All right, let's get started. My name is David Karnofsky. I cover media, entertainment, and advertising at J.P. Morgan. Happy to have, at least with me, the first time at the conference, Natasha Fernandes, Chief Financial Officer at IMAX. Thanks for being here.
Thanks for having me, David.
Let's start big-picture question on how you think IMAX's position in the exhibition industry has shifted post-pandemic, and why should that be meaningful to investors?
IMAX has strengthened its position post-pandemic. We have several tailwinds to IMAX, and people, when they go to the movies, they wanna see blockbusters, and they want a premium experience. We've also shifted our position in the industry with filmmakers and studios. You know, we're now at the forefront of conversations, first with even filmmakers, and then coming alongside with studios to make sure, you know, the IMAX of it all is very present. And, you know, you'll see it in even articles and things that come out when they talk about movie releases, and it specifically calls out, "And it has an IMAX release," and that's not something you would've seen a few years ago. And, you know, you see this back in our results.
We're already back to 2019 box office, capitalizing on IMAX demand by growing our global network, opening that content aperture, and having other types of experiences and events happening in our locations. And then, you know, if you think about why is it meaningful to investors, well, it's all coming down to: How are we growing our bottom line, right? And it's growing through the consumer shift in demand and behavior, growing our market share. Globally, our market share, we had our best-ever domestic market share in Q1 of almost 6%. Which then, in turn, turns into, obviously, financial results. But then also just even our placement of being able to be at the forefront of conversations.
Maybe I'll ask one on the slate. Outside of the typical August slowdown, you have a pretty consistent, I would say, nicely diverse slate of content coming, notably better Q4 than last year. What are you most looking forward to? What could surprise the upside in terms of IMAX performance?
You know, the remaining 2024 slate has really good potential. If you sat and you lined up 2023 versus 2024, 2024 slate looks really good, and it's a perfect fit for IMAX. Furiosa is actually coming up really quickly this weekend, and the presales are really strong. It's actually stronger than Godzilla x Kong and Planet of the Apes with respect to presales, so that's doing really well right now. Q3 has Deadpool, which could be really huge. It's probably between that and Despicable Me are named as the top performers of the year right now, right? And then, you know, that leads us towards thinking Q3 will be a really strong quarter. And then you look at Q4, and it has Joker, and truthfully, everyone at IMAX, including Rich, is very excited about this title.
I mean, I think we'll index high. It's a Filmed for IMAX title. It's got film prints, and it's gonna go out to some film locations, very similar to the way Dune was, so it's gonna have the whole IMAX of it all in that as well. And then, if you look at some other titles, there's some good potentials in Q4 with Wicked, so there's this amazing world-building happening there, and Universal's already out behind it, putting marketing materials out there. Gladiator II, with some epic battle scenes, and it's been a long time since the first Gladiator. Mufasa, which is a perfect holiday title, and then we also have Venom 3, a film for IMAX title, so everybody who wants their superhero fix will get in there a little bit, too.
I can't believe you left out Beetlejuice. Beetlejuice-
Beetlejuice.
That's yours, right?
Beetlejuice.
Yeah.
Yeah. It is coming as well.
Yeah.
I remember that from my days as well.
Got it.
That'll be interesting to see.
All right. In the past, when I discussed the slate with Rich, I always start with that Hollywood first question, but we do have to cover local more in depth now.
Mm-hmm.
For investors less familiar with the theatrical box office, what's important to know about mix of Hollywood versus local, and what role are you playing there?
You know what's great, is over the last few years, you've actually seen a shift in our box office dynamic. So we've had about 20% of our box office coming from local language between last year and then even in Q1, and as we look forward, you look at what that opportunity is, and so we actually... You know, everybody was closed, right? So we had the time during the pandemic to hone in on local language and what wasn't working versus what could work, and we developed a new DMR in the cloud process.
We built out our studios relationships, our local language studio relationships, and created some slate deals with them as well, and that's what's actually created the opportunity for us, is we got some time to hone in on, you know, building out those relationships with local, local studios and really pushing that forward. You know, anime is a great example. It's, like, increasing consumer demand.
Yeah.
