payments, which are financing fees, are recognized as revenue. In addition, in sale arrangements, the present value of the estimated contingent fees that may become due if certain annual minimum box office receipt thresholds are exceeded is recorded as revenue in the period when the sale is recognized and is adjusted in future periods based on actual results and changes in estimates. Such variable consideration is only recognized on sales transactions to the extent the Company believes there is not a risk of significant revenue reversal. Finance income is recognized over the term of a financed sale or sales-type lease arrangement. In sale arrangements, title to the IMAX System equipment generally transfers to the customer. However, in certain instances, the Company retains title or a security interest in the equipment until the customer has made all payments required by the agreement or until certain shipment events for the equipment have occurred. In a sales-type lease arrangement, title to the IMAX System equipment remains with the Company. The Company has the right to remove the equipment for non-payment or other defaults by the customer. The revenue earned from customers under the Company’s IMAX System sale or sales-type lease agreements varies from quarter-to- quarter and year-to-year based on a number of factors, including the number and mix of IMAX System configurations sold or leased, the timing of installation of the IMAX Systems, the nature of the arrangement and other factors specific to individual contracts. Joint Revenue Sharing Arrangements The Company provides IMAX Systems to exhibitors through joint revenue sharing arrangements (“JRSAS”). Under the traditional form of these arrangements, the Company provides the IMAX System under a long-term lease in which the Company assumes the majority of the equipment and installation costs. In exchange for its upfront investment, the Company, primarily, earns rent based on a percentage of contingent box office receipts rather than requiring the customer to pay a fixed upfront fee or fixed annual minimum payments. Rental payments from the customer are required throughout the term of the arrangement and are typically due either monthly or quarterly. The Company retains title to the IMAX System equipment components throughout the lease term, and the equipment is returned to the Company at the conclusion of the arrangement. Under certain other JRSAs, known as hybrid arrangements, the customer is responsible for making fixed upfront payments prior to the delivery and installation of the IMAX System in an amount that is typically half of what the Company would receive from a typical sale transaction. As with a traditional JRSA, the customer also pays the Company a percentage of contingent box office receipts over the term of the arrangement, although this percentage is typically half that of a traditional JRSA. Under most JRSAs (both traditional and hybrid), the initial non-cancellable term is 10 years or longer and is renewable by the customer for one to two additional terms of between three to five years. The Company has the right to remove the equipment for non-payment or other defaults by the customer. The contracts are non-cancellable by the customer unless the Company fails to perform its obligations. The revenue earned from customers under the Company’s JRSA can vary from quarter-to-quarter and year-to-year based on a number of factors that drive box office levels including film performance, the mix of IMAX System configurations, the timing of installation of IMAX Systems, the nature of the arrangement, the location, size and management of the theater and other factors specific to individual arrangements. JRSAs also require IMAX to provide maintenance and extended warranty services to the customer over the term of the lease in exchange for a separate fixed annual fee. These fees are reported within IMAX Maintenance, as discussed below. JRSAs have been an important factor in the expansion of the Company’s commercial system network. JRSAs allow commercial theater exhibitors to install IMAX Systems without the significant initial capital investment required in a sale or sales-type lease 43 Table of Contents arrangement. JRSAs drive recurring cash flows and earnings for the Company as customers under these arrangements pay the Company a portion of their ongoing box office receipts. The Company funds its investment in equipment for JRSAs through cash flows from operations. As of March 31, 2025, the Company had 893 locations under joint revenue sharing arrangements in its global commercial multiplex network. The Company also had contracts in backlog for 346 systems under joint revenue sharing arrangements as of March 31, 2025, including 152 upgrades to existing locations and 194 new locations. IMAX Maintenance IMAX System arrangements also include a requirement for the Company to provide maintenance services over the life of the arrangement in exchange for an extended warranty and annual maintenance fee paid by the exhibitor. Under these arrangements, the Company provides preventative and emergency maintenance services to ensure that each presentation is up to the highest IMAX quality standard. Annual maintenance fees are paid throughout the duration of the term of the system agreements. All Other Streaming and Consumer Technology Streaming and Consumer Technology includes the Company’s Streaming Technology software offerings and IMAX Enhanced products and services. Streaming Technology consists of several software products, including: • IMAX StreamSmart – works within existing video compression workflows to reduce bitrates and retain picture quality across all devices and formats and deliver significant cost savings for both on-demand and live content. • IMAX StreamAware On-Demand – all-in-one quality assurance and quality control to automate and standardize checks for comprehensive content integrity and regulatory compliance for third-party content libraries, across an entire video compression workflow. • IMAX StreamAware On-Air – real-time monitoring software for live streams, which enables users to monitor video quality across their networks and to identify and address streaming issues. • Stream it in IMAX Enhanced - end-to-end technology solution that dynamically improves video and audio fidelity for live and on-demand content. These products are powered by IMAX VisionScience ® , an AI technology that allows streaming platforms and broadcasters to automate workflows. The Company believes that these products allow users to deliver the highest quality viewing experiences to their subscribers while reducing costs. IMAX Enhanced is a solution to bring The IMAX Experience into the home. IMAX Enhanced provides end-to-end premium technology across streaming content and best-in-class entertainment devices, offering consumers high-fidelity playback of image and sound in the home and beyond, including the following features: • IMAX’s expanded aspect ratio, which is available on select titles and streaming platforms; • IMAX’s proprietary remastering technology, which produces more vivid, higher-fidelity 4K HDR images on premium televisions; and • IMAX’s signature sound, which was specially recreated and calibrated for the home to unlock more immersive audio. To be certified as IMAX Enhanced, leading consumer electronics manufacturers spanning 4K/8K televisions, projectors, A/V receivers, loudspeakers, soundbars, smartphones, personal computers, tablets, and more must meet a carefully prescribed set of audiovisual performance standards, set by a certification committee, along with some of Hollywood’s leading technical specialists. At present, certified global device partners include Sony Electronics, Hisense, TCL, LG, Phillips, Hewlett Packard, Xiaomi, Sound United and Honor, among others. As of March 31, 2025, more than 300 IMAX Enhanced titles had been released across six of the biggest streaming platforms worldwide: Disney+, Sony Pictures CORE, Tencent Video, iQiyi, Yonku and Rakuten TV. Over 15 million IMAX Enhanced certified devices are estimated to be in use today. IMAX Streaming and Consumer Technology is part of the Company’s next evolutionary step to extend the IMAX brand and technology further into new use cases, including streaming entertainment and the consumer electronics market. 44 Table of Contents Other All Other also includes revenues from sources including one owned and operated IMAX System in Sacramento, California; a commercial arrangement with one theater resulting in the sharing of profits and losses; the provision of management services to three other theaters; and offering production advice and technical assistance to both documentary and Hollywood filmmakers. IMAX NETWORK AND BACKLOG IMAX Network The following table provides detailed information about the IMAX network by type and geographic location as of March 31, 2025 and 2024. For additional information regarding the composition of the IMAX network, see “Marketing and Customers” in Part I, Item 1 of the Company’s 2024 Form 10-K. March 31, 2025 March 31, 2024 Commercial Multiplex Commercial Destination Institutional Total Commercial Multiplex Commercial Destination Institutional Total United States 372 4 24 400 363 4 24 391 Canada 44 1 5 50 42 1 7 50 Greater China (1) 793 — 13 806 791 — 13 804 Asia (excluding Greater China) 186 1 2 189 170 2 2 174 Western Europe 136 4 8 148 128 4 8 140 Latin America (2) 62 1 7 70 59 1 7 67 Rest of the World 145 — 2 147 144 — 2 146 Total (3) 1,738 11 61 1,810 1,697 12 63 1,772 (1) Greater China includes China, Hong Kong, Taiwan, and Macau. (2) Latin America includes South America, Central America, and Mexico. (3) Period-to-period changes in the table above are reported net of the effect of permanently closed locations. (See “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there,” “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows,” and “Risk Factors – General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems” in Part I, Item 1A of the Company’s 2024 Form 10-K.) IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,738 IMAX Systems operating as of March 31, 2025, representing a market penetration of only 48%. The Company believes that the majority of its future growth will come from international markets. As of March 31, 2025, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada). Revenues and GBO derived from international markets continue to exceed revenues and GBO from the United States and Canada. Risks associated with the Company’s international business are outlined in “Risk Factors – The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales and future growth prospects” in Part I, Item 1A of the Company’s 2024 Form 10-K. 45 Table of Contents The following tables provide detailed information about IMAX Systems operating in multiplex locations by arrangement type and geographic location as of March 31, 2025 and 2024: March 31, 2025 Commercial Multiplex Locations in IMAX Network Traditional JRSA Hybrid JRSA Sales Arrangements (1) Total Domestic Total (United States & Canada) 274 6 136 416 International: Greater China 385 101 307 793 Asia (excluding Greater China) 52 1 133 186 Western Europe 45 13 78 136 Latin America 4 — 58 62 Rest of the World 12 — 133 145 International Total 498 115 709 1,322 Worldwide Total (2) 772 121 845 1,738 (1) Includes Sales and Sales-Type Lease deal types. (2) Period-to-period changes in the tables above are reported net of permanently closed locations. March 31, 2024 Commercial Multiplex Locations in IMAX Network Traditional JRSA Hybrid JRSA Sales Arrangements (1) Total Domestic Total (United States & Canada) 272 6 127 405 International: Greater China 413 109 269 791 Asia (excluding Greater China) 48 8 114 170 Western Europe 41 15 72 128 Latin America 2 — 57 59 Rest of the World 15 — 129 144 International Total 519 132 641 1,292 Worldwide Total (2) 791 138 768 1,697 (1) Includes Sales and Sales-Type Lease deal types. (2) Period-to-period changes in the tables above are reported net of permanently closed systems. Backlog The following table provides detailed information about the Company’s backlog as of March 31, 2025 and 2024: March 31, 2025 March 31, 2024 Number of Systems Dollar Values Number of Systems Dollar Values (In thousands of U.S. Dollars, except number of systems) New Upgrade New Upgrade New Upgrade New Upgrade Sales Arrangements (1) 161 9 $ 162,359 $ 6,530 149 15 $ 157,494 $ 14,868 Hybrid JRSA (2) 94 — 66,623 — 100 1 74,873 910 Traditional JRSA (2) 100 152 1,979 275 128 49 425 1,575 Total 355 161 $ 230,961 $ 6,805 377 65 $ 232,792 $ 17,353 (1) Includes Sales and Sales-Type Lease deal types. (2) The consideration owed under traditional joint revenue sharing arrangements is typically a percentage of contingent box office receipts rather than a fixed upfront fee or fixed annual minimum payments. Accordingly, such arrangements do not usually have a dollar value in backlog; however, hybrid joint revenue sharing arrangements typically provide for contracted upfront payments and therefore carry a backlog value based on those payments. The backlog reflects the minimum number of commitments for IMAX Systems according to signed contracts. The dollar value fluctuates depending on the number of new arrangements signed from year-to-year, which adds to backlog, and the installation and 46 Table of Contents acceptance of IMAX Systems and the settlement of contracts, both of which reduce backlog. The dollar value of backlog typically represents the fixed contracted revenue according to the signed IMAX System sale and lease agreements that the Company expects to recognize as revenue upon installation and acceptance of the associated system, as well as an estimate of variable consideration in sales arrangements. The value of backlog does not include amounts allocated to maintenance and extended warranty revenues or revenue from systems in which the Company has an equity interest, operating leases, and long-term conditional theater commitments. The Company believes that the contractual obligations for IMAX System installations that are listed in backlog are valid and binding commitments. From time to time, in the normal course of its business, the Company will have customers who are unable to proceed with an IMAX System installation for a variety of reasons, including the inability to obtain certain consents, approvals or financing. Once the determination is made that the customer will not proceed with installation, the agreement with the customer is terminated or amended. If the agreement is terminated, once the Company and the customer are released from all their future obligations under the agreement, all or a portion of the initial rents or fees that the customer previously made to the Company are recognized as revenue. Certain of the Company’s contracts contain options for the customer to elect to upgrade system type during the term or to alter the contract structure (for example, from a JRSA to a sale) after signing, but before installation. Current backlog information reflects all known elections. The following tables provide detailed information about the Company’s backlog by arrangement type and geographic location as of March 31, 2025 and 2024: March 31, 2025 IMAX System Backlog Traditional JRSA Hybrid JRSA Sales Arrangements (1) Total Domestic Total (United States & Canada) 122 2 11 135 International: Greater China 95 90 49 234 Asia (excluding Greater China) 20 2 39 61 Western Europe 12 — 23 35 Latin America 1 — 7 8 Rest of the World 2 — 41 43 International Total 130 92 159 381 Worldwide Total (2) 252 94 170 516 (1) Includes Sales and Sales-Type Lease deal types. (2) Worldwide Total of 516 includes 254 new IMAX Laser Systems and 161 upgrades of existing locations to IMAX Laser Systems. March 31, 2024 IMAX System Backlog Traditional JRSA Hybrid JRSA Sales Arrangements (1) Total Domestic Total (United States & Canada) 79 2 14 95 International: Greater China 53 90 62 205 Asia (excluding Greater China) 23 7 21 51 Western Europe 16 1 16 33 Latin America 3 — 2 5 Rest of the World 3 1 49 53 International Total 98 99 150 347 Worldwide Total (2) 177 101 164 442 (1) Includes Sales and Sales-Type Lease deal types. (2) Worldwide Total of 442 includes 261 new IMAX Laser Systems and 62 upgrades of existing locations to IMAX Laser Systems. Approximately 74% of IMAX System arrangements in backlog as of March 31, 2025 are scheduled to be installed in international markets (2024 — 32%). The Company’s system backlog in Greater China represents 45% (2024 — 46%) of its total current backlog, including 191 new IMAX Systems and 43 upgrades (2024 — 195 new and 10 upgrades). 