Good day, and welcome to the IMAX Third Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Stephen Davidson, Head of Investor Relations. Sir, please go ahead..

Thank you, Cady. Good morning and thank you for joining us on today's third quarter 2019 earnings conference call.

On the call today to review the financial results are Rich Gelfond, Chief Executive Officer; and Patrick McClymont, Chief Financial Officer; Megan Colligan, President, IMAX Entertainment; and Rob Lister, Chief Legal Officer are also joining us today. 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 third quarter earnings press release and the slide presentation accompanying today's call has been posted on the Investor Relations section of our website.

At the conclusion of this call, our historical excel model will be posted to the website as well. I would like to remind you of the following information regarding forward-looking statements.

Our comments and answers to the 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 filings for a more detailed discussion of some of the factors that could affect our future results and outcomes. During today's call, references maybe 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 reconciliation to non-GAAP financial measures including 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 Mr. Rich Gelfond.

Rich?.

Endgame 16 IMAX blockbusters have been filmed using our cameras from 2008 to 2019. Our domestic opening weekend indexing for Chris Nolan's last film, release in IMAX Dunkirk was an incredible 23% despite IMAX accounting for less than 5% of total screens. As I mentioned earlier, his next film hits IMAX theaters next year.

When release is filmed in IMAX, it provides studios with a powerful marketing hook. Our filmmaking partners get behind our technology on social media and in the press and our fans turnout in a big way. That's a big part of the reason why we're excited about the 2020 slate and the opportunity to bring more film makers to our end-to-end technology.

Again, putting it in perspective, it was 2008 we've had 16 films and next year we have at least five. Furthermore, it has historical perspective to the slate discussion since 1980 domestic yearly box offices only declined nine times and for an average of just 3%.

More recently the domestic Bond office has set a new record and nine of the last 15 years. The long-term trends of box office are favorable and when you consider the factor of it in our growing network our global slate and the number of films using IMAX cameras we are positive on the 2012 slate.

Moving onto China on Slide 7, our strong moment continues into the second half of the year with Mainland China IMAX box of 20% of local currency terms year-to-date through October 7 after the national holiday compared to 3% growth for China's overall box office.

With only 1% of the screens IMAX is far outpaced in the industry and gaining market share. Our box office was up over 160% marketing our best ever national day holiday performance in China with all three top grossing films My Country, My People, The Captain and The Climbers being available in IMAX theaters.

Our performance in local language films moves from strength-to-strength thanks to our flexible programming strategies. In the third quarter of Chinese animated hit Ne Zha now the second highest grossing in China's film history reach more than $35 million at our Greater China box office.

We recently crossed more than $101 million of total Chinese local language box office in 2019 marking our best annual performance ever up 11% over the same period in 2018 and accounted for an increasing mix of our total China box office over 30%.

In summary with our optimized local programming strategy and with blockbusters representing a higher share of the overall market, we believe that we are well positioned for sustainable market share gains in China.

With strong execution and financial results in our core business, we're also looking at future growth drivers and exploring ways to further monetize demand for the IMAX experience as illustrated in Slide 8. Through our Enhanced licensing initiative, we are working to bring IMAX digitally remastered content into the home.

We believe that we can extract even greater value from our core business capitalizing on our content portfolio and brand on home entertainment devices and platforms. For example, this fall we launched IMAX Enhanced streaming content on FandangoNOW, in the U.S. and Rakuten TV in Europe.

FandangoNOW recently became the first streaming service in the world to offer Marvel title in the home. In this case, Spider-man Far From Home as an IMAX Enhanced title, which includes exclusive IMAX expanded aspect ratio, DMR, and our proprietary audio mix.

This creates an opportunity to expand our ecosystem and add new high quality revenue through licensing streams. Furthermore, the strength of our brand, technology, and creative relationships provides an opportunity to create new experiences and drive increased utilization across our network.

Earlier this year, we conducted successful tests with radio hits [indiscernible] and celebrated Director Paul Thomas Anderson on the short film Anima and with the brand Soundgarden, the band Soundgarden on a concert film. Just last weekend, we premiered a limited run piece from Kanye West in conjunction with his new album Jesus is King.

The 30 minute piece ran in select showings alongside our regularly scheduled blockbusters selling out shows in 24 cities worldwide and capturing more than $1 million in global box office.

Furthermore, the project growth drove considerable buzz in the press across social media and with taste-making young fans expanding our brand into new cultural territory and exposing new audiences to the IMAX experience. It also demonstrated our ability to launch a global event beyond movies.

