Good day and welcome to the IMAX First Quarter 2020 Earnings Conference Call. All participants are 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 would like to turn the conference over to Mr. Brett Harriss. Please go ahead.

Thank you, Emma. Good morning, everybody and thank you for joining us on today’s first quarter 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 this call. In addition, the full text of our first quarter earnings press release and the slide presentation have been posted on the Investor Relations section of our website. At the conclusion of this call, our historical Excel model will be posted on the website as well. I would 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 filings 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 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?

Thanks, Brett. These are extraordinary times as our world, the entertainment industry and IMAX Corporation confront an unprecedented challenge of COVID-19. As much as we look forward to theaters reopening, we fully support local officials and our exhibition partners around the world in closing theaters as necessary. We'll also be extremely cautious in markets like China that are beginning to reopen schools, restaurants and other public spaces. I hope all of you joining us are staying healthy and safe. Today I'd like to discuss the continued financial strength of IMAX, the health of our brand and our ongoing efforts to enhance the IMAX Experience for our audiences, the condition of our China business, IMAX's contributors in contrasting a formidable upcoming film slate and finally our relationship and efforts to support our exhibition partners. Looking at the first quarter of 2020, clearly our results were impacted by COVID-19. We reported revenues of $35 million and adjusted EBITDA loss of $4.4 million and adjusted net income loss to common shareholders of $29 million or $0.48 per share. This includes a $0.10 credit provision that Patrick will discuss in greater detail. We installed 12 IMAX systems in the first quarter and our commercial theater network now stands at 1,526 theaters, up 7.5% versus Q1 of last year. I want to underscore that IMAX is in a strong financial position to weather this crisis. We entered the year with more than $90 million in net cash on our balance sheet. At the end of March, we drew the balance of our $300 million revolving credit facility to maintain maximum flexibility throughout the duration of theater closures. As a result of this strong cash position and a commitment to controlling costs, we're confident in our ability to operate through an extended shutdown in a zero-revenue environment. We've already taken significant costs out of our 2020 operating structure and we'll continue to be flexible and respond accordingly as the situation evolves. With technology and licensing business, we don't have a lot of fixed assets and we run the business with fewer than 700 full-time employees. Impressive, when you think about how we have grown and managed the global brand that operates across 81 countries and territories and our box office was in excess of $1 billion last year. We managed the business conservatively over the preceding years. And as a result, we believe that we have the balance sheet to be ready for exhibitors, studios, filmmakers and audiences when the entertainment industry is back up and running. Furthermore, as global economies restart, we believe consumers will turn to strong trusted brands like IMAX. Prior to the challenges of 2020, IMAX was coming off two consecutive years of record-breaking global box office. Last year we set records for global, local language and international box office including box office records in 27 countries worldwide. We entered 2020 with a record number of releases, filmed using IMAX cameras. We have established a unique and powerful position in the entertainment ecosystem. Consumers seek out the IMAX Experience for immersive blockbuster entertainment. Studios value IMAX as the mark of a must-see film and a powerful partner in marketing, curating and driving box office for their biggest releases. The world's best filmmakers and creators are increasingly using our end-to-end technology to bring their artistic vision to life. Exhibitors rely on our theaters to provide a premier experience that drives ticket pricing, volume and differentiation. And finally, streaming services offer new opportunities for us to bring new event content to our theaters and to bring IMAX technology to home entertainment. This privileged position enables IMAX to take an active role in shaping how the entertainment industry emerges from this crisis. We're also using this time to reshape how we deliver for our audiences. The last time the theatrical business saw a crisis of this magnitude was in the early 2000s, when many of the major exhibitors restructured. And while IMAX is in a far stronger position today during the last crisis, we fostered many of the innovations that enabled our global growth over the last two decades. We invented the proprietary Digital