Michael Mougias - IMAX Corp. Richard L. Gelfond - IMAX Corp. Greg Adam Foster - IMAX Corp. Patrick S. McClymont - IMAX Corp..

Eric O. Handler - MKM Partners LLC Chad Beynon - Macquarie Capital (USA), Inc. Alexia S. Quadrani - JPMorgan Securities LLC Steven Frankel - Dougherty & Co. LLC Eric Wold - B. Riley FBR, Inc. Vasily Karasyov - Cannonball Research LLC James Charles Goss - Barrington Research Associates, Inc..

Good day, and welcome to the IMAX Corporation Third Quarter Earnings Conference Call. All participants are currently in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. As a reminder, today's conference is being recorded.

At this time, I'd like to turn the conference over to Head of Investor Relations, Mike Mougias. Please go ahead..

Thanks, Brandon. Good morning, and thank for joining us on today's third quarter 2018 earnings conference call. Joining me today is our CEO, Rich Gelfond; our CFO, Patrick McClymont; and our Head of Entertainment, Greg Foster, who each have prepared remarks and will be available for Q&A.

Today's conference call is being webcast in its entirety on our website. A replay of the webcast will be made available shortly after the call. In addition, the full text of our earnings press release and the slide presentation accompanying today's call have been posted in the Investor Relations section of our website.

I'd like to remind you of the following information regarding forward-looking statements. Our comments and answers to your questions on this call as well as the accompanying slide deck may include statements that are forward-looking and that they pertain to future results or outcomes.

Actual future results or occurrences may differ materially from these forward-looking statements. Please refer to our SEC filing for a more detailed discussion of some of the factors that could affect our future results and outcomes.

During today's call, references may be made to certain non-GAAP financial measures as defined by Regulation G of the Securities and Exchange Commission.

Discussion of management's use of these measures and the definition of these measures as well as reconciliations to adjusted net income, adjusted EPS and adjusted EBITDA as defined by our credit facility are contained in this morning's press release. With that, let me now turn the call over to Rich Gelfond..

Infinity War, and Black Panther. I look forward to the growing number of titles next year that are using our cameras, including the final of the Avengers series and Lion King. Another competent of our differentiated offering is our best-in-class technology.

As we discussed on our last call, we successfully launched our cutting-edge IMAX with Laser experience in April. And it continues to elevate The IMAX Experience compared to other movie-going options, underscoring the industry's widespread adoption are the 200-plus signings from our exhibitor affiliates around the world of IMAX with Laser.

We also continue to bring on new partners such as China Resources, one the largest state-owned commercial real estate developers in China who signed an agreement for 14 new IMAX with Laser theaters last quarter. You might also have seen that this quarter we began to introduce our core technology into the home.

In September, we announced IMAX Enhanced, a licensing partnership with the audio expert Xperi, the parent company of DTS, which featured Sony and Sound United as hardware launch partners.

A new certification program, this opportunity is exciting as it leverages our brand and core technology and serves as our first foray into the consumer electronics market through licensing. Televisions that are IMAX-certified will come with an IMAX viewing mode, enhancing the quality of the in-home experience.

Additionally, in collaboration with our launch studio partners, Sony Pictures and Paramount, we will be releasing IMAX remastered content, which has been optimized by IMAX for the device ecosystem.

It is important to note that this initiative requires no IMAX capital investment and virtually no ongoing OpEx because it leverages our existing technology capabilities and leans heavily on our ongoing brand efforts.

While profitable to IMAX on day one, we anticipate the initiative will become more meaningful over time as we introduce additional partners into the program. We are in active discussions with a number of potential partners and look forward to sharing updates in the coming months.

In conclusion, we are encouraged by our performance through the first nine months of 2018, where I mentioned earlier EPS has more than doubled from 2017.

Looking ahead, we believe the evolving entertainment landscape, coupled with increased differentiation through IMAX with Laser, more IMAX DNA and our strengthened marketing initiative, which kicked off this summer, will strategically position the company to capitalize on the evolving entertainment landscape.

At the same time, our ongoing focus on controlling costs and delivering operating leverage should continue to benefit IMAX and our shareholders into 2019 and beyond. And finally, as many of you are aware, Greg will be exiting IMAX at the end of this year. I'd like to thank him for his tremendous contributions over his 18-year career at IMAX.

His impact on the transformative growth of our business has been enormous, and he played a pivotal role in building our highly successful film business. Greg will forever be part of the IMAX family, and I thank him for his enormous dedication over the years.