47 Table of Contents (See “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows.” in Part I, Item 1A. of the Company’s 2024 Form 10-K.) Signings and Installations The following tables provide detailed information about IMAX System signings and installations for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 2024 System Signings: Sales Arrangements (1) 19 5 Traditional JRSA 76 3 Total IMAX System signings (2) 95 8 (1) Includes Sales and Sales-Type Lease deal types. (2) Includes IMAX System upgrades of 58 for the three months ended March 31, 2025 (2024 ― no upgrades). Three Months Ended March 31, 2025 2024 System Installations (1) : Sales Arrangements (2) 13 5 Hybrid JRSA — 1 Traditional JRSA 8 9 Total IMAX System installations (3) 21 15 (1) Three IMAX Systems were relocated from their original location for the three months ended March 31, 2025 (2024 ― one). When a system is relocated, the amount of revenue earned by the Company may vary from transaction-to-transaction and is usually less than the amount earned for a new sale. In certain situations when a system is relocated, the original location is upgraded to an IMAX Laser System. (2) Includes Sales and Sales-Type Lease deal types. (3) Includes seven IMAX System upgrades for the three months ended March 31, 2025 (2024 ― three upgrades). RESULTS OF OPERATIONS The Company’s business and future prospects are evaluated by Richard L. Gelfond, its Chief Executive Officer (“CEO”), using a variety of factors and financial and operational metrics, including: (i) IMAX box office performance and the securing of new IMAX films and alternative content to be exhibited across the IMAX network; (ii) the signing, installation, and financial performance of IMAX System arrangements; (iii) the success of the Company’s investments in business evolution and brand extensions into streaming and consumer technology; (iv) revenues and gross margins earned by the Company’s segments; (v) consolidated earnings (loss) from operations, as adjusted for unusual items; (vi) the continuing ability to invest in and improve the Company’s technology to enhance the differentiation of The IMAX Experience versus other out-of-home experiences; (vii) the overall execution, reliability, and consumer acceptance of The IMAX Experience ; and (viii) short- and long-term cash flow projections. Results of Operations for the Three Months Ended March 31, 2025 and 2024 Net Income and Adjusted Net Income Attributable to Common Shareholders The following table presents the Company’s net income attributable to common shareholders and the associated per share amounts, as well as adjusted net income attributable to common shareholders* and adjusted net income attributable to common shareholders per share for the three months ended March 31, 2025 and 2024: 48 Table of Contents Three Months Ended March 31, 2025 2024 (In thousands of U.S. Dollars, except per diluted share amounts) Net Income Per Diluted Share Net Income Per Diluted Share Net income attributable to common shareholders $ 2,327 $ 0.04 $ 3,274 $ 0.06 Adjusted net income attributable to common shareholders* $ 7,178 $ 0.13 $ 7,941 $ 0.15 *Refer to “Non-GAAP Financial Measures” for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount. Revenues and Gross Margin For the three months ended March 31, 2025, the Company’s revenues and gross margin increased by $7.5 million, or 10%, and $6.3 million, or 13%, respectively, when compared to same period in 2024, principally due to a higher number of installations and stronger IMAX box office performance driven by the record Chinese New Year period. The following table presents the Company’s revenue, gross margin, and gross margin percentage by reportable segment for the three months ended March 31, 2025 and 2024: Revenue Gross Margin Gross Margin % (In thousands of U.S. Dollars) 2025 2024 2025 2024 2025 2024 Content Solutions $ 34,249 $ 34,013 $ 23,554 $ 22,099 69 % 65 % Technology Products and Services 50,593 43,150 29,086 23,584 57 % 55 % Sub-total for reportable segments 84,842 77,163 52,640 45,683 62 % 59 % All Other (1) 1,825 1,960 536 1,206 29 % 62 % Total $ 86,667 $ 79,123 $ 53,176 $ 46,889 61 % 59 % (1) All Other includes the results from Streaming and Consumer Technology and other ancillary activities. Content Solutions Content Solutions segment results are influenced by the level of commercial success and box office performance of the films and other content released to the IMAX network, as well as other factors, including the timing of the releases, the length of play across the IMAX network, the box office share take rates under the Company’s Film Remastering and distribution arrangements, the level of marketing spend associated with the releases in the year, and fluctuations in the value of foreign currencies versus the U.S. Dollar. For the three months ended March 31, 2025, Content Solutions segment revenues and gross margin increased by $0.2 million, or less than 1%, and $1.5 million, or 7%, respectively, when compared to the same period in 2024. In the three months ended March 31, 2025, box office generated by IMAX films, including booking fees, totaled $298.2 million, a $30.9 million, or 12%, increase versus the prior year comparative period of $267.3 million, while IMAX box office excluding booking fees totaled $280.7 million, a $20.0 million or 8% increase versus the prior year comparative of $260.7 million. The growth was primarily driven by the stronger IMAX box office performance of the IMAX local language film slate in 2025. During the three months ended March 31, 2025, IMAX box office was generated by the exhibition of 34 films and other content (33 new films and 1 re-release), including the following Hollywood titles, Captain America: Brave New World ($27 million) , Mickey 17 ($11 million) , Mufasa: The Lion King ($10 million) and Interstellar ($10 million) which was originally released in a prior year. In the three months ended March 31, 2025, local language films exhibited across the Company’s global network generated over $202 million in box office, representing 68% of its global box office. The Chinese local language film, Ne Za 2, became the highest grossing IMAX release of all time in China ($161 million, including booking fees) and contributed to the highest grossing Chinese New Year in the Company’s history. In the three months ended March 31, 2024, IMAX box office was generated by the exhibition of 26 films (19 new films and 7 re-releases), including Dune: Part Two , which generated box office of over $132 million. In addition to the level of revenues, Content Solutions segment gross margin is influenced by the costs associated with films and other content exhibited in the period. These costs can include production, post-production, distribution, and marketing, which are expensed as incurred. For the three months ended March 31, 2025, gross margin percent was 69% compared to 65% in the prior quarter period. The increase was due to the higher level of IMAX box office and the profit that incrementally ensues when individual titles generate higher levels of box office. 