Re-mastering process, which has made IMAX a coveted partner among studios and filmmakers throughout the world. We transitioned our theater operations and technology from analog to digital, and we developed a business model that has driven our theater sales business. We're taking a similar approach in this challenging time. We're accelerating the development of a comprehensive direct-to-consumer strategy to build on the strength of our brand, create new touch points with our audiences and drive more revenue opportunities. We're developing new technologies to bring additional interactivity for our theaters. We're leveraging technologies like artificial intelligence and the cloud to better manage our internal workflows and are enhancing systems to better organize and codify our box office theater and financial data. Moving to China, our unique position in this market also offers us insight into the COVID-19 situation. Given our vast network in China, where we have more than 700 theaters, IMAX has been managing through the impact of this virus since January. This provides us with an up-close on-the-ground look at the trajectory of theater closures and re-openings and consumer behavior patterns, especially as China works to restart its economy. Schools are opening across China, in-store retail consumption is picking up and TV and film production have also resumed under strict health guidelines, all positive signs. As a matter of fact, just yesterday, a member of the Chinese government announced that he expected theaters to begin opening in early June. When theaters do reopen in China, we believe IMAX will benefit from an exceptional slate. We are prepared to immediately distribute many of the classic titles that are under consideration for release when the theaters resume operations, followed by many of the Hollywood titles earlier in the year that have yet to be seen in China. And of course, the Chinese titles that were originally slated for release over the Chinese New Year. Additionally, there were positive signs that Chinese audiences are excited to return to their theaters. A survey released this month by Chinese ticketing platform Maoyan found that 72% of Chinese moviegoers are eager to get back to the movies, up from 54% just a month ago. Turning to the broader film slate, in the back half of 2020 and into 2021, we will participate in a formidable content pipeline with which to re-launch the theatrical business in earnest. Given the uncertainty around theater re-openings, the slate is subject to change, but we've engaged in frequent conversations with our studio partners for being extremely thoughtful and aggressive to find compelling release windows and serve global audiences in the best way possible. While we will need to be creative in scheduling, studios are deeply committed to theatrical releases for the biggest event movie of the year. There is simply no way to recoup the substantial financial commitment of a blockbuster film without a theatrical release. In 2020, we are poised to set a new record for releases that are filmed in IMAX with many of the year's biggest films including Detective Chinatown three in China, Christopher Nolan's latest Sci-Fi film Tenet, Wonder Woman 1984, the latest James Bond installment No Time To Die and Paramount's Top Gun: Maverick. The schedule for 2021 is an exceptionally strong slate and as of now includes three Marvel titles; the latest installment of Spider-Man; the highly anticipated new Batman film; new entries from global blockbuster franchises including Fast & Furious, Mission: Impossible, and Jurassic World; and of course, James Cameron's Avatar 2, the sequel to the highest-grossing IMAX film of all time, currently remains on schedule for the end of next year. In terms of slate changes, we're mostly seeing release shifts. Studios with big blockbuster products or major film slots often experience a two to three month delay, and many studios are simply shifting their entire schedules as a group. Disney is a great example where they moved Black Widow, originally scheduled for this May, into the November Marvel slot previously held by The Eternals. As a result, 2022 is also currently filled with films such as Thor, Black Panther, Fast & Furious 10, and Mission: Impossible Eight and will hold strong audience appeal for IMAX consumers. The long-term product pipeline is as robust as it has ever been. We look forward to working with our studio and exhibition partners to bring audiences the experiences they crave. In the near term, we have incorporated a number of remote tools into our workflows and arranged for select staff to have safe access to our post-production facilities so we can continue work on forthcoming titles like Tenet. And just as in China, there are early encouraging indications that U.S. audiences are eager to get back to the movies. A survey released by research firm EDO earlier this month revealed that the overwhelming majority look forward to returning to the cinema when theaters reopen, albeit cautiously. More than 70% of respondents said they were likely to return to