In fact, since announcing the Kanye project, we've been approached with numerous opportunities from creators across the cultural spectrum, who want to work on our platform. In conclusion, IMAX delivered strong results in the third quarter, and we believe that we are building on this momentum.

Moving into the fourth quarter as we close out a record breaking year. As our 2020 slate take shape, we'll have at least five releases filmed in IMAX, thanks to a strategic initiative to inject more IMAX DNA into our slate.

We are driving greater demand for the IMAX experience throughout the entertainment ecosystem with a powerful brand and technology uniquely positioned to deliver value for creators and consumers, studios and distributors.

When you add to that the global scale of our network, we believe that we are well positioned to capitalize on the change at hand in the entertainment industry. And we have confident in our ability to continue to improve revenue generation, margin profile, return metrics, and a strong overall financial performance.

With that, I would like to now pass the call to Patrick for review of our financial results. Patrick..

Thank you, Rich. Good morning everyone. I'm pleased to share our third quarter results with you today, which reflects our continued execution and the inherent operating leverage in our model. With a 5% growth in revenue and continued cost discipline driving a 26% increase in adjusted EBITDA and a 50% increase in adjusted EPS. For today's call.

Let's begin with our review of our box office performance followed by an update on installations in the quarter as well as a review of signings and backlogs. Then we will discuss our financial results for the quarter and our balance sheet. Finally, we will close guidance for the fourth quarter and full year 2019.

Let's start with our IMAX global box office detailed on Slide 10 of the earnings presentation. In the quarter, we delivered 246 million in IMAX global box office representing a 40 million or 19% increase and clearly illustrating the geographic diversification of our global network.

A 40% increase in international box office excluding China led the year-over-year growth as well as a 23% increase in domestic box office. Slightly lower box office in Greater China, which was down 2% was driven by a slower September in advance of the national holiday. We had only two films, one of which was a documentary.

October box office rebounded driven by our strong performance during the national holiday in China. Turning to Slide 11, year-to-date through September IMAX global box office of $867 million exceeds the prior year by 9% and we expect a strong fourth quarter.

Strong performance throughout our global network contribute to the year-to-date box office growth including Greater China, up 27% local currency or 17% U.S. dollars and other international growth up 14%.

Specifically, we delivered attractive growth in Asia Pacific where Japan was up 26%, Europe we experienced accelerate growth in France and Germany, which were up 31% and 40% respectively, and in Finland where a new theater recorded almost $2 million in box office in just the first 10 months of operations.

Finally, as Rich alluded to, we saw exceptional performance in the Middle East principally due to Saudi Arabia where we see attractive near term growth opportunities. Our significant. Backlog in Saudi Arabia will bring us to 20 theaters there in the next couple of years.

We're pleased to report that our box office momentum has continued into the month of October. Through Tuesday, we produced $76 million in box office with Terminator, Ford v Ferrari, Frozen 2, Jumanji and Star Wars still yet to be released. Next, let's turn to our network expansion details on Slide 12.

During the third quarter, our sales team delivered 30 signings including eight upgrades. We installed 39 systems in the quarter, consisting of 30 new installations, and nine upgraded systems, versus 37 installs in the prior year, consisting of 36 new installs and one upgrade.

As a result, we exited the third quarter 2019 with backlog of 607 systems, reflecting our ability to replenish our systems pipeline, with new signings during our robust period of installs. The new installs in the current quarter consisted of 14 sales-type, 12 JVs and four hybrids compared to 15 sales-type, 15 JVs is and six hybrids in the prior year.

It should be noted that one of the 14 sales-type installs in the quarter was a Xenon system that we redeployed into a new location, which is a great use of the asset and appropriately came with a lower margin profile than a new system. The 9 upgrades in the quarter we're all JVs and the one upgrade install in the prior year was also a JV.

Now let's turn to our financial results on Slide 13. Total revenue in the third quarter increased by 4 million or 5% to 86.4 million driven principally by strong topline growth of 18% in our network business, as well as higher other revenue, partially offset by lower theatre business revenue, which I will address in the segments discussion later.

We generated 47 million of gross profit and increase of 5 million or 12% which resulted in a roughly 310 basis point improvement in gross margin to 55%. Important drivers of expanded margins included higher network revenue on a 19% increase in box office.

Lower new business COGS driven by the absence of VR in the segment in 2019 as well as an increased contribution of IMAX Enhanced with minimal cost. Operating expenses defined as SG&A excluding stock-compensation, plus R&D were 26 million in line with the prior year.