Replacing Greg in the New Year is Megan Colligan, the former Head of Global Marketing and Distribution at Paramount. Megan brings extensive experience in media and entertainment and has deep industry relationships with studios, filmmakers, actors, and streaming companies.

Megan has spearheaded the launch of major global box office of blockbusters such as Transformers and Mission Impossible franchises, and she has significant experience in China where Paramount was one of the most successful importers of content into that country.

We're excited for her to join in February and look forward to her bringing a fresh perspective to IMAX. With that, I'll turn the call over to Greg..

Impossible 6, helped drive $206 million of third quarter IMAX box office. China, in particular, stood out last quarter. We generated $78 million of box office, which was up 31% compared to last year.

It's also worth noting that we recently shipped the first IMAX cameras to China, and we're hosting a filmmaker symposium to educate filmmakers on how to leverage IMAX cameras and the benefits from doing so.

Just like we've done in Hollywood, we're strengthening our strategy of building closer relationships with filmmakers in China, so we can further differentiate the IMAX format, particularly for local language content.

On the topic of China, it's also worth mentioning that a number of Hollywood titles have been given official China release dates, including Predator, which comes out this Friday; Venom; and Aquaman. In fact, Aquaman will open in China before any other markets. While only a few weeks into the quarter, we've been pleased with our box office performance.

For example, Venom exceeded everyone's expectations with an $80 million domestic opening where we indexed at nearly 11%. And just recently, as Rich pointed out, we launched First Man where IMAX accounted for 23% of the opening weekend box office.

IMAX DNA is something we've spoken a lot about recently, and seeing our results reiterates why this is such a big deal. Importantly, we're also seeing an increased number of top filmmakers who are approaching us to integrate IMAX into the early stages of the film production process.

Our ability to differentiate content and present their film exactly as the director intended has afforded us valuable relationships that continue to grow stronger. We cannot announce all of the upcoming films that will feature IMAX DNA at this time.

However, we're confident there will be several more films with IMAX DNA released over the next two years and more than in any such period before.

Some IMAX DNA titles that I'm particularly excited about and can mention include the Lion King, the final Avengers film, Wonder Woman 1984, and Chinatown Detective 3, the first Chinese title to be filmed with IMAX cameras that will be released during Chinese New Year next year.

When studios and filmmakers bring IMAX into their early production process, it helps distinguish the film and in particular The IMAX Experience. Studios and talent also tend to highlight the IMAX DNA at premieres, film junkets and through IMAX-focused digital marketing content, which builds consumer awareness and interest.

As a result, we have consistently demonstrated that more box office is generated when IMAX cameras or our exclusive aspect ratio are part of the film's release. Again, First Man being the most recent case in point.

In addition to these attributes benefiting traditional studios, we believe our ability to differentiate and launch content on a global scale will benefit other entrance to the theatrical blockbuster space. With that, I will turn the call over to Patrick..

Impossible in China, which collectively contributed over $32 million of IMAX box office in the quarter. Recall we are in lower DMR fees in China on Hollywood titles. Our theater sales and maintenance business contributed $40.7 million of revenue and reflects are installing 15 sales and 6 hybrid theaters last quarter.

From a margin standpoint, we generate $42.2 million of gross profit last quarter, which resulted in a 51.4% gross margin. Please note the year-over-year comparison of our gross margin is less relevant due to our investment in Inhumans in 2017. From a segment standpoint, network business margins were 61.4%.

This is entirely a function of lower segment revenue, as we held costs flat to the prior period. Theater sales and maintenance margins were 49.6%. Turning to operating expenses, SG&A, excluding stock-based compensation, came in at $21.9 million, while R&D came in at $4 million.

As we articulated on previous calls, we expect R&D to come down over the coming quarters as a result of our concluding development of the IMAX with Laser product. This will be partially offset by normalizing our marketing spend, which was down last year as we did not have a CMO in place for the majority of the year.

We continue to focus on controlling costs and demonstrating operating leverage, as we have done throughout this year. I'd also like to note that our tax rate for the third quarter came in at 16% as a result of some reversals of uncertain tax positions in the quarter. For the full year, we continue to believe our effective tax rate is 24%.

Adjusted EBITDA for the quarter was $25.9 million, producing adjusted EBITDA margins of 35.7%. Net income came in at $5 million or $0.08 per share, while adjusted net income was $9 million, which calculates to $0.14 per share.