theaters when they reopen, including 75% of respondents between the ages of 13 and 39, which is the IMAX core audience. And while shelter-in-place guidelines have clearly driven at-home entertainment consumption, it's also clear that theatrical remains an essential part of the creative vision, consumer proposition, and economic model for blockbuster filmmaking. As I said, the road for blockbuster filmmaking runs through IMAX, and we believe that we're well positioned to reap the benefits of this rich content pipeline as it begins to flow later this year and beyond. Despite recent challenges, we're hopeful that our exhibition partners will also reap the benefits of a strong slate and be able to manage through this temporary closure of theaters in the near term. Earlier this month, several exhibitors made important moves to extend their liquidity, lower the risk of bankruptcy, and manage through the crisis. The exhibitors are long-standing value partners to IMAX, and these moves drive increased stability that will benefit the whole exhibition and entertainment industry as well as IMAX. We've supported exhibitors as they were forced to close theaters and we'll continue to support them throughout this situation and beyond. Agility is a hallmark of IMAX, and our ability to service our partnership with exhibitions remains strong. As a result, we're confident we can resume installs when conditions improve. We've grown very fast and have the ability to ramp up screen installations quickly. You may recall that in the fourth quarter of 2019, we installed a record 95 systems which represented more than 50% of our full year installs, and we completed 57 installations in December alone. Additionally, we completed 12 installs in the first quarter of this year, despite the challenges provided by COVID-19 in key strategic markets including China, Japan, South Korea, India and North America. Now I'd like to talk about reopening. The process of reopening theaters will be measured and will require time for the industry to build the type of theater-going momentum capable of supporting a blockbuster release. But first, we expect theaters to reopen with promotional pricing and library content in cooperation with Hollywood Studios. For the limited reopenings we saw in China, theaters planned to play library content at discounted prices with studios taking a smaller share of the ticket revenue. We also expect social distancing expectations and regulations to create limited seating arrangements. Given theaters typically operate with substantial excess capacity, we expect the industry in general, and IMAX in particular, to generate incremental gross margins even with constrained seating. We also believe that our core audience, the younger fanboys and fangirls, that most value an opening weekend blockbuster in IMAX will be the first to resume experiential activities such as movie-going. Let me caution that timing remains highly uncertain. As I said based on what we've heard from the government in China, we estimate that that opens in June, with the rest of the world opening sometime in July and August. This of course is just an estimate. We are fortunate in that unlike most of out-of-home entertainment businesses, it will cost us virtually nothing to reopen IMAX. If you think of other out-of-home entertainment businesses like sports or live theater, there's a lot of talent you have to bring in; you have to open a lot of infrastructure and hire a lot of staff. For IMAX as a technology provider, we don't require additional employees or capital to reopen. We figuratively flip the switch. It's a distinct advantage of our technology and services licensing model. Given limited operating costs associated with our business, the first IMAX ticket sold generates incremental cash flow. To conclude, COVID-19 poses an extraordinary challenge to the entertainment industry and the experienced economy in general. While this is an unprecedented situation and the future is yet uncertain, we believe IMAX is well positioned to meet the challenge, manage the crisis, and continue to thrive when it is behind us. We have the financial strength to endure, support our partners in these times, and to be ready for audiences when they're ready to return to our theaters. Our brand and the IMAX Experience have been in strong growing demand around the world. We're carefully monitoring the Chinese film industry, which in time will drive revenue along with insights on how to deal with safety, responsibility, and effectively relaunched theaters. And when these theaters reopen, we have a remarkably strong pipeline of blockbuster content, and we are actively working the program through next year and beyond. The unique privileged position we built in the ecosystem gives IMAX firm footing in difficult times, and we look forward to continuing our success in driving new opportunities for growth and creating value in a post-COVID-19 world. Thanks again for joining us today and please continue to do everything you can to stay safe and healthy. And with that, I'd like to turn it over to Patrick.