Net income attributable to common shareholders for the quarter was 9 million or $0.15 per share, compared to 5 million or $0.08 per share of 88% while adjusted net income was 13 million or $0.21 per share, up 50% from the prior year.

Adjusted EBITDA for the quarter came in at 32 million up 26% compared to the prior year, producing 570 basis points of adjusted EBITDA margin expansion to 41.4% compared to 35.7% in the prior year. Now drilling into our second performance on Slide 14.

In our network business revenue growth of 18% resulted from a 19% increase in box office, which benefited from a 40% increase in international ex China, and a 9% increase in our theatres in the commercial network.

Revenue in our theatre business decreased by 7% as we installed one less sales-type system, as well as the previously mentioned installation of one refurbish system. Also we installed to fewer hybrid systems during the quarter. The average revenue per new sales type installed 1.2 million compared to 1.3 million in the prior year.

The geographical mix of systems installed result in a lower average revenue per hybrid in the quarter. The decrease in the number of systems installed in the quarter also resulted in lower cost of revenues in the theatre business. Now let's turn to capital and liquidity on Slide 15.

We ended the quarter with 103 million in cash, of which 83 million is in IMAX China. We only have 20 million in debt outstanding from our revolver compared to 40 million at the end of 2018. So we have total available liquidity of 383 million providing financial flexibility.

In the quarter we repurchased approximately 47,000 shares at an average price of $20.35 a total just less than 1 million. We currently have 126 million remaining on the outstanding repurchase authorization.

IMAX China repurchased approximately 1 million in shares for the quarter for a total of approximately $2 million, which increased our share of IMAX China's earnings. Lastly on Slide 16, we have a full year 2019 guidance, elements of which we are refining. There is no change to our annual box office guidance.

So we continue to expect low double-digit growth versus full year 2018 and through October we were up 11%.We now expect to be at the high end of the guidance range of 185 to 190 total systems with a shift in the mix of new installs and upgrades.

Although the mix is shifting, we expect this adjustment and guidance to be net neutral in terms of revenue impact to the fourth quarter 2019. We are now expecting to be slightly below, below end of the guidance range of 140 to 145 new installs. However, we now expect to be slightly above the previous guidance of 45 upgrades.

In terms of new theatres in Q4, we're expecting a total of 29 revenue generating STLs. Additionally, we're expecting to install 28 new JVs and seven hybrids.

In terms of upgrades in Q4, we are expecting a total of 35 inclusive of the 35 upgrades our 10 IMAX with laser system upgrades, with sales type structures with revenue and margin similar to a new STL. In summary, a little less new theatres, a little more upgrades, but no change in our expected revenue in the quarter.

To wrap it up, our results for the quarter were strong with topline growth and margin expansion, yielding the attractive operating leverage inherent in our model. We expect to deliver even stronger performance in Q4. I would now like to open the call to Q&A..

[Operator Instructions] Our first question will come from Eric Handler with MKM Partners..

Couple of quick things, I guess Patrick one, can you maybe talk about why you're sort of looking at the low end of your new system install range. Is this just a timing issue with new theatres being built or is there something other going on.

And then I'll have a follow-up question after this?.

So, Eric, I'm going to answer that. There's absolutely nothing going on. The bottom end of the range on that was related primarily to one client who has historically exceeded its annual rollout commitments, but this year was in line with its commitments.

So at the beginning of the year, when we give guidance, we looked at what they did in prior years, and they exceeded it and this year, they met it. But for next year, they're online for more installs and it certainly a one-off situation..

And then Rich I wonder if you could provide just a little color of some of the things going on in China with your ticketing partnership that you have with [Molly on] and how your market share is looking now that for the local films versus the Hollywood films?.

As you know, we're having an extremely good year in China and on the local currency basis we're up almost 30% in box office. We changed our programming strategy, where we’re programming multiple Chinese films around the holiday times of year, as we mentioned in October for the national holiday we were up 160% from where we were last year.

Ticket prices are strong in China. The local language films , as s I mentioned in the call, we're over $100 million this year for the first time, and it's a record for us.

So China, I would say, it's a very good quarter in a lot of ways, as you know, but the year-to-date, China's probably the brightest spot on a year-over-year basis in IMAX overall, it's going very well..

And then - one of the things within that the - how you're seeing the differential between your market share for the local language films versus the market share for the Hollywood films?.

Yes. I mean I don't have the exact number but it’s up significantly, the local language number do you know it off hand, Patrick..