It's a great local-to-global strategy, so it's, you know, how we take Hollywood and we push it global. Well, now you're taking those local languages, and you're pushing those global, and you're bringing them back to North America, and so lots of opportunity there. What's great is it follows the same economics as our Hollywood deals as well, so you're still getting the same good take as, as we do in Hollywood titles, and it gives us other content, so you're not so reliant on Hollywood content. You're getting an opportunity for all of this other content, and in some regions, like in other worlds, in rest of world countries, like China or France and Japan, local language is more popular than Hollywood is.
Got it. 2025 slate looks really strong. Marvel, DC, Avatar, an F1 movie that looks like it was kind of made for premium. There's 10 films on there right now shot with IMAX cameras. What's driving that uptick in camera usage? How is that different, or how... Sorry, how is the indexing different when that applies? You also mentioned prints before. Maybe how widely can that be used? I know that's a little bit more limited.
Mm-hmm.
Yeah.
Well, actually, we... Rich was at Cannes last week-
Yeah
... and so we actually held a press conference there, where there were, like, almost 10 firms, and they, we unveiled, it was 14 films, filmed for IMAX for next year.
Okay.
So-
That's right.
It's actually-
Yeah
... it's actually increased us since we last talked. So I think, you know, it's more than double any previous year, which we're excited about, but, you know, I think it's just a win-win all around. IMAX film is creating this more immersive, sort of experience for consumers. It's resulting in higher demand and better indexing. We have the ability with prints. So you think about Dune 2 and even Joker, it's filmed completely on digital cameras, but we've then converted it to prints, and we're doing a limited release amongst, like, you know, 10 film locations- 15 film locations, and it's creating that Halo Effect for us, of wanting to experience it in IMAX and doing almost appointment booking, right?
Yeah.
Appointment viewing, and so that's what's been really helpful towards that whole piece, too. And, you know, demand and use for the IMAX camera has taken off. We've had so many people come to us with the IMAX camera, and so actually at Cannes, we actually talked about the film camera and that we have four in production, and we're starting to build out, you know, what could the next generation of film cameras look like? And we're working directly with filmmakers on those. So I think there's lots of opportunity there, too, to make sure we build the right one for filmmakers that they, they wanna use.
Got it. Outside of the cameras, what other tools do you or your exhibitor partners have to drive higher indexing on IMAX?
The cameras, the remastering, so our technology-
Yeah
... that's in the remastering process, you know, with respect to the creating the quality and the, and the image and the sound fidelity, creating the most experience, like, immersive theater experience. So sitting back and actually sitting in one of those bigger theaters and getting the sound, the screen, the quality, all happening because we have that 24/7 maintenance happening, and then, of course, the bespoke marketing. Like, you would've seen in, you know, you would've seen in Planet of the Apes, how IMAX was all over that marketing. And then Furiosa as well, it's just, "Experience it in IMAX." So you're no longer seeing, like, a list of 20 names across a poster. You're seeing IMAX and maybe one other, but in some cases, you're just seeing IMAX.
You know, working with studios and filmmakers to understand to market it specifically for IMAX and have our name built into that marketing.
Got it. I wanted to follow on one stat. I think you gave this either at a conference or on earnings, but it surprised me, was that your indexing on *Dune* grew in week two and then again in week three.
Yeah.
And I didn't understand it 'cause I thought, okay, it should've been the opposite, right? All the fanboys come out in week one. They want the IMAX format, then the more-
Mm-hmm
... casual audience step in. What's going on there?
That's, like, the best phenomenon ever.
Right? Right. I'm saying it's surprising.
It just keeps growing week after week after week.
Yeah.
But I think that's exactly back to the appointment viewing. That's what happened. It's, you know, you couldn't get a seat on weekend one, so you waited, and you-
Yeah
... booked Week 2 or Week 3, and I think it's clearly apparent between both Dune and Oppenheimer that the film for IMAX titles really do well with that. And, you know, people have the patience to wait now. Like, the one thing about what's happening now is you're not worried about an Easter egg getting out, right?
Yeah.
Some of these titles, like Oppenheimer and Dune, you're going for the drama and the effect of it all, so you just want to experience it, and you're willing to wait for that best experience.
Got it. Okay, you've stated, I think previously, your screens are kinda basically booked from, like, May to September of next year. I'm curious, when we've looked at the slate generally, we've always been surprised studios don't take advantage of slower periods. If you look at this year, seems like the first third of the year had a little bit more room. You see room for the kinda slate to extend into quieter periods? Can you play a role there to facilitate that?