Thanks, Rich and good morning, everyone. I hope you and your families are staying safe through this challenging time. The size and scope of the global pandemic are unprecedented in both magnitude of impact and speed of onset. Because of our large presence in China, we started dealing with these issues earlier than most companies. Thanks to prudent, disciplined and conservative financial management during the last several years, we remain in a strong position to meet the current set of challenges. Our balance sheet is sound, providing stability to our business and the organization. We are planning for a resumption of our operations; while we are planning for business resumption this summer, we remain confident in our ability to operate through an extended business shutdown in a zero-revenue environment. We ended the first quarter with $352 million of cash on our balance sheet, which includes cash from our revolving credit facility, which we drew down in its entirety in March. We are in close contact with our banking group, which remains supportive of our business, financial strength and transparency. While the duration of theater closures remains uncertain, we expect our network to reopen well before we exhaust our current liquidity. Based on our current cost structure, we estimate monthly spend of approximately $10 million for operating expenditures. These costs primarily represent our full-time employees, facility costs and fully reflect cost actions executed throughout the first four months of the year that will continue to phase in through the second quarter. One of the many challenges of the COVID pandemic is uncertainty; while we cannot control when the theaters ultimately will reopen, we can control our operational costs and capital allocation. In late January, almost two months ahead of the U.S. outbreak, theaters in China closed. In response, we took immediate cost action, curtailing some growth initiatives, non-essential capital expenditures, travel and entertainment consulting projects, and non-core marketing. When the epidemic developed into a global pandemic, we took a deeper dive. In March, we completed a bottoms-up analysis of all our costs looking at everything short of a reduction in full-time headcount. We reduced temporary non-staff employees, overtime, consultants and our marketing budget. In April, we moved the majority of our company to a four-day work week. Departments that lacked product demand or were not able to effectively function remotely, most notably those involved in equipment manufacturing and the DMR process, moved to either a two or three-day per week schedule. We expect these measures to reduce costs while maintaining our ability to quickly scale up operations as social distancing measures are lifted and our business resumes. Of course, should the shutdown of theaters last longer than we expect, we have the option to take additional cost measures, reducing our cash burn and extending our cash runway. Much of our CapEx is driven by the growth in our joint ventures. CapEx associated with our new joint venture and upgrade joint venture installations remains dependent on our outlook and that of our partners, which in turn is contingent on the pace of construction activity and theater reopenings. As such, we do expect to make continued investments to develop our global network through the balance of the year, albeit at a reduced level compared to recent years. Excluding investments associated with our joint ventures, we anticipate spending less than $10 million in maintenance CapEx in 2020. In Q1 2020, we repurchased 2.5 million IMAX shares for $36.6 million or an average of $14.72 per share. IMAX China repurchased 480,000 shares for a total of US$890,000 or an average of $1.85 per share. Our ownership of IMAX China now stands at 59.7%. Turning to our financial results, before I jump into the details, I'd like to point out that our results were driven by the closure of our China business in late January and the subsequent closure of the majority of our network throughout March. Please note, we renamed our operating segments to better describe their underlying operating activities. Our network business is now called IMAX Technology Network. Our theater business was renamed IMAX Technology Sales and Maintenance. New business was renamed New Business Initiatives. The other segment is now Film Distribution and Post-Production. Total revenue in the first quarter was $35 million, down 56% versus last year. In the first quarter, we saw the IMAX Technology Network business deliver a 91% decrease in gross profit based on a 64% decrease in revenue. Lower revenue and gross margins were driven by the 63% decline in gross box office year-over-year, given the closure of the network. The IMAX Technology Sales and Maintenance segment delivered gross profit that was down 64% and revenue down 50%. The decline in revenue and gross margin was driven by lower sales and sales-type leases which numbered two in the first quarter of 2020 versus six in Q1 2019. The maintenance revenue of $7.4 million declined from $13 million in the previous quarter as we did not recognize maintenance revenue on closed theaters since we could not provide the service. The SG&A excluding stock-based compensation was $24.9 million, down sequentially from the $29 million of expense that was recorded in the fourth quarter of 2019 and up $1.2 million year-over-year. The $1.2 million increase was primarily driven by increased staff costs and a foreign exchange loss partly offset by decreases in marketing, travel and entertainment expenses and IT spending. R&D was up by $1 million; however, this was offset by a corresponding $1 million reduction in projects related to sustained engineering which hits system cost of sales. In Q2, we expect operating expenses to decrease sequentially through the quarter as we realize the previously discussed cost actions. Adjusted EBITDA for the quarter was a loss of $4.4 million, down from $28.5 million. Net income for the quarter was a loss of $49.4 million or a loss of $0.82 per share, while adjusted net income was a loss of $28.7 million or $0.48 per share versus a positive $0.18 per share last year. There are two specific items I would like to call out. First, we took a $0.10 per share charge for potential credit losses principally associated with our theater receivables. This charge represents a conservative reserve given the challenges facing our theater partners. This charge is excluded from our adjusted EBITDA but included in our adjusted net income. Second, we took a one-time non-cash deferred income tax charge of $0.23 per share related to withholding taxes on historical earnings from our IMAX China business. We had previously planned to indefinitely reinvest these funds offshore, and as a result, did not accrue any withholding taxes that would become due assuming we repatriated the earnings out of China. The change in the company's plans reflects its desire for increased capital allocation flexibility to repatriate cash from China to support dividend payments by IMAX China including IMAX Corp. Because of this, we made an approximately 10% tax accrual on $200 million of retained earnings which relates to the export tax payable upon moving the cash from China to Hong Kong. We expect IMAX China to continue to use its future earnings and cash flow to invest in growing its business. This one-time non-cash charge is excluded from both our adjusted EBITDA and adjusted EPS. Now, an update on installations. We installed a total of 12 IMAX systems in the first quarter versus guidance of 10. The breakdown for new systems was two sales type leases, one hybrid, and two joint ventures. We also upgraded seven joint venture locations to IMAX with laser in markets such as Japan and the United States. To close, while the situation remains uncertain, we are confident IMAX has the financial stability to endure the challenges ahead and be ready to quickly delight our patrons once again when they return to the cinema. With that, I'll turn the call over to the operator for Q&A.