49 Table of Contents Technology Products and Services The primary drivers of Technology Products and Services segment results are the number of IMAX Systems installed in a period, the costs associated with each installation, lease payments tied to the box office performance of the films released to the IMAX network, as well as the associated maintenance contracts that accompany each installation. The average revenue and gross margin per IMAX System under sale and sales-type lease arrangements vary depending upon the number of IMAX System commitments with a single respective exhibitor, an exhibitor’s location, the type of IMAX System sold, and various other factors. The installation of IMAX Systems in theaters or multiplexes, which make up a large portion of the Company’s system backlog, depends primarily on the timing of the construction of those projects, which is not under the Company’s control. The following table provides information about IMAX Systems installed under sales arrangements and the associated revenue recognized during the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 2024 (In thousands of U.S. Dollars, except number of systems Number of Systems Revenue Number of Systems Revenue New IMAX Systems 12 $ 9,124 5 $ 3,862 Upgraded IMAX Systems 1 1,460 1 1,377 Total 13 $ 10,584 6 $ 5,239 Included in the table above are three IMAX Systems that were relocated from their original locations (2024 ― one IMAX System). When a system under a sale or sales-type lease arrangement is relocated, the amount of revenue earned by the Company may vary from transaction to transaction and is usually less than the amount earned for a new sale. In certain situations when a system is relocated, the original location is upgraded to an IMAX Laser System. For the three months ended March 31, 2025, Technology Products and Services segment revenue and gross margin increased by $7.4 million, or 17%, and $5.5 million, or 23%, respectively, when compared to the same period in the prior year, The higher level of revenue is primarily driven by a greater number of sales installations and renewals and a higher level of rental revenues, which are box office dependent. Rental revenues increased by $0.5 million, as a result of growth in GBO from JRSAs, which increased by $14.7 million, or 12%, in the three months ended March 31, 2025 when compared to the prior year comparative period, from $125.4 million to $140.1 million. For the three months ended March 31, 2025, gross margin percent was 57% compared to 55% in the prior period, which primarily reflects the higher level of revenues, as described above. All Other For the three months ended March 31, 2025, All Other revenue and gross margin decreased by $0.1 million, or 7%, and $0.7 million, or 56%, respectively, when compared to the same period in 2024, which principally reflects the lower box office performance of the Company’s one owned and operated theater. Selling, General and Administrative Expenses The following table presents information about the Company’s Selling, General and Administrative Expenses for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, Variance (In thousands of U.S. Dollars) 2025 2024 $ % Total Selling, general and administrative expenses $ 33,462 $ 31,257 $ 2,205 7 % Less: Share-based compensation (1) (4,720) (4,337) (383) (9 %) Total Adjusted Selling, general and administrative expenses (2) $ 28,742 $ 26,920 $ 1,822 7 % (1) A portion of share-based compensation expense is recognized within Cost and Expenses Applicable to Revenue, Research and Development and Executive transition costs. (Refer to “Capital Stock and Reserves — Share-Based Compensation” in Note 11 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.) (2) See “Non-GAAP Financial Measures” for a description of this non-GAAP financial measure and a reconciliation to the most comparable GAAP amount. 50 Table of Contents For the three months ended March 31, 2025, the higher level of Selling, General and Administrative Expenses year-over-year reflects the timing of industry events, marketing expenses, and higher professional service fees. Research and Development For the three months ended March 31, 2025, Research and Development expenses were $1.3 million, representing a decrease of $0.9 million, or 40%, when compared to Research and Development expenses of $2.2 million during the same period in the prior year. The reduction year-over-year was primarily driven by the capitalization of film camera costs in accordance with the achievement of technological feasibility in 2024. The Company continues to expense its investment in other projects, including in the development of new Streaming and Technology product offerings and improvements to its existing IMAX System product suite. Credit Loss (Reversal) Expense, Net For the three months ended March 31, 2025, the Company recorded a credit loss reversal of $0.1 million, as compared to a credit loss expense of less than $0.1 million recognized in the prior year. Management’s judgments regarding expected credit losses are based on the facts available to management at the time that the Condensed Consolidated Financial Statements are prepared and involve estimates about the future. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect. (Refer to Note 3 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1). Interest Expense, net For the three months ended March 31, 2025, interest expense was $1.8 million, representing a decrease of $0.1 million, or 7%, as compared to $1.9 million during the same period of the prior year. For the three months ended March 31, 2025 and 2024, interest income was $0.5 million and $0.5 million, respectively. Income Taxes For the three months ended March 31, 2025, the Company recorded an income tax expense of $7.3 million (2024 — tax expense of $5.2 million). The Company’s effective tax rate of 47.2% for the three months ended March 31, 2025 reflects the geographic allocation of income earned in taxing jurisdictions and also reflects an increase in the valuation allowance, withholding taxes and a tax benefit related to share-based compensation. The Company’s effective tax rate of 48.8% for the three months ended March 31, 2024, reflects the geographic allocation of income earned in taxing jurisdictions and also reflects an increase in the valuation allowance, withholding taxes and a tax expense related to share-based compensation. Non-Controlling Interests For the three months ended March 31, 2025, the net income attributable to non-controlling interests of the Company’s subsidiaries was $5.8 million, an increase of $3.7 million, when compared to the same period in 2024, primarily due to the higher IMAX box office earned in Greater China. CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024 The discussion below summarizes our cash flows from operating, investing, and financing activities as reflected in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024. Three Months Ended (In thousands of U.S. Dollars) 2025 2024 Net cash provided by (used in) Operating activities $ 6,951 $ (10,968) Investing activities (14,624) (7,140) Financing activities 4,234 22,794 Effect of exchange rate changes on cash (84) 131 Net change in cash (3,523) 4,817 51 Table of Contents Net cash provided by the Company’s operating activities increased $17.9 million in the three months ended March 31, 2025, primarily due to a decrease in cash used for working capital expenditures. (Refer to Note 9 to Condensed Consolidated Financial Statements in Item 1. for more information on the Company’s change in other operating assets and liabilities.) Net cash used in investing activities increased $7.5 million in the three months ended March 31, 2025, primarily due to an increase in the level of investment in equipment contributed to the Company’s JRSAs with exhibitor customers and capital expenditures. Net cash provided by financing activities decreased $18.6 million in the three months ended March 31, 2025, mainly driven by a decrease in net borrowings under the revolving credit facilities and an increase in cash paid for taxes withheld on employee stock awards vested. No share repurchases were made or dividends paid in the three months ended March 31, 2025. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2025, the Company’s principal sources of liquidity included: (i) its balances of cash and cash equivalents of $97.1 million; (ii) the anticipated collection of trade accounts receivable, which includes amounts owed under JRSAs and Film Remastering and distribution agreements with movie studios; (iii) the anticipated collection of financing and variable consideration receivables due in the next 12 months under sale and sales-type lease arrangements for systems currently in operation; and (iv) installment payments expected in the next 12 months under sale and sales-type lease arrangements in backlog. Under the terms of the Company’s typical sale and sales-type lease agreements, the Company receives substantial cash payments before it completes the performance of its contractual obligations. In addition, as of March 31, 2025, the Company had $250.0 million in available borrowing capacity under its Sixth Amended and Restated Credit Agreement (the “Credit Agreement”), $26.5 million in available borrowing capacity under the IMAX (Shanghai) Multimedia Technology Co., Ltd. (“IMAX Shanghai”) revolving credit facility with the Bank of China (the “Bank of China Facility”), and $27.9 million in available borrowing capacity under IMAX Shanghai’s revolving credit facility with HSBC Bank (China) Company Limited, Shanghai Branch (the “HSBC China Facility”). (Refer to “Borrowings — Revolving Credit Facility Borrowings, Net” in Note 6 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 for a description of the material terms of the Credit Agreement, the Bank of China Facility, and the HSBC Facility.) The Company’s $97.1 million balance of cash and cash equivalents as of March 31, 2025 (December 31, 2024 — $100.6 million) includes $91.3 million in cash held outside of Canada (December 31, 2024 — $85.4 million), of which $53.9 million was held in the People’s Republic of China (the “PRC”) (December 31, 2024 — $47.5 million). Management reassessed its strategy with respect to the most efficient means of deploying the Company’s capital resources globally and determined that historical earnings of certain foreign subsidiaries in excess of amounts required to sustain business operations would no longer be indefinitely reinvested. During the three months ended March 31, 2025, no historical earnings from a subsidiary in PRC were distributed (2024 — $nil) and, as a result, no foreign withholding taxes were paid to the relevant tax authorities (2024 — $nil). As of March 31, 2025, the Company’s Condensed Consolidated Balance Sheets included a deferred tax liability of $12.5 million for the applicable foreign withholding taxes associated with the remaining balance of non-repatriated historical earnings that will not be indefinitely reinvested outside of Canada. These taxes will become payable upon the repatriation