I think, you know, there's a complete opportunity. Just 'cause something has been labeled a blockbuster period before doesn't mean it's always a blockbuster period going forward. I mean, look at March. *Dune* released March 1st.
Okay.
It's not typically a blockbuster period. I think there's an opportunity that if you put a really good, quality content, piece of content out there, that we could definitely create an IMAX halo effect around it and make it perform well. And I think we need to start thinking through that, that there's 52 weeks in a year, and every week is a week where people would go to the movies. There's nothing stopping you from going to the movies in January versus in June, right? So I think, you know, if there's good quality, that you can definitely do that. And then, you know, as you think about it, we also have that opportunity with the experiential content and the alternative content, so pushing that forward in those periods. We did Queen Rock in January, right? A weekend in January-
Yeah
... and made $5 million on that weekend. Like, I think that's where you get the opportunities to then fill in the slots that Hollywood's not taking and push some more box office through the IMAX network.
Yeah, and I was thinking, if the studios aren't allowed to talk to themselves, right, you could say-
Oh, they're allowed to talk to us.
Right. Someone's gotta take this,
Yeah, yeah
... mid-January.
Yeah.
Yeah. Maybe get the Super Bowl sold. I don't know. That's a long shot. Okay, so as IMAX's position with studios has become more important, what are some positive implications that come with that? So for instance, one of the more interesting comments I thought on a prior call was when Rich indicated that there had been some increased flexibility from your partners, studio partners, I would say, to book alternative content during the weeks. Maybe that's one thing you can talk about, but, you know, how else could this benefit you?
Yeah, I think it's a give and take. You know, when there's more competition for the windows, then they'll ask for greater IMAX alignment and, at times, flexibility. But, you know, I think we view. We're very smart on the way we view our relationships, and we view our relationship with studios as partners. So we work together on that. And, you know, you mentioned having conversations. We're always in conversations with the studios as to timing and what could happen. You think about A24. We actually started a slate deal with A24, for an iconic film series. So they're just bringing back iconic films from their library. I think this week there's Uncut Gems, is what's getting released this week, and we've already done two others.
But it's great because it's creating, like, this additional piece of content that people get an opportunity to see, and it's enabling us to create higher utilization in the IMAX locations. And then internationally, there's always been more flexibility 'cause we don't necessarily lock in the international releases, right? And so you have the opportunity to program what fits local tastes better, and so I think that all works nicely together to create that higher utilization for us.
... Got it. How about the take rate, right? Your take rate from studios is fairly consistent. Sometimes there's been a bump in specific periods. I think that's associated with certain films. Any opportunity to kinda increase that over time, or is that not really the driver?
I wish. I wish.
No, no, I'm saying you're becoming-
Yeah.
You're becoming more important, right?
Yeah.
I mean, the IMAX releases-
Yeah.
Yeah.
And we are, and I think that's where the fact that we get 12.5%, and it's been steady, it's been consistent over decades. I think that's a pure sign of exactly what of how valued we are, the fact that that has not changed. But where the opportunity lies is the conversations that we're having around other deliverables, like marketing, versioning, early release dates, earlier releases than for an IMAX location versus others, doing Q&As with directors and filmmakers. So I think that there's other ways of grabbing opportunities aside from the straight take rate off the top, but I think, you know, that's where you get the opportunities from them.
You mentioned before utilization, the partnership with A24 to bring in more content during the week. I guess that leads into a conversation around alternative content. Part of that, I think, is you've brought some older content back, right?
Mm-hmm.
Queen Rock.
Mm-hmm.
That was successful for you. The indexing was good. Sorry, the margins were good. With regards to older content, like, what's the wider opportunity here, right? If DMR costs are coming down, can you, like, re-screen older films, things that should've been on IMAX 40 years ago, but the tech wasn't there yet, like?
I hope you went to see Jaws and ET, 'cause they, we did bring them back-
Right
... last year after 40 years. So there's definitely opportunity. I think, you know, what, what was great out there? What could we bring back? Could you bring back, you know, if you're, if you're doing... I don't. It's not happening, but if you did Gladiator, and you brought back the first one, and you wanna do the second one, or if there's other titles that you wanna see first in a, in a series and then see the next, installment, I think there's lots of opportunities there. I mean, concert series, definitely there's an opportunity. You look at Queen Rock, we did, before that, we did, The Beatles. You know, we did a small event with André 3000, but we're doing Beach Boys next week, a documentary with Beach Boys.