Thank you. We'll go to our first question today from Eric Wold from B. Riley. Please go ahead.

Thank you. Good morning guys. Just a couple of questions but just one on the backlog and installation plans. I know it's kind of a little bit cloudy in terms of when you will start reinstalling IMAX and start opening once again. Can you give a little color on the backlog in terms of how many theaters had been scheduled to install this year prior to the shutdown? Maybe security of that backlog in terms of any ability of theaters to either cancel or push out? And then if there is kind of a restart or kind of accelerated restart of the issue in China, what is the ability to kind of really accelerate into year-end and how the holidays and Chinese New Year can make up for lost time so to speak?

Eric, could you talk a little closer to the phone and louder? Hard to hear you, sorry.

Sorry, I'll take it off the speaker probably. I know there's still uncertainty in terms of when your theater installs will resume this year especially in China, but maybe give a little more color on the backlog in terms of how many theaters had been scheduled to install this year prior to the shutdown maybe security of that backlog in terms of any ability of theaters either cancel or push out? And then if there is kind of a restart or kind of accelerated restart of the issue in China, what is the ability to kind of really accelerate into year-end and how the holidays and Chinese New Year can make up for lost time so to speak?

In terms of the backlog, everything is legally binding, which means no one can unilaterally exit from it. We hadn't provided installation guidance for this year when the pandemic began, as we were supposed to give it during our year-end call in China, which we missed. Even though the backlog is legally binding, there exists the possibility that we might mutually agree with our partners to extend installation timelines, especially since they might be focused on reopening theaters and rehiring staff. Our relationship does not operate in a way that enforces rigid install dates, so we aren't going to impose a strict deadline. I anticipate that there will be a number of installations this year. We saw a decent amount in the first quarter, and there were also some signings then. However, we are not in a position to provide guidance at this moment. You should expect installations to be lower than usual due to the period of closure. It's important to acknowledge that it will take time to resume normal operations, and I don't think institutions will want to manage reopening concurrently with a rapid build process. I hope this information helps.

That does help, Rich. I guess the last question, you talked about obviously the Chinese market probably opens up with library titles, kind of delayed Hollywood and the Chinese New Year titles. As you get past that and get into the back half of the year, which looks to be in the U.S. a fairly healthy and crowded kind of blockbuster film slate. How do you think the Chinese government will handle that over there given the need still to kind of approve a lot of titles for the back half of the year? How do you think they'll slot them to not let them overlap? And what are your thoughts on how that will be handled over in China?

So, China is always a country where things are weighed against each other. And you're alluding to the fact that they have a stated objective of playing as much Chinese content as they can. But in this instance, I think the balance is going to swing towards getting the economy going again. And I think, as we saw late last year, they tended to be more aggressive in letting Hollywood films in and more generous in giving different dates. Given that in China of the 70,000 screens, a lot of them are in high-profile malls. My bet would be that they're going to allow in a lot of those films in order to encourage the consumer to go back into those malls and spend. And also, I think because production has been closed in China as it has been in the rest of the world, but longer in China after they run through the New Year's movies and some other movies, I don't think there's going to be a lot of original content. But I think both factors will lean towards more Hollywood.

Great, thank you, Rich.

Thank you. We'll go to our next question now from Eric Handler from MKM Partners. Please go ahead.