Well just - if you think about our business being up close to 30% in total box office and in the market right now in China is up about 4%. They have very strong New Year so the market has turned positive. But that just tells you that we took a lot of market share this year, right. We're growing at such an accelerated pace.

So, and that's both on the local side and the Hollywood. And we attribute it to a number of different things. As Rich mentioned, some of it is better marketing and some of that's with our partner Maoyan; and a lot of it is better film selection, where we've got more optionality.

Local language 2019, year-to-date we are now just North of $100 million and we're up 7%..

Our next question comes from Eric Wold with B. Riley..

Kind of a follow-up question to one of Eric's, [for the cameras] install timing. I know, Rich, you mentioned that nothing kind of was behind the, kind of, the shift in mix of installs this year, but that one client kind of going from more in line to exceeding.

I guess looking out into 2020, I'm not looking toward kind of the exact guidance in terms of installs, but maybe just a sense of, you obviously have internal scheduling of when they're supposed to come.

Has there been any shifts because of original install thoughts for 2020 timing versus what you're seeing now, especially kind of what's been going on within China?.

Well, Eric, we haven't really looked at our - we're in the midst of looking at our 2020 budget. So on a preliminary basis, the answer is no. And in fact, in preparation for this call, we kind of scrubbed through the backlog.

And I'd say going into 2020, that looks, not in terms of numbers because we haven't done that, but the risk profile looks the same. There's no systemic risks that we see at all..

And just on that backlog, around 600 some systems, I assume it's not evenly spread over the coming years, it's probably more front weighted.

Anytime you can give some broad idea of kind of how much of that backlog is maybe within the next couple of years?.

Well, we haven't scheduled it out that way Eric. But it's consistent with how the backlog has run off in the past. And what we've said is a fair amount runs off in three years. And again, we haven't scheduled it. But it's the same as it's been. Its no, it's a longer-term.

And as a matter of fact, and I don't want to make too much of this, but because Saudi Arabia is a new market that's coming online, has an awful lot of building going on there, some of that is more frontend loaded..

Perfect. And then just finally, I know there is some spending timing around kind of installs and openings. But I guess given your balance sheet flexibility in and kind of the improving cash flow, somewhat surprised that there's only been less than $3 million of buyback here on the, kind of, on the corporate level this year.

Any thoughts around why that hasn't been higher in kind of your capital allocation priorities?.

I think we've said before, Eric, that we're going to be opportunistic about it. And we have been opportunistic, we have approval to buyback a lot more, as you know. And as you also know, over the last several years, we bought it in hundreds of millions of dollars' worth of stock. So we have the firepower, we have the authorization.

When we think it's the right time, we'll do it..

Our next question comes from Alexia Quadrani with JPMorgan.

Hi, this is Jiayun Pan on for Alexia. Thanks for taking our question. I would just love to get more color on your slate in China. It seems to be a little more heavy, Hollywood heavy between now and year-end.

And what's the outlook for Chinese New Year? Besides Detective Chinatown 3, I believe there's going to be a sequel to Ne Zha or at least that in the same universe.

Would love your thoughts on how you might capitalize on the success of the last film?.

Well, I'll add to the New Year part of it, and then I'll ask Patrick, maybe to comment on the fourth quarter. But we have three films for Chinese New Year. The only one I remember by name is the one you mentioned, filmed with our cameras. But I think our team is feeling very good about Chinese New Year.

And we think we kicked out - again, remember how we kind of pivoted in strategy. We used to choose one and now we try and pick three that are all considered to be contenders for this top place, and we think we've achieved that for New Year's 2020. In terms of the rest of the year, Patrick, I don't have that off hand.

I don't know if you could add color to that..

Detective Chinatown 3, Lost in Russia, and the Rescue. And right now, the market is enthusiastic about all three. And similar to what we've done in other Hollywood periods, we'll have all three available and we'll ride the one that's doing the best in IMAX. So we're optimistic heading into 2020 for the local slate..

Our next question comes from Steven Frankel with Dougherty..

Just a follow-up on this local language theme in China.

Given the success here, are you looking to show multiple films in more parts of the year other than the big holiday, blockbuster periods?.

Yes, they're available, Steve, sure. And I'm - you also give me an opening a little bit to talk about it in a broader sense. Because the box office in China has been increasing over the years, so materially there's more money in China going in to production, which is higher quality production.

And also, they've been exploring new genres such as - which is the one from earth? The one that was highly successful?.

Wandering Earth..