During the quarter, we also generated $6.9 million of free cash flow, bringing our free cash flow generation for the first nine months to $34.8 million. I'd like to now review our fourth quarter guidance, which will be posted on the IR website at the conclusion of this call.

From an installation standpoint, we continue to anticipate installing roughly 155 new systems for the full year. For the fourth quarter, we expect to install approximately 21 sales-type, 11 hybrids, and 41 full JV systems. We also expect to install 23 upgrades in the quarter.

From a new business standpoint, we now anticipate our new business pre-tax expense for the full year to be $4 million to $5 million, which is slightly below our previous guidance of $4.5 million to $5.5 million.

This reduction reflects our continued scale-back of certain initiatives such as VR and the TCL JV combined with the benefit of the non-recurring expense in 2018 related to the VR camera. Turning to DMR expenses, we now expect full-year DMR cost of sales to fall in the $37 million to $38 million range.

This is down from the $38 million to $40 million we guided to last quarter and is in line with 2017. This reduction largely reflects the progress we made on automating various aspects of our DMR process and our overarching efforts to reduce costs and create more efficiencies throughout the business.

From an OpEx standpoint, we continue to expect total OpEx, which includes SG&A, less stock-based compensation, plus R&D, to be flat compared to last year. The balance of our guidance is unchanged from last quarter.

Overall, our recent results helped demonstrate the inherent operating leverage that exists in our business and we are pleased with the momentum we have seen throughout 2018.

Looking ahead, we believe studio and streaming companies' increasing emphasis on blockbuster content, combined with our growing footprint of theaters, increased differentiation and more disciplined approach to costs will continue to increase the earnings power of our business long-term. With that, I'll turn the call over to the operator for Q&A..

Thank you. The first question will come from Eric Handler with MKM Partners. Please go ahead with your question..

Thank you very much. I think one for Patrick here. You guys are doing a really good job of reducing your DMR expenses, and you mentioned several reasons why.

So, as you look forward and based on what you know now, is that $37 million to $38 million a year, is that – can you expect that to stay flat in the next couple years? And then secondly, you kept your install guidance the same, but third quarter was a little bit light for the installs relative to your prior guidance.

Was there just some shifts or was there some other reasons why installs came in a little different?.

Sure. Thanks for the question, Eric. On the install guidance, it is just a shift. We've got a few that slid to the fourth quarter, and we've got a very busy fourth quarter but comfortable with the guidance there. On the DMR expenses, we're going through our budget process now, and of course, we'll give guidance for next year on our fourth quarter call.

What I will say is, we continue a lot of efforts to try to figure out ways to streamline the DMR process. I think it's really interesting. If you look at how many films we processed this year – this quarter and on a year-to-date basis, we're up year-over-year, yet our costs are staying flat.

So you can see that there's real efficiencies, and there's more to come. So I can't give you a specific thought now, but I do know that we're focused on this and we do think there are opportunities to continue to take those costs down..

Great. Great. And thanks. Just one quick one for Rich.

Rich, in China, as you do more of these local films, how are you seeing reception among Chinese moviegoers, particularly in like the smaller markets to you DMR-ing these titles?.

Well, it's early, Eric. So I hate to project trends. But overall, as you know, our box office was up over 30% in the quarter. And the fact that we did multiple films clearly helped our performance with the local language films. So I'm optimistic about it, but we just started..

Thank you very much..

Thank you for the question. The next question will come from Chad Beynon with Macquarie. Please go ahead with your question..

Hi, good morning. Thanks for taking my question, congrats on the quarter. I wanted to start with capital allocation here. You recently entered into a new credit facility and have a lot of flexibility to repurchase shares. Stock has been volatile.

Patrick, maybe if you could just provide some color in terms of how you're thinking about this with all the other initiatives just given the volatility in the stock market? Thanks..

Sure. On capital allocation, it continues to be what we communicated, which is the first use for our capital is investing in our growing network where we see opportunities to produce attractive returns. We're going to end up adding something like 155 new theaters, 25 upgrades this year. So we continue to invest heavily in the network.

So that's the first. The second is, when we've concluded that we have excess capital, then you see historically we returned that to shareholders. We have a $200 million authorization right now. We've spent about $50 million against that. And when we see opportunities in the marketplace, we step in.

So it's pretty straightforward and consistent with what we've communicated..