Good morning. Thank you for the question. Rich, I'm curious about the reopening of theaters that include IMAX screens. Will you provide best practices to your exhibitor partners regarding screen management, sales, and equipment disinfection? Will you be offering guidance during the reopening phase, or will each exhibitor be on their own since there's no universal approach for these reopenings?

We're in regular contact with our exhibition and studio partners globally, essentially on a daily basis. There’s always communication happening across various locations. It ultimately comes down to the exhibitors' decisions regarding when and how to reopen, depending on government regulations. However, there is definitely an ongoing discussion about this. We've formed an internal team to figure out the safest ways to open our theaters, and we wouldn't proceed unless we deem it safe. Different exhibitors are exploring various approaches; for instance, one might consider using every other seat initially, while another is looking into software that keeps families seated together with spacing. Internationally, places like Hong Kong are planning to open theaters soon with their own protocols. We are involved in shaping those protocols and are focused on this internally. It’s not just a decision by one side; there will be extensive consultation, and a uniform approach won’t work for everyone.

So will you be providing maybe some best practices to the western theaters based on what's going on in Asia as they reopen?

As I mentioned, Eric, we are not imposing any mandates or providing a specific list. However, we are engaged in broad communication, positioned at the center due to our numerous relationships. We communicate frequently, and if we observe that certain approaches are successful in Thailand and not in Korea, we share those insights. We are partners in this and will work together to find solutions, even though the final responsibility lies with them.

Thank you very much.

Thank you. Our next question now comes from Chad Beynon from Macquarie. Please go ahead.

Hi. Good morning, Rich, Patrick. Hope you are well. Wanted to, I guess, continue the discussion on that last question maybe asking it a different way. Can you I guess help us think about maybe seat occupancies or screen occupancies on the weekends or during big releases? We're just trying to figure out how to think about indexing in the social distant I guess near-term opening world? And kind of how this could look. Obviously, you've put up some pretty incredible indexing. And if Tenet is the first movie, I don't think we should assume it should be as strong as Dunkirk or some of your historically successful films. So could you just kind of help us think about where occupancies are? And if you can adjust screen times and some of those things?

Sure. Well, first of all, no one at IMAX has seen it yet, but I've heard the movie is incredible and furthers the crystal and legend of doing really cutting-edge phenomenal storytelling. So I really look forward to that. And I know Chris really would like to come out with the film for theaters, but that's up to a lot of things including government regulations and the virus and all sorts of things. So we've started to study the capacity issues. And as you probably know a successful cinema chain over a long period of time, the occupancy rates are in the 15% to 20% range. So one way to think about it is that they have a big multiplex and they have a lot of screens in it depending on how much product they have, they can do pretty well with capacity constraints. IMAX, since it's a single-screen theater, has a different issue because let's say, arbitrarily, at the beginning capacity is going to be set at 50%. By the way, I should stop there and say there are no real rules on that; where that comes from is what was talked about in China, but no one has said that that's what's going to happen. But I think if that happens that will be for a period of time. And then after that period of time elapses, adjustments will be made. But if you look at the IMAX numbers and we've done some work on it, if a film opens in the U.S. to around $150 million a year, like if you look back at Captain Marvel last year, the IMAX capacity utilization on the opening weekend is around 50%. So that would mean that we wouldn't lose much. We wouldn't lose anything if the movie was $150 million or less. If there are bigger openings like Endgame, even that movie by the second weekend, that was down to about 50% capacity utilization in IMAX. So the place where it really would affect us will be opening weekend for a big movie on select days, Thursday, Friday, Saturday nights. And part of the goal of our marketing would be to figure out how we can move people from Saturday night by way of example to Tuesday night or Tuesday afternoon. And I think given the brand association between someone like Chris Nolan and IMAX, I actually think that that's likely to happen, and we'll design marketing tools around that.

That's great. Thanks, Rich. And then lastly just regarding the financial situations with your exhibition partners. Are there other things that you're considering to help them get through this period, whether it's sale lease backs on their equipment? I'm guessing most of them are in JV or hybrids or delaying receivables? And then also on that, and it's a different time, but when many of the exhibitors went through the bankruptcy process, I guess that was 20 years ago, did they close or change any of the arrangements with you guys? Or was that just too long ago to really have a data point on that? Thanks.