Wandering Earth and Ne Zha. So Wandering Earth was sci-fi and Ne Zha is animation. And because they've been so successful, I think they're putting higher budgets and more into different genres; specifically, like sci-fi, which does very well in IMAX.

So I think if you look at it structurally and from a little bit longer-term, there'll be more movies going, more high quality movies and more IMAX wheelhouse movies going into production. And I would expect that we would continue to play more of those.

And as to your specific question, I think if there are multiple movies same time and they have IMAX potential, we'll play them..

And then Patrick, maybe some insight into how the mix is changing in China towards theaters that would be less capital intensive for you?.

Sure. As we've discussed, we're certainly headed in that direction. I think that's even reflected in our most recent large deal that we did with CGV, where it's a mix of partnership deals and also hybrid deals. And what we're doing is, we're looking at each opportunity, each market, each theater, and deciding what the right risk allocation approach is.

And so over time, you'll see that our backlog and therefore our mix of installs in China will start to skew more towards the hybrid structures and the sales structures. Previously, when we were signing up these very large deals, it made sense to do those on a portfolio basis and do them with the partnership structures.

Now as we continue to grow the network, we're looking at more in a theater-by-theater basis and figuring out what the right solution is for each instance. And so you will see it start to skew towards the sales and the hybrids..

And then on this notion of certifying more cameras; are the cameras that you're certifying, able to reproduce the full aspect ratio of IMAX?.

Well, remember, there are different aspect ratios on different theaters, and there are different cameras.

But Megan, maybe you want to give some color on our camera program?.

Yes. The concept is with - working with, we're identifying the best-in-class cameras that they have. We're identifying it through the blended and an operating system that allows for the full scale and scope of IMAX to be utilized.

And it's really to increase the flexibility for film makers, so that they're capable of using the digital camera that they prefer. And that we're working as a concierge service to be able to adapt any camera to our system, so that you're capable of achieving that full aspect ratio. So the answer is, yes..

Our next question comes from Mike Hickey with Benchmark Company. [Operator Instructions].

Just a few.

I guess, Rich, it's hopeful, you could update us on your view of some of the pricing schemes, domestic that we're seeing in terms of subscription, discounting and sort of how impactful that then I guess in the business in the quarter, maybe Q4 and beyond?.

So as you know, a lot of these programs are new. Regal is only put in place a couple of months ago. But we obviously have done some detailed analysis of them the AMC stuff program, which has been around longer. We've taken a deeper dive into, and we've concluded that it's helped us in terms of revenues and attendance and various matrix.

The Regal one, again, we don't have data on, but we've been working with Cineworld in Europe for years with a very similar program and we concluded that spin positive, but I think to the extent any of these plans kind of provide it’s not an exact word, but it's similar to a subsidy or an incentive to go to IMAX.

They seem to be working and they seem to be moving people into, the premium category. So early but so far feeling pretty positive..

I guess the next question it's good to hear your enthusiasm for the 20 box office domestic. Obviously, you pointed out a lot of potential blockbusters, but I guess when you look at sort of the size of the individual films, or perhaps that they're not the usual fan boys suspects that you would think of driving the box office in prior years.

How do you sort of strategize, I guess your 20 slate given that you may have as many blockbusters, but maybe smaller in size. And I guess, any initial view on what your growth view is for 2020 - for your total box office would be helpful? Thank you..

So in terms of growth units, as I said we're still in our budget process, so I can't do that. But, as we said, I avoided saying that on this call I might as well do it now. We don't correlate to being a North American exhibitor.

So we set our growth this year and box office, globally it’s going to be in the low double-digits and that's not where the North American box office is. And I think, a lot of people in the U.S. tend to look at Box Office through a different lens then we do.

And as I said, we have at least five films using our cameras in Dunkirk we did 23% of Chris Nolan's last film, and its filming the whole thing and it's some. No I think, that's going to be a very big movie for IMAX, Bond, virtually the whole movie was shot with IMAX cameras.

The next Wonder Woman, IMAX cameras, Top Gun, IMAX cameras, China, IMAX cameras as I said during my prepared comments. And in the last more than 10 years, we've had 16 films. And this year we have at least five we said, I think it'll be more than that.

I think on those on the blockbusters that are clearly identified, you have a basis for IMAX significantly outperforming. We also have a network growing close to 10% around the world, and that provides a very good basis. You have local language films doing significantly better for us.

