A disappointing lineup of movies hampered second-quarter earnings for major movie theater companies Regal Entertainment Group and Imax Corp., which both reported financial results Wednesday.
Imax reported a loss of $1.7 million, or 3 cents a share, during the three months that ended June 30, compared with a $6-million profit during the same period a year ago. Regal’s net income was $23.6 million, or 15 cents a share, down nearly 30% year over year.
The weak results reflect an anemic three-month period for the box office in the United States and Canada, during which Hollywood fielded poorly reviewed flops such as Universal Pictures’ “The Mummy” and Warner Bros.’ “King Arthur: Legend of the Sword.”
But instead of dwelling on the downturn, Imax Chief Executive Richard Gelfond highlighted the successful recent release of the World War II movie “Dunkirk,” which exceeded expectations last weekend. The film has made $121 million in worldwide ticket sales.
“While several films in the second quarter underperformed our expectations, the recent release of Christopher Nolan’s ‘Dunkirk’ emphasizes the value in viewing our business as a portfolio of films,” Gelfond said in a statement.
The wild swings in the box office have led Imax to cut back on its staff in order to manage costs. Imax, which primarily focuses on major Hollywood movies that demand the big-screen treatment, is particularly sensitive to quarterly and annual box office fluctuations. The big-screen company in June said it would lay off 100 employees, or 14% of its workforce.
Fellow major exhibitors AMC Entertainment and Cinemark Holdings report their earnings in early August.
Cinema stocks have declined on Wall Street in recent months as the studios’ major summer tent pole films have done mediocre business, wiping out gains posted during a strong first quarter. The domestic box office has totaled $6.58 billion so far this year, down about 1% from 2016, according to comScore.
Regal’s stock has slipped 12% in the last six months to $20.20, according to data compiled by FactSet, while Imax has declined 34% to $21.85 in the same period and AMC is down 38% at $21.05. Cinemark has slid 6% to $39.49 a share.
Still, both Regal and Imax were little changed in after-hours trading because equity analysts had anticipated the declines in earnings and sales.
Regal’s revenue was $764 million during the quarter, in line with average analyst expectations of $765 million, according to FactSet. Imax revenue came in at $87.8 million, slightly shy of the $89.3 million estimated by analysts.
Imax and Regal both rose 1% Wednesday on Wall Street. Both reported earnings after the close of trading.
Regal CEO Amy Miles was optimistic in a call with analysts Wednesday, pointing out that the end of the year is expected to deliver strong film titles to theaters.
“Our industry has always experienced and will continue to experience short-term fluctuations in revenue primarily related to the commercial appeal of the content available in any given period,” Miles said. “Recent quarters are no exception, but against the backdrop of quarterly ups and downs, the long-term box office remains remarkably stable.”