So, you know, lots of opportunities with respect to concert films, and there's a whole library out there of concert films that have existed for decades. So, you know, sifting through them and seeing what will work, what could we DMR and make it into a really good high-res and quality, fidelity for us, I think that that would be a great alternative to push through.
You have to do the event around it, too, right?
And you do a full-
Bring the band back together.
Exactly!
Right.
I mean, we did that with Talking Heads, the Stop Making Sense Tour last September, and I was there. And that entire cinema in Toronto was like, everybody was standing and dancing, and it was all... What I found interesting is, it was all different generations. It's not like just a, the generation from 40 years ago. It's a generation now, too. So I think there's lots of opportunity.
Got it. Maybe, just moving forward to your, your theater relationship, so at earnings, you disclosed 17 signings year to date. That pace was off a little bit from the same time last year, though Rich kind of talked about activity remaining high, more announcements to come. I think more announcements have come. Any update to provide here? And have you observed any momentum shift in terms of interest from the exhibition, community?
Yeah, our sales pipeline is stronger than ever that I can recall, and I've been here 17 years. I mean, the pace is picking up. At Cannes, there was a lot of momentum behind those conversations. Our head of sales attended it with Rich as well, and they had lots of conversations with exhibitors, not only in Europe, but exhibitors who were from different countries that were there, including from China. And so I think that there are opportunities. Since earnings, we've done a 10-system deal with SM Cinema in the Philippines, and we've done another 3-system deal with Megarama in France. And then, in 2023, on the back of Avatar's success, I mean, we signed almost 130 systems, right? Which was almost 3 times the year before.
So I think there's lots of opportunity, and you think about even in the States, we just signed a deal with EVO last year for 8- systems. So even regions that you think may be, you know, fully, you know, populated, then there's still opportunities with respect to what could an experience look like for IMAX in those regions. And EVO's great 'cause it's that experiential environment where, it's a complex that has, like, restaurants and event and other activities and then a few cinemas. It's not like a 20-plex, right?
Yeah. And just remind, I mean, for the audience, like, the process of going from, you know, signing, it's in the backlog, to a build. Sometimes you're signing and building immediately.
Mm-hmm
... sometimes it's extended. What are the factors that kind of drive that?
Yeah, so it depends on. We could do a sign and install, meaning you sign it this year, and you install at some point this year, and that's because the complex already exists. And so really, it'll only take us a few weeks to go in and pull out whatever technology is in that box and put an IMAX system in. But the other opportunity is if it's a new build. If it's a new build, it could take, you know, somewhere between 1-3 years, depending on the construction timing of the exhibitor and their plans. What's great about our backlog, if you even looked, you know, over the past five years, it's remained steady.
Like, we're at about 450 systems in backlog, of which almost 400 are new for new footprint, and we've been growing our footprint about 5% a year. I think, you know, as you look at that, we continue to install. We guided this year 120 systems- 150 systems for installations, and as you install that, you're then replenishing it with these signings. So lots of opportunity with respect to not only sign and installs but then also creating a flow of future installations to solidify that continuous growth every year.
On the 120 systems-150 systems, the mix was pretty similar to last year in terms of, right, JVs versus-
Yeah
... I'll use an old term, and you know, sales-type leases, and upgrades and non-upgrades. Any reason to think that mix would change over time or, you know, should we expect that to be relatively steady? I mean, I should think about that.
It's been pretty steady overall, and I mean, and even the backlog, it's pretty even, evenly mixed right now. But I think there's an opportunity to do, whether it be JVs in countries where there's high, per-screen averages-
Right.
I think that's an opportunity for us. We have a really healthy balance sheet, and so if I was thinking about capital allocation, I think there's an opportunity where we put up the capital and do that model so that we can get the higher return through the JV rent, like the film rental returns. But the other thing we've been moving towards are hybrids, so sort of that mix between a sale and a,
Yeah
... and a full lease, where they all the cost of a system is covered, but then you get a higher percentage rent. Which, you know, as you look out to years of 2025, 2026 even, with the film slate coming in 2026 as well, if you have higher box office periods, then you'd rather have a network that you're getting to have film rentals on, 'cause that's when you start to get all that incrementality in the model.