Okay. Great. Thanks. And then, back on China, we've read that there's been some new restrictions in the home market with Chinese TV content going less towards foreign directors and writers and actors. And that's more in the primetime.

Could this actually be a positive for movie theater attendance in the market, whereby if consumers want to experience what you're showing and what Hollywood can bring to the country, they may actually have to go to the movie instead of watching it in their home? Any color on that? Thanks..

Yeah, the good news is we haven't seen any similar restrictions in the movie business, but whether TV business has an effect on the movie business is very complicated. Obviously, there are so many factors. I wouldn't draw a direct correlation there. But as you know, as I said a minute ago, our box office was up very robust in the last quarter.

And I don't know why, but I wouldn't identify that as one of the factors..

Okay. Thank you very much..

Thank you for your question. The next question will come from Alexia Quadrani with JPMorgan. Please go ahead with your question..

Hi, thank you. Just a couple of questions. The first one just on your commentary about shipping the IMAX cameras to China, I guess any timeline when you think that may translate into sort of a benefit that we can see.

And then maybe any commentary about the local films and how we should think about China in the coming quarter? And then my follow-up question is just on the marketing initiative. I think, Rich, your commentary was well received. I guess, any thoughts about how much you will continue it and sort of what sort of benefits driving..

Hi, this is Greg. So, first of all, on the cameras, I think you're going to start to see it sooner rather than later. It really depends on the release dates, which we're not the driver of. That's more from the distributor. But there are two movies that we know of so far that are using IMAX cameras.

One is a movie called 800 that Ye (29:45) has made, and the other is the Wanda title talked about, which is Chinatown Detective 3. Those movies will be coming out in the next 12 months or so. And there's several more that we're working on. With the cameras firmly planted in China, it makes it much easier.

And again, through the filmmaker symposium, we're also going to begin to train a new generation of Chinese filmmakers to think about IMAX cameras and how to be a really realistic option since it's physically there.

So it's not going to be a rush in the next six months to a year, but you're going to start to slowly see it roll out, and I think it's going to be very beneficial..

In terms of the marketing plans, Alexia, they have two goals behind them. One is a general goal of increasing awareness of the brand over the long-term. So when people wake up in the morning, rather than saying, oh, Avengers is in IMAX, let's see it in IMAX, they say what's an IMAX that day, and then they seek that out. And that's a long-term goal.

And the short run is to influence box office, butts in seats. And we're extremely data-driven. As you know, we were recently involved in First Man with extra marketing in a fairly big way, encouraged by Universal and integrated by Universal.

While the results of the film generally were disappointing box office, as you know, we did over 20% indexing was an extreme positive. And we work with some of the ticketing agencies and some data services, and we'll have a very strong handle on actually how much our marketing move the needle in terms of driving people to IMAX.

Our next kind of big film that we're going to focus on from a branding point of view is Aquaman, which actually opens early in China and then opens in the U.S. near Christmas. And again, we're going to use the iconic blue frame, which we developed, and that will be the third different studio, which has agreed to let us do that.

So just to put it in context, a year ago, our marketing with the studios said "and IMAX" in the tiny letters in the bottom of the poster. Now our marketing is integrated into the film with the IMAX frame and brand around it. So the early results have been positive. We're analyzing the data.

And I think it's starting to work, but it'll have a more material effect going forward..

Okay. Thank you very much..

Thank you for your question. The next question will come from Steven Frankel with Dougherty. Please go ahead with your question..

Hey, good morning. I wonder if we could revisit the DMR COGS subject for a minute. You have done a great job controlling those costs. But I do remember over the last couple of years, one of the pressure points had been the studios pushing you to put more marketing dollars to work.

Is that still going on and your cost savings are enabling you to reduce overall COGS or has that pressure eased somewhat?.

I don't think there's any change in that. We have display deals in place with all the studios and most recently with Universal. So that gives a clarity not just on displays but what our economic terms are. And I don't think it's changed meaningfully in the last year.

So our efforts are really focused on making sure that we're controlling our cost and we're planning efficiencies in the system. And that's what you're seeing now. It's not really a change in the marketing side of things..

Great. And can you give us any data points around the A-List and how that may have impacted your business this quarter? I think it's early..

I mean – yeah, it's still small and early. So AMC has announced 400,000 subscribers. We have not seen the data, but we've discussed it with AMC. And my impression is that it's a much higher percentage of A-List people go to IMAX movies than the regular AMC network to the magnitude of three times or something like that.

