IMAX Corporation (IMAX 24.00), which offers a great movie-watching experience, made an announcement after Monday's close detailing efforts to boost shareholder value. It will be a two-pronged effort that includes a new share buyback plan and a cost-reduction initiative that will lead to the elimination of approximately 100 full-time positions.
The company had a prior $200 million share repurchase program that will end this month. Under that plan, which began in 2014, IMAX repurchased 6.4 million shares that led to a 4% net reduction in shares outstanding. The new program, which was approved by the Board of Directors, authorizes the repurchase of up to $200 million of common shares by June 30, 2020.
In conjunction with share buyback efforts, IMAX is targeting $20 million in annualized cost savings, the purpose of which is to increase profitability, operating leverage and free cash flow. The cost-savings pursuit will include job losses that equate to roughly 14% of the company's full-time global workforce, which also involves positions at IMAX China.
IMAX indicated that it expects to report an aggregate pre-tax restructuring and impairment charge of approximately $15 million in 2017, with approximately $11 million of those charges recognized in the second quarter. The cost savings associated with the plan are anticipated to take effect beginning in the third quarter of 2017.
The company heralded its new buyback program as a sign of confidence in its growth prospects and pushed the notion that a more streamlined cost structure will facilitate operating leverage during both strong and weak periods of box office and allow for the pursuit of new initiatives that include original content and virtual reality.
IMAX, which has seen its stock plunge 23.6% this year, will provide further 2017 cost guidance on its second quarter earnings call in late July.