of any such earnings. The Company forecasts its future cash flow and short-term liquidity requirements on an ongoing basis. These forecasts are based on estimates and may be materially impacted by factors that are outside of the Company’s control (including the factors described in “Risk Factors” in Part I, Item 1A of the Company’s 2024 Form 10-K as supplemented by “Risk Factors” in Part II, Item 1A of this Form 10-Q). As a result, there is no guarantee that these forecasts will come to fruition and that the Company will be able to fund its operations through cash flows from operations. In particular, the Company’s operating cash flows and cash balances will be adversely impacted if management’s projections of future signings and installations of IMAX Systems and box office performance of IMAX content are not realized. Based on the Company’s current cash balances and operating cash flows, management expects to have sufficient capital and liquidity to fund its anticipated operating needs and capital requirements during the next twelve-month period following the date of this report. 52 Table of Contents CONTRACTUAL OBLIGATIONS Payments to be made by the Company under contractual obligations as of March 31, 2025 are as follows: Payments Due by Years (In thousands of U.S. Dollars) Total Obligation Less Than One Year 1 to 3 years 3 to 5 years Thereafter Purchase obligations (1) $ 34,786 $ 32,584 $ 1,747 $ 248 $ 207 Pension obligations (2) 20,298 — 20,298 — — Operating lease obligations (3) 14,877 3,557 6,365 4,780 175 Credit Facility 50,000 50,000 — — — Federal Economic Development Loan (4) 1,847 969 878 — — Convertible Notes (5) 231,725 1,150 230,575 — — Postretirement benefits obligations 2,338 10 209 207 1,912 Total $ 355,871 $ 88,269 $ 260,072 $ 5,235 $ 2,294 (1) Represents total payments to be made under binding commitments with suppliers and outstanding payments to be made for supplies ordered, but yet to be invoiced. (2) The Company has an unfunded defined benefit pension plan, the Supplemental Executive Retirement Plan (the “SERP”), covering its CEO, Mr. Richard L. Gelfond. The SERP has a fixed benefit payable of $20.3 million. The table above assumes that Mr. Gelfond will receive a lump sum payment of $20.3 million six months after retirement at the end of the term of his current employment agreement, which expires on December 31, 2025, in accordance with the terms of the SERP, although Mr. Gelfond has not informed the Company that he intends to retire at that time. (See Note 14 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.) (3) Represents total minimum annual rental payments due under the Company’s operating leases. (4) The Federal Economic Development Loan is repayable over 36 months, with repayments commencing January 2024. (Refer to “Borrowings — Convertible Notes and Other Borrowings, Net” in Note 6 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.) (5) The Convertible Notes bear interest at a rate of 0.500% per annum on the principal of $230.0 million, payable semi-annually in arrears on April 1 and October 1 of each year. The Convertible Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted. (Refer to “Borrowings — Convertible Notes and Other Borrowings, Net” in Note 6 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.) OFF-BALANCE SHEET ARRANGEMENTS There are currently no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Company’s financial condition. CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements and related disclosures in accordance with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts reported in the Company’s Condensed Consolidated Financial Statements and accompanying notes. Management’s judgments, assumptions, and estimates are based on historical experience, future expectations, and other factors that are believed to be reasonable as of the date of the Company’s Condensed Consolidated Financial Statements. Actual results may ultimately differ from the Company’s original estimates, as future events and circumstances sometimes do not develop as expected, and the differences may be material. For more information on the Company’s critical accounting estimates refer to the section entitled “Critical Accounting Estimates” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2024 Form 10-K. RECENTLY ISSUED ACCOUNTING STANDARDS Refer to Note 2 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 for a discussion of recently issued accounting standards and their impact on the Company’s Condensed Consolidated Financial Statements. NON-GAAP FINANCIAL MEASURES GAAP refers to generally accepted accounting principles in the United States of America. In this report, the Company presents financial measures in accordance with GAAP and also on a non-GAAP basis under the SEC regulations. Specifically, the Company presents the following non-GAAP financial measures as supplemental measures of its performance: • Adjusted net income or loss attributable to common shareholders; • Adjusted net income or loss attributable to common shareholders per basic and diluted share; 53 Table of Contents • EBITDA; • Adjusted EBITDA per Credit Facility; and • Adjusted Selling, general and administrative expenses. Adjusted net income or loss attributable to common shareholders and adjusted net income or loss attributable to common shareholders per basic and diluted share exclude, where applicable: (i) share-based compensation; (ii) realized and unrealized investment gains or losses; and (iii) restructuring and other charges, as well as the related tax impact of these adjustments. The Company believes that these non-GAAP financial measures are important supplemental measures that allow management and users of the Company’s financial statements to view operating trends and analyze controllable operating performance