Right. So the balance sheet becomes a strategic asset for-
Oh, yeah
... the future.
We have a great balance sheet to do that off of, so.
Right. I think you've estimated global penetration at a little under 50%. That breaks down to 55 in the U.S. and China, approximately 35 for rest of world. Where are you most focused in terms of filling out the opportunity right now?
Yeah, as you said, we are only 35% penetrated, which gives us a lot of opportunity in the rest of the world market. We have a huge opportunity with respect to growing market share. If you looked at the market share for rest of world, we're at only half of where we are domestically. So even taking that up 1 point would make a significant difference financially for us. And, you know, I think if you think about even domestic, 20% of our signings were in domestic in 2023, and even 20% was in China. So I think there's still growth in even the other areas, too. But if I was thinking about where we could really expand out significantly and make an impact right now, would be Japan.
We only have about 50, 55, 56 there currently, and there's opportunity for 100+ over there, and they have a really high per-screen average that's approaching $2 million, and that's because of the local language content play, as well as Hollywood. Australia only has two in that entire country, which we know it's zoned for 40. India, there's only 40, and if you think about the opportunity in India with respect to Bollywood content and all the other dialects that they have now, too, I mean, there's lots of growth that you could have, we could have there. I think we've zoned it for 150. Germany, France, the Middle East, you know, all areas that we're focused on right now.
And so for some of these markets with a low penetration, what becomes the thing that gets the ball rolling ultimately? Is it the theater owners, and they're kind of looking at this and saying, "All right, how do I generate traction?" And then places like Australia, right, that's a big opportunity. Or do you have an established brand mark, brand in some of those markets?
Our brand is growing in some markets, but we do have an established brand in some of them, like Japan, for instance.
Yeah.
You know, what's been interesting is as you start to have the conversations and the exhibitors think, "Okay, those zones have been there. I have time. I don't really need to react," well, then all of a sudden, we sign a deal with someone. So in France, we did that last year. You sign a deal with someone, and suddenly it's like this.
Yeah, let's go.
... you know, supply-demand, right?
Yeah.
You create the competitive forces that help you have those conversations sooner, because what they were waiting on before, they no longer can wait. Because if the zone goes away, we're not willing to... You know, there's no zone left, so they have to really come to the forefront and the table quicker now.
Yep. How about domestically, right? You could argue, IMAX maybe faces some competition from exhibitor-owned formats or exhibitor-owned PLF formats. As you look to open zones in the U.S., I think there's around 250, you know, do you have to get additional buy-in from circuits that, you know, haven't engaged with you as much? What, what can you do there?
So, I don't think exhibitors own PLFs or anything like IMAX, for sure.
I know. I knew I teed you up for that. That's why I tried to...
Okay, they perform well, but they're definitely no IMAX.
Right.
And so I think if anybody doubted whether IMAX was a PLF, I think Dune 2 clearly showed it.
Yeah.
Like, one in every five tickets across the world so sold in IMAX. Like, that is unbelievable when you think about the fact that we're on less than 1% of the screens. I think we have tremendous opportunity still to grow domestically, with both existing and new partners. You know, I think we have quite a few domestic partners that that still have even runway. We have them in our backlog. We have more, more deals that are pushing out now. Then I mentioned EVO a little earlier. We signed with new partners like EVO. But with the successes of Oppenheimer and Dune, I think it's just clearly evident that without having IMAX, you won't perform as well. Like, you have an opportunity to expand your box office by having an IMAX location, and it's clear.
It's in the numbers. It's, like, clearly shown, and you can see it. Like, anybody who had an IMAX location for Dune, for Oppenheimer, you know, probably for Deadpool and Joker, like, particularly the film, the ones that get filmed for IMAX, that's where you get the big opportunity, and I think the Halo Effect onto those complexes is evident, too.
Got it. I want to circle back to just to China. I was going to ask on box, but I also just want to ask on installs, right? I mean, previously, going back years ago, that was a real big focus on the install side. Still a substantial amount of installs there. Maybe just refresh us on kind of where the footprint's being out, what the opportunity is in that market.