So the early indications are extremely positive, but the dollars are small. And also from talking with AMC, I think there's still our momentum behind that program. We're in the early stages of it. Obviously, MoviePass's financial difficulties have made the AMC proposition even more attractive for people interested in that kind of product.

So I think it's going to have a very positive effect over the long run, and it started to have one, but the dollars aren't meaningful yet..

Great. And then you mentioned Japan.

Could you just give us an update on how many theaters are open there today and what the backlog looks like?.

Off-hand, I don't really have the information. I think it's around 25. Mike is checking it. About 25 open. And I think there is 20-ish or something like that in backlog. I'm pretty sure I'm in the ballpark..

Okay, great. Thank you..

Thank you for your question. The next question will come from Eric Wold with B. Riley Incorporated..

Thanks, guys. Good morning. Thank you. So I guess kind of looking at the PSAs, looking at China, I guess obviously your PSAs may not be always the best metric to gauge strength in a market given everything that kind of goes into it. But it was good to see PSAs in China up for the first time in three years.

I guess knowing you guys are looking to do an increased use of hybrids and sales type leases in those markets where you pull out your capital, and so box office theoretically matters less for those locations than a full-fledged JV.

Is there any way you can kind of give us some sense of how the relative performance of the three install models in China or maybe even how same-store sales performing to where – for kind of how it matters?.

Eric, again, reiterating what you said, as we segue away from the JVs, the PSAs are less relevant. And in fact, as we've said before, we're looking at return on investment. And virtually all of our network is profitable on a theater-by-theater basis, on an ROI basis. I would say the mix is going well for us.

When we talk about deals in progress, which we do monthly, we're skewing much more towards sales-type leases or towards hybrids. And that's being very well received. As you noted, PSAs were up. We started to look at same-store sales. And that's been in a positive direction, up a little bit in China this year.

So we can't break it down in the buckets you want, or maybe afterwards Patrick can try and give you some more color unless you have it now. But generally, things are tracking positively..

Yeah. We don't disclose same-store sales basis, but it's positive for this year. And importantly, when you look at the China market overall, the – our business is growing at a similar rate to the overall business and our network is growing there obviously and the overall market is growing in terms of screens.

And so we feel like we're in a position now where for our films, we're achieving the right market shares, we're headed in the right direction, and the business did stabilize quite a bit the first nine months of this year..

Yeah. Just to clarify one of my last answers. There are 32 theaters open in Japan today and nine in backlog..

And real quick, Patrick, clarify a statement you said.

When you said same-store sales are positive for this year, were you talking about China specifically or globally or both?.

I was answering your question on China..

Okay. And then on China, I know it may be a little wonky because Dolby's got a September fiscal year versus your December, but they kind of saw the same thing, where a number of expected theater installs in China were delayed. In the quarter, they came in below expectations kind of like you experienced.

Is that – do you think it's kind of a one-quarter push-out due to some factor or you think it's something that can continue into next year, or kind of maybe what was behind some of the delays there?.

Yeah. We don't have delays, Eric, to be clear. There were two installs that slipped from the third quarter to the fourth quarter, but we're right on budget for the year with China. Dolby has a very different issue, they don't have brand awareness in China. We have 600-plus theaters in China plus a backlog in China. They have 26 open in China.

Our PSAs are practically double. They announced a deal with Wanda for 100 theaters that they are supposed to roll out in three years or four years. And they have 20 something of them rolled out. So basically Dolby has not worked as a business proposition in China. That's their problem. We don't have a problem.

We have a huge network and our installs are on time..

Thanks, Rich. And then last two questions for Patrick. Just numbers – I guess numbers questions.

One, what was the total number of films in Q3 that counted towards DMR costs? And then I know you're not giving 2019 guidance at this time, but assuming everything is kind of progressing as you planned on the new business that's now going to be $4 million to $5 million headwind this year, what would be kind of the max headwind you expect to see in 2019?.

So the second question, we'll answer that on the fourth quarter call when we give guidance. Yeah, I think we've been very clear throughout this year that we're not looking for new business projects. We're keenly focused on the core business. And that will be the approach for next year as well.

But in terms of a specific number, you're going to have to wait until we get to the fourth quarter call. And then in terms of the number of films, it was 23 in the quarter..

Perfect. Thanks, guys..

Thank you for your question. The next question will come from Vasily Karasyov with Cannonball Research. Please go ahead..