Oh, I remember that time very well. The number of theaters that were changed or canceled was minimal, almost negligible. There were just a few. Our arrangements with the exhibitors are important since they are our partners. The positive news for both them and us is that the capital markets have been favorable for financing exhibitors during this crisis. For instance, Cinemark raised $250 million, and AMC recently raised $500 million. This provides a solid financial foundation, so I don't see bankruptcy as a significant risk for many chains right now, although some smaller regional operators may be facing challenges. However, it doesn't seem to be a major issue at this point. We have been in business with many of these partners for a long time, and before some of these financings occurred, we assured many of them that we would support them. If they needed to delay installations or slow down payments, we were understanding. Now that they have regained financial stability, we aim to establish a more normalized business relationship with those who are still struggling, and we will continue to support them. Our focus isn't just on short-term results; we have been in business for over 50 years, and one of the keys to our success is our ability to collaborate with our partners. I believe we will maintain that approach moving forward.

Thank you. Best of luck.

Thank you. We'll now go to our next question now from Mike Hickey from Benchmark Company. Please go ahead.

Hey, Rich. I hope you guys are good. Thanks for taking my questions. Just two. First, thinking about maybe more of the economic stream that the world is going to deal with here. The recessionary environment that we're clearly in, can you just remind us how moviegoers behave in a recessionary environment? And how they choose between the premium ticket and maybe a cheaper ticket? And I have a follow-up.

The movie business in general tends to perform quite well in recessions. In fact, I think people see it as an affordable luxury. They might cut out a trip or a restaurant if they're open or vacation or things like that. But movies are still relatively low-priced way to escape and get away. And historically, cinemas have done well in downtimes. In fact, we looked at our own data from the post 9/11 period and the 2009 financial crisis, and our box office was either flat or up during that period of time. So I don't really see that as a significant headwind.

Thanks, Rich. It’s helpful. The second question, I guess this is not your first pandemic, obviously, this one is at a scale I don't think anyone has ever experienced before. But just curious what you've learned from prior pandemics and moviegoers' willingness to bounce back?

So the only real reference point we have was the SARS situation in Hong Kong and to some extent in Canada. So what I remember from Hong Kong was that they opened a little bit slow and were down year-over-year for the first few months, but the back end of the year when they reopened they were significantly up from the prior year. Again, I'm not sure it's a great analogy, because as you say, it was a lot smaller and a lot more isolated, but that's really the only data point we have.

All right. Thanks, guys. Best of luck.

Thank you. We will now go to our next question from Alexia Quadrani from JPMorgan.

Thank you. Thank you very much. Two questions. First is, do you see the studios perhaps reluctant to release films initially post reopening given lower luxury capacity suggesting the slate could be pushed out further? And then my second question, Rich, is do you see windows changing, I guess following this current style Universal, and more companies potentially considering a hybrid PLF versus theatrical? And I guess along those lines, does the potentially tighter window really impact your NOI?

I'll start by saying that the window doesn't impact us significantly because most IMAX movies run for two weeks or less. If it's a Chris Nolan film, that's an exception. Regardless of where the windows end up, it won't greatly affect IMAX. On the question of stability concerning windows, the studios being hesitant has a complicated explanation. On one hand, studios want to ensure theaters are operating at full capacity and that as many people as possible see their films. On the other hand, many of these films involve significant capital, high carrying costs, and subsequent windows that depend on the theatrical release, along with their own reporting and accounting challenges. They are motivated to move forward quickly. Certain filmmakers are eager to release their movies. For example, Chris Nolan is particularly motivated to have theaters opened and his movie released in July as scheduled. It's all about balance, and I believe there's unprecedented cooperation between studios and exhibitors right now. There’s almost daily communication as everyone seeks to determine likely opening dates and the best timing. People are truly collaborating to make this work. Before I move on to your next question about windows, I want to highlight that while there has been talk about the Trolls experiment, it's important to recognize that virtually every blockbuster has been rescheduled for theatrical release. People have speculated about the windows for a long time, and if there was ever a moment to abandon theatrical releases, it would be now. However, that hasn’t occurred, which reinforces the importance of the theatrical window for studios and filmmakers.

Thank you.

Thank you. We will now go to our next question today from Aravinda Galappatthige from Canaccord. Please go ahead.