Yeah, I think we did a really good job a few years ago when we did the IPO, taking that capital and really pushing out and creating growth in China. And so we have over 700 locations there with an opportunity to double that. I mean, really it comes down to strategically stepping back and saying, "How much do we want to continue to grow in China and use our capital there? Or how much would you want to go to the rest of world regions where, you know, the per screen averages are higher?" So not that you would not grow in China, but would you grow at the same rate, or would you use your capital somewhere else? And I think that's where an opportunity lies. 'Cause as we look at China, we have a really strong presence in China.
Our brand is well established, we perform really well on local languages and on Hollywood. Holly- I mean, Planet of the Apes, we've been doing almost 15% of indexing.
Fifteen? Yeah.
Yeah. And so if you think about, you know, what's our opportunity over there, I think our opportunity over there is to really focus on utilisation and to increasing that, as opposed to creating a lot more new locations. Now, of course, we're gonna still expand in China. We have a great agreed commitments, and we're gonna continue. We just signed a new deal with, Hengdian last in Q4, for another 20-system deal, I believe. And so, you know, if we-- we're still expanding, but will you expand at that same rate that we did back in 2015, 2016? Probably not, because I think, you, you should look at capital allocation. You'd wanna use it in other regions now, too.
Yeah, makes sense.
Yep.
On the box office there, I think that was your softest region, box office-wise, growth and absolute in Q1. There's some noise there, right? Difficult *Avatar* comps, there were some local comps. But can you talk a little bit about what you're observing in that market in terms of moviegoing index? I know you just talked about *Planet of the Apes*-
Mm-hmm
... 15%.
Mm-hmm.
What's it been kind of generally? You know, any other incremental color would be great.
Yeah, I think, you know, Q1 was not as strong in versus the other regions, due to, you know, the Chinese New Year. There wasn't no large blockbuster. It was mostly dramas. And then the Hollywood content hasn't been performing as well over there right now. But I think, you know, I think there's been steady improvement. I think that there's an opportunity for us to expand the way our brand is even looked at over there. So not simply large blockbusters, but, like, how we did Oppenheimer here last year, a drama-based film or scientific film. Like, you know, we could do other genres, and I think that's, you know, getting our brand in China associated with the local language dramas is really gonna help us as we move forward over there. I think that's a really good opportunity. Plus, alternative content.
We actually just announced a deal with NBA China last night through IMAX China, where we're gonna do the NBA Finals. And so we're trying that out on a test number of screens in Hong Kong and Taiwan. And then, if that works, hopefully there's an opportunity to expand that through mainland China, if it, you know, goes through the censorship pieces that it needs to. But I think, you know, could alternative content, like how we're doing it here in the States with concerts or, you know, we did the Suga release. So are there opportunities over there with local artists in China to create other types of content that will bring in consumers to the theaters as well?
Right. There's a lot more flex to-
Oh, yeah
... do that type of content. Yeah.
If it's local, local artists, I think there will be. So the only thing is if it's-
But that's probably also where the opportunity is.
Yeah, exactly.
That's right. You're not gonna bring, I guess, an A24-
They don't want The Beach Boys over there? What?
The Beach Boys. Sorry, that was a better example.
Yeah.
Okay. I wanna just shift to margin. So IMAX is guiding to a target of 40% in 2025, roughly 40%, relative to high 30s in 2024. What are the key factors to think about when we look at your long-term trajectory? Is it all kind of operating leverage off a higher box? Are there other kind of factors in your control that you're focused on?
There's significant amount of operating leverage that we have in our margins, especially from your, as you said, from the higher box office, as we expand that box office. But expanding that box office comes from also expanding our network. So as we expand our network, it expands our box office, and as well as we have the whole Film for IMAX of it all, which in 2025 is gonna be very evident with the 14 plus titles, then all of that comes through the bottom line. Like, you look at Q3 last year, it was our best Q3 ever, and we had EBITDA margin of 49%. So you start looking at what's that opportunity.
Then the other part of that is, I expect steady improvements in our margins overall as we look at, you know, continuing to look at our costs and how can we create economies of scale in certain areas, and then also the streaming consumer business. So while it's still small right now, it has very high margins to it. So, as you grow that out, that will make a difference as well.
I'll come back to SSIMWAVE in a second, but maybe one more on CFO-type question. Working capital has been a little bit of a drag in the post-COVID period. Pre-pandemic, it was-
Mm-hmm
... kind of more flattish if you looked at it on a multi-year basis. Can you talk to the dynamic here? Would you expect this to reverse, move back to neutral, over time?