Thank you. I have one for Patrick, one for Greg. Patrick, can you comment please on the EBITDA to free cash flow conversion? I think through the first three quarters of this year, you had around 36%.

Is that approximately what you see the business doing going forward, or are there some puts and takes that would change that going forward? And I'll have one for Greg later..

Yeah. I think this nine months is probably getting closer to a proxy of what the free cash flow conversion will be for the core business because we have meaningfully scaled back on the new business activities. There's still some spending. So I think it's a decent proxy, and we've got operating leverage in the network.

And so, as we continue to focus on that, that flows through, you'll see even more free cash flow conversion..

All right. Thank you. And then I have a question about the genres and people's taste shifting.

Do you guys see anything that would alarm you in terms of films that should be performing better and where you should be over-indexing like First Man or Solo and stuff like that? And then films like A Star Is Born doing better than expected where you would – one would think that's not a typical IMAX title.

Is there anything you see that you're closely watching and concerned about in that regard? Thank you..

So I think the punch line for that question is, should we be open to a wider variety of content? And the answer is yes. I think we can't limit what is an IMAX movie and what isn't. We're in the blockbuster business. There are certainly some movies that on paper and conceptually feel more aligned with the IMAX – the DNA, if you will.

But those movies don't perform. It's a moot point. It doesn't really matter. So a movie that's supposed to be like an IMAX movie and is unsuccessful doesn't help us. So we're definitely going to be – continue to focus on, what we'd call, Fanboy type of titles.

But we're also going to be much more open-minded, not only here but in China, what has to be the consumer taste. And consumer tastes are evolving and IMAX will need to evolve accordingly..

Okay. Thank you very much..

Thank you for the question. The next question will come from Jim Goss with Barrington Research. Please go ahead with your question..

Good morning. Rich, I'm curious for a little more commentary on the streaming convergence thought.

I'm wondering if you – if a streaming company wanted to target a blockbuster-type movie and involve you, if you're risking the pushback from exhibitor partners if you decided to launch a day and date the streamed version that would then later play at other channels..

So, Jim, the answer is quite simple. We wouldn't consider a day and date that would bypass the theatrical windows. So our discussions that we're having with the streaming services, and we've said before we're talking to all of them mostly by answering our phones, we would not consider violating the theatrical windows. So that's not an issue for us..

Okay. Perfect. And Greg, I'm wondering in terms of the discussion we've had over the years about hedging against a wrong bet, I'm wondering what has pleased you so far in terms of progress such as screen splitting and limiting number of weeks per title, and what still needs to be done.

And you might have touched on it a little bit with being open to a wider variety of content.

But what – where does it go from here in your view?.

Impossible, which was hugely successful for us. So I think going forward, there are going to be some periods of time – most periods of time with IMAX where we're going to ostensibly play one movie.

But when there are two good movies coming out at a specific time, we again have to be flexible to be able to kind of pivot, not only pivot in terms of having a second movie but what the balance or ratio is of the show schedule to one move to the next.

So, for instance, I think it's a really good opportunity to play a family-oriented movie during the day and a "Fanboy" kind of movie at night. And I think going forward you'll see IMAX do more of that, and it's the right strategy..

And you've seen greater receptivity on the part of the studios for your channeling those decisions?.

Certainly not with every movie. We're not going to do that with a Marvel kind of title. It wouldn't make sense to do it. But when it's the right reasonable decision, yes, we are..

Okay. Great. Thank you very much..

Thank you. That concludes the Q&A. I'll turn the call back over to Rich Gelfond for closing remarks..

Thank you, operator. So I'd like to use the occasion to look back a year where we were a year ago versus where we are today. So a year ago, our stock price was virtually identical to where it is today. Today, we increased EPS by 132% for the first nine months over where we were first nine months a year ago.

We've continued our cost reduction initiative and demonstrated significant operating leverage with a great jump in margins. Our box office is extremely strong, considerably stronger than our budget. China has stabilized and in some ways turned, whereas – I mentioned same-store sales were up in China.

PVOD is no longer an overhang on the industry as opposed to a year ago. And we have over 200 signings for the year, which is more than we had last year, including our upgrades. We have growth markets in Japan and India where each market has over 40 theaters, including the backlog, and a long, long runway to go.

So we think from our point of view, we've really delivered on what we said we're going to do over the last year and continue to do that. And we thank you for your continued support..

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect your lines..