on a comparable basis between periods without the after-tax impact of share-based compensation and certain unusual items included in net income attributable to common shareholders. Although share-based compensation is an important aspect of the Company’s employee and executive compensation packages, it is a non-cash expense and is excluded from certain internal business performance measures. Reconciliations of net income attributable to common shareholders and the associated per share amounts to adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share are presented in the tables below. Three Months Ended March 31, 2025 2024 (In thousands of U.S. Dollars, except per diluted share amounts) Net Income Per Diluted Share Net Income Per Diluted Share Net income attributable to common shareholders $ 2,327 $ 0.04 $ 3,274 $ 0.06 Adjustments (1) : Share-based compensation 5,212 0.10 4,707 0.09 Unrealized investment gains (32) — (30) — Restructuring and other charges 57 — — — Tax impact on items listed above (386) (0.01) (10) — Adjusted net income (1) $ 7,178 $ 0.13 $ 7,941 $ 0.15 Weighted average shares outstanding — basic 53,145 52,501 Weighted average shares outstanding — diluted 54,969 53,406 (1) Reflects amounts attributable to common shareholders. In addition to the non-GAAP financial measures discussed above, management also uses “EBITDA,” as such term is defined in the Credit Agreement, and which is referred to herein as “Adjusted EBITDA per Credit Facility.” As defined in the Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in addition to the exclusion of interest, taxes, depreciation and amortization. Accordingly, this non-GAAP financial measure is presented to allow a more comprehensive analysis of the Company’s operating performance and to provide additional information with respect to the Company’s compliance with its Credit Agreement requirements, when applicable. In addition, the Company believes that Adjusted EBITDA per Credit Facility presents relevant and useful information widely used by analysts, investors and other interested parties in the Company’s industry to evaluate, assess and benchmark the Company’s results. EBITDA is defined as net income or loss excluding: (i) income tax expense or benefit; (ii) interest expense, net of interest income; (iii) depreciation and amortization, including film asset amortization; and (iv) amortization of deferred financing costs. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) realized and unrealized investment gains or losses; (iii) restructuring and other charges; and (iv) write-downs, net of recoveries, including asset impairments and credit loss expense or reversal. Reconciliations of net income attributable to common shareholders, which is the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA per Credit Facility are presented in the tables below: 54 Table of Contents (In thousands of U.S. Dollars) Three Months Ended March 31, 2025 Reported net income $ 8,150 Add (subtract): Income tax expense 7,285 Interest expense, net of interest income 769 Depreciation and amortization, including film asset amortization 14,913 Amortization of deferred financing costs (1) 492 EBITDA 31,609 Share-based and other non-cash compensation 5,275 Unrealized investment gains (32) Restructuring and other charges 57 Write-downs, including asset impairments and credit loss expense 66 Total Adjusted EBITDA $ 36,975 Less: Non-controlling interest (8,926) Adjusted EBITDA per Credit Facility - attributable to common shareholders $ 28,049 (1) The amortization of deferred financing costs is recorded within Interest Expense in the Condensed Consolidated Statements of Operations. (In thousands of U.S. Dollars) Twelve Months Ended March 31, 2025 Reported net income $ 35,432 Add (subtract): Income tax expense 7,122 Interest expense, net of interest income 3,787 Depreciation and amortization, including film asset amortization 65,252 Amortization of deferred financing costs (1) 1,969 EBITDA 113,562 Share-based and other non-cash compensation 23,700 Unrealized investment gains (129) Restructuring and other charges 3,806 Write-downs, including asset impairments and credit loss expense 2,921 Total Adjusted EBITDA $ 143,860 Less: Non-controlling interest (19,183) Adjusted EBITDA per Credit Facility - attributable to common shareholders $ 124,677 (1) The amortization of deferred financing costs is recorded within Interest Expense in the Condensed Consolidated Statements of Operations. The Company also adjusts Selling, General and Administrative Expenses to exclude a portion of share-based compensation and related payroll taxes. Management uses non-GAAP and other financial measures such as this, internally for financial and operational decision-making and as a means to evaluate period-to-period comparisons. IMAX believes that this non-GAAP measure provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management and its financial and operational decision making. A reconciliation of Selling, General and Administrative Expenses, the most directly comparable GAAP measure presented in the Condensed Consolidated Statement of Operations in Part I, Item 1, to Adjusted Selling, General and Administrative Expenses is presented in the table below. 55 Table of Contents Three Months Ended March 31, (In thousands of U.S. Dollars) 2025 2024 Total Selling, general and administrative expenses $ 33,462 $ 31,257 Less: Share-based compensation (4,720) (4,337) Total Adjusted Selling, general and administrative expenses $ 28,742 $ 26,920 The Company cautions users of its financial statements that these non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. Additionally, the non-GAAP financial measures used by the Company should not be considered in isolation, or as a substitute for, or superior to, the comparable GAAP amounts.