I do expect it to reverse and become a contributor, actually. It, you know, I think that there's just a dynamic we're experiencing right now. You looked at, you know, Q4 and the weaker slate that happened in Q4. It's just a timing thing with respect to when do you receive in your cash, and your working capital all flows through. And so, you know, I think you need, we need to remember that the exhibitors went through a very long period of COVID and trying to recover, and now everybody's returned to health, and so you'll start to see all of that free cash flow kinda come through the model. And if you looked historically, you know, the free cash flow conversion was higher, much higher. And so I see that opportunity coming forward.
And then, you know, as a management team as well, we're actually focused on free cash flow now. It's one of our metrics that we're being held accountable to. So I think that that helps us as well, as we look towards, improving that metric.
Got it. Very helpful color. About four minutes left. Anyone in the room wanna ask one? Nope. Yeah, right here. Yeah. So, well, the wind- Oh, let you get the mic.
... Thanks. So when you're doing the JVs, how do you evaluate them, for example, hurdle rates or how do you deploy your capital in there versus it looks like the last five years you closed out quite a bit of your stock and buybacks, but then again, 2013 to 2020, you also closed a bunch of buybacks. So how do you figure out how to allocate that capital, and how do you know that you should put capital to work in India or China or somewhere else?
Yeah, so we actually have a committed backlog where we schedule out what our installations are gonna be, and so we know what we're committed to with our exhibitor partners with respect to number of JVs or not. And then also, as we look at just the sign and install as well, there's that opportunity too. So we allocate out a certain amount of capital for JVs and the system expansion, which system expansion is long-term growth for us, right? Especially in years that are, like, that are coming up for 25 and 26, when the higher box office levels are expected to be evident.
But then, as you sit on some other cash or excess cash or even drawing into the revolver, which we've done this past quarter, to do buybacks, we really think it's important to support our stock price if we feel like there's an opportunity. We've done almost over $100 million in the past few years, actually. So we did $80 million in the year before that, and I think, you know, we've bought almost 19% of our shares outstanding back, and it's been a good use of our capital. I mean, you kind of have these streams. You have investment in JVs, we have buybacks, and then you have M&A activity, and so we did SSIMWAVE a couple years ago.
We're not a very frequent M&A firm, but if we do, it would be an impactful one that we would look at, but not very large. So I think, you know, we have an opportunity with respect to buybacks to continue. We feel like it's a good use of our cash to buy back our own stock. It's a good investment for sure.
At what level is an exceptional use of the capital?
So we don't guide to how much we're gonna buy back generally. I think we, you know, we've just been doing that on an ad hoc basis. We have a pretty, active management team that's involved in that process, including Rich, our CEO, and myself. And so we're, we're always looking at what the prices are and what's our opportunities. And then it's just a, you know, an evaluation between how much debt, what's the, what's the rates, what's the buyback tax, all of those components that you, you contemplate in making that investment.
Okay. Unfair to do this in two minutes, but SSIMWAVE, you talked about it, higher margin business. What's the opportunity for in-home? What are some emerging use cases you're excited about?
Yeah, we're still very excited about SSIMWAVE. We actually have rebranded the whole thing. We, it's now called Streaming Consumer Tech, so it includes SSIMWAVE plus IMAX Enhanced. It's in our other sort of segment in our, in our financials right now, but, you know, as we look at 2023 was our foundation year of building it out, bringing on a new sales team, actually doing some R&D and creating a better product that's more plug-and-play. When we bought the company, we... The product that we bought, it actually, in order to sell it, you'd have to take down the tech stack at another company and put it in. So this now, the R&D that we did, it's now more plug-and-play.
It can sit on top, and the great thing about that is, you know, for streaming companies, we've done studies, and it can save them, you know, 20% plus of streaming costs just from bandwidth savings and transmission costs. And, you know, you think about an opportunity for companies to save money where they've been losing money, this is it, right? And so, what I see that being a huge contributor towards the future-
Right
... and an opportunity for us. It's just getting sort of those legs in place. We were actually at NAB in April, and we had over 200 meetings. We did a panel with Disney+, I think, and that went really well. They're using our StreamSmart product. So I think, you know, as we work on building out our future with that, I'm excited about it.
Great.
It's a new term for us for sure, too, which is great.
Yep, always good to hear.
Yeah.
All right. Thank you, Natasha.