Good morning. I appreciate the chance to ask my questions. I have two. First, Rich, considering the financial challenges faced by exhibition partners, particularly regarding the joint revenue-sharing agreements, might you need to make larger concessions to them? Specifically, if there are changes to the footprint, how much flexibility would they have to possibly reduce the current count? What options would be available in such a situation? Regarding the joint revenue-sharing agreements, is there a chance you might need to provide them with some flexibility, either permanently or temporarily? My second question is about receivables. Patrick, could you share the trends in receivables for April? I understand that in May, the balance is approximately $65 million, likely mostly with the exhibition partners. Can you discuss the duration and any changes you've observed since the end of the quarter? Thank you.

I'll answer your first question, which is, as I said to you before, the exhibitors are in pretty good shape right now, thanks to the capital markets and the prudent moves that they've made. We carefully negotiate all of our agreements including our joint venture agreements on a worldwide basis and they're binding contracts. So no, I don't think there'll be changes to those agreements. I think both of us put up a lot of capital in the JVs and we have model returns, and we expect those returns. With that said, when you talk about temporary, I mean, there are things like I mentioned earlier that they want to delay rolling out some joint ventures to preserve their own capital and that makes sense for them. So, certainly we would consider delaying it. There were other kinds of things that provided them temporary relief through a tight period of time. We're in business with them for a very long period in time and intend to be, but fundamentally changing our business deal is not something that we would entertain.

Sure, I'm happy to provide some insights. Currently, when we assess our receivables, our primary focus is on our build and accrued accounts receivable. Approximately two-thirds of this is attributed to the exhibitor side, while the remaining one-third is from the studio side. As expected, we haven't observed any significant changes on the studio side. However, we anticipate some changes on the exhibitor side, especially since theaters are currently closed. We are in active discussions with all our exhibitor partners and have a clear understanding of the situation. As Rich mentioned, these partners are important to us, and we are committed to finding ways to support them. During the call, we noted that we took a reserve against specific receivables, a significant portion of which was linked to the implementation of CECL, the new accounting guideline, which came into effect during a particularly challenging quarter. We believe we are well-positioned to handle this situation. Regarding concentration, it aligns with our expectations, remaining concentrated among our major partners. Approximately 20% of our build and accrued accounts receivable comes from our top three to five partners, indicating no significant concentration risk. Overall, we feel we are in a relatively solid position and are closely monitoring developments.

Thanks very much.

We will now go to a question from Vasily Karasyov from Cannonball Research.

Good morning. Rich, I wanted to follow up on your comments about blockbusters being rescheduled. If we look three, six, or nine months after movie theaters reopen, it's likely that there will be an abundance of blockbusters and IMAX titles due to the backlog of releases and new productions coming up, with limited openings available in a year. This could be beneficial for IMAX as the share of IMAX movies in the box office may rise, pushing out smaller films from studios like Lionsgate. Alternatively, this situation might lead to revenue cannibalization for you. Could you help clarify that dynamic? Am I considering this incorrectly?

I wouldn't say you're wrong, Vasily. However, I believe that most IMAX movies typically run for just one or two weeks. We have a lot of other films to feature in that time, which serve as fillers. If the situation you're describing arises, and there is sufficient spacing between movies—assuming we collaborate with studios to achieve this—it could work out well for us. It's important to note that the pandemic has caused a halt in production for several months, and the timeline for its resumption is uncertain. While things appear promising for 2021, I anticipate that the expected influx of films will likely be distributed more evenly throughout the year as production resumes, rather than overwhelming us at the start. Therefore, I don't foresee this being a major concern.

All right. Thank you.

Thank you. As we have no further questions, I would now like to turn the conference back over to Rich Gelfond for any additional or closing remarks.

Thank you all for joining us. It's been a challenging time for us at IMAX, and we recognize we're just a small part of the world, especially in light of the health care workers and sick individuals on the front lines. We've been using this time to innovate, prepare, and plan for a strong comeback. It's hard to believe it was just a few months ago that we had a record year and impressive earnings, which we shared in February. If those returns come back, I believe we will be well-positioned to thrive once theaters open globally. We appreciate your presence today, and I especially want to thank our employees for their hard work during this situation. Thank you for joining us.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.