You have two key high ticket box office markets growing rapidly and coming online, Japan and Saudi Arabia. And when we look at it we have a different view than people looking at North American exhibitors. And I didn't even mention the two Marvels that are coming out next year and the two Pixar and Disney has some big movies including Move On.

So we just think the slate is pretty good next year..

Our next question comes from Jim Goss with Barrington Research..

I was wondering and Rich you just mentioned Disney Pixar Marvel. I'm wondering about the concentration of Hollywood power in Disney and now with Disney Fox.

And to the extent that you've always been very relationship focused, has that concentration worked to your benefit or – as they've dominated in the blockbuster space and the movie space in general or has that hurt in anyway?.

I have to say, mostly positive Jim, because we have such a good relationship with them. We're fully integrated into their leases and their marketing efforts. And I know, you've seen some of the marketing that came out around Endgame and some of the other Disney and Marvel releases.

I think the integration of our two organizations, from a box office point of view has been a real positive. But again, that's kind of a headline, I think, especially in 2020. You need to parse through that because of the films we mentioned, that we use in our cameras on, those are all non-Disney films.

So I think 2019 you know, Disney really dominated the blockbuster business as you said, they're an important partner with love working with them. But I think this will be a little bit more spread out in 2020. And, that's fine, too. We have a wonderful relationship with Warner Brothers, with Sony, Paramount with Universal.

I think, it's good when it works, but we're not tied to them..

And I know there still a comment that upgrade IMAX with laser was sort of running a bit higher relative to new installs. And I am wondering if you could talk about the value of laser.

Is it more in terms of cost, quality and therefore demand for seeing films at the IMAX and the IMAX screens are there specific issues that are driving that continue to rollout?.

I think it's mostly differentiation Jim, it provides more of a differentiation from their regular screens and the PLF. And we done some early work on it and again, I underline the word early. But from the research we've done, there is an uptick in box office at the theatres versus the DNA in those theatres that have converted to laser.

And I think there is to be more there. And one reason there could be more, as we haven't really marketed heavily around the ways that we've kind of left word of mouth and the image speak for itself. And going forward, starting in 2020, we’ll be marketing a little bit more aggressively around laser.

And so I think, like you would expect, ultimately it comes down to that differentiation, leading to abundant seeds..

And finally over the years, you've tinkered with optimizing the nature of your film schedule, and you have seemed to converge to say no more than one or two weeks per title unless it's something unusual perhaps Star Wars. I'm wondering and I think the DMR costs have gone down as it's been used Marci compared a fast turnaround.

So I'm wondering, are you happy with how things are working at this stage.

And I've asked probably over the years about the notion of split screen, when you do have only one week say with that week's blockbuster, is there anymore inclination or receptivity to doing something like that either in terms of the screens or to the screens during the week, as time has gone on?.

So to your first question, Jim about are we happy with the way kind of the slate has fallen. The answer is yes. We've used our position in the ecosystem and our relationships with filmmakers and studios to try and optimize the schedule for us. One asterisk on that would be people who film with our cameras, where we over index.

I think that's where we're going to try and carve out more screen time for them. So historically with Chris Nolan's films, we've done that. And I think as there are more films, film with our cameras, you'll see us protect those filmmakers more both for relationship reasons and as we believe it will be in our economic interests.

In terms of split screens, we've done more of that internationally than we have in the past. And it's worked out pretty well for us, especially a couple of films that are more likely play to PG kind of audience. You run that in the daytime and more than our movie later in the day. I think in the U.S., there is still a resistance to that by the studios.

So, we would certainly be open to doing more of that, but that's not really the model. They're following I think another thing you might see is more carve outs for us.

So as our worldwide network continues to get bigger, and we probably can carve out a certain number of screens to show something else and particularly on the second week and we think that fine tuning might help grow the box office..

[Operator Instructions] I am currently showing no further questions in the queue. I'll now like to turn it back over to IMAX for closing remarks..

Thank you, operator, and thank you all for listening in on our call. As you know, we delivered a very solid quarter. We sort of promised that we would control costs over the last couple of years and I think we've done a very good job doing that.

I think with the box office increase and the revenue increase, you've seen more of that slow down to the bottom line.

We think this year is going to turn out to be a record year for us with the fourth quarter coming up capital off by Star Wars and 2020 particularly because of the IMAX Cameras and the IMAX DNA and the growth in the network we feel very good about where we're going.

We're experimenting with a few newer ideas and IMAX Enhanced and trying to emphasize different contents. The early results there are quite positive. So we think the business going very well and we thank all of you for your support..

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect..