Good day and welcome to the IMAX Corp First Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brett Harris. Sir, please go ahead. Thank you. Good morning, everybody, and thank you for joining us for today's First Quarter Earnings Conference Call. Joining me on the call today to review the financial results are Rich Gelfond, Chief Executive Officer, and Patrick McClymont, Chief Financial Officer. Megan Colligan, President of 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 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'd like to remind you of the following information regarding forward-looking statements. Today's call, as well as the accompanying slide deck, may include statements that are forward-looking in that they pertain to future results or outcomes. These forward-looking statements are subject to risks and uncertainties that could cause our actual future results or occurrences to differ. Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information, future events, or otherwise. During today's call, references may be made to non-GAAP financial measures. Discussion of management's use of these measures and the definition of these measures, as well as a reconciliation to non-GAAP financial measures, including adjusted net loss, adjusted EPS, adjusted EBITDA as defined by our credit facility, are contained in this morning's press release and in our earnings material, which are available on the Investor Relations page of our website at imax.com. With that, I'll turn the call over to Mr. Richard Gelfond. Rich. Thanks, Brett, and good morning, everyone. Thanks for joining us today. Since its earliest days, the pandemic has invited a guessing game of how the world will change when COVID-19 is finally mercifully behind us. But we believe the post-COVID future of entertainment is coming into view for the first time, and that beginning of a cultural and behavioral shift is at hand. For the past year, two things have been invariably true of global customers. One, they've been stuck at home, and two, they've had a brush with mortality and thought about it. Streaming media sustained many of us through the lockdown, and it did a great job of it. It turns out people stream a lot of TV, particularly when they're locked in their living rooms, and it's the only thing they can do. But the data shows people are ready for more. Having lived through lockdowns, we don't believe consumers will be content to stay in their homes. We believe they will lean hard into experiences, opportunities to express the personal freedoms they lost, be around other people, and expand their worldview beyond the couch. We see signs that the experience economy is poised to come roaring back: travel, live music, sports, theater, and yes, the movies. And the cinema continues to be among the first forms of out-of-home entertainment to come back online in many markets around the world. It is a widely accessible and affordable experience, but one that's nonetheless immersive, transporting, and most importantly, communal. And the premium IMAX experience is the biggest, best, and most globally renowned cinematic experience you could get on the planet. That's why we've helped lead the global film industry out of the pandemic in Asia and why we're beginning to do it around other parts of the world. For all its challenges, the pandemic has revealed many strengths of the IMAX business. We are the only global out-of-home platform for blockbuster entertainment. We're in 84 countries and territories worldwide. We've taken advantage of markets on the road to recovery and weathered markets that remain closed. We've leaned into our strong network in Asia as audiences there return to cinemas in numbers beyond even pre-pandemic levels. In China and Japan, local blockbusters are shattering box office records and driving increased IMAX market share despite capacity limitations. After the successful reopening, there is now, in other parts of the world, it is now spreading to other places, most notably the very encouraging performances of Godzilla vs. Kong, Mortal Kombat, and Demon Slayer. We have a flexible asset-like business model. We've withstood the temporary closure of theaters and aggressively managed our cost structure, maintained our liquidity, and preserved our balance sheet. Our ratio of fixed to variable costs allows us to be very nimble. We don't own significant real estate. We're not burdened by leases. We don't have staffing at our theaters, and as global markets reopen, we're able to bounce back quickly to generating box office, essentially flipping a switch without significant startup costs or lead time. We're an in-demand global brand. In the post-pandemic era, it is clear people will turn and are turning to brands they trust. Studios are prioritizing IMAX release windows so they can lock in their slates, while filmmakers want more IMAX DNA and technical support for their films. We've added more than 80 new systems to our network during the pandemic as exhibitors look to IMAX to reinvigorate their business upon reopening. Consumers want the most immersive experience as they return to the cinema, and they are choosing IMAX. We continue to see that. Where the virus is under control and people feel safe, audiences are eager to get out of their homes, return to the movies, and most importantly, return to IMAX, and as the momentum of the global reopening is evident in the financial results we report today. As the industry turns the corner, two key strategic things have become clear. One, global pent-up demand for moviegoing is real and is strong, and two, IMAX's unique position at the center of the global ecosystem is as important as ever. This creates a world of opportunity for IMAX. I'd like to quickly touch on a few things today before handing it over to Patrick. Progress on the reopening of our global network, which demonstrates the durability of moviegoing and near-term opportunities for IMAX, accelerating momentum in our industry, operating performance, and recent results as the success we've seen in Asia starts to spread to other global markets, and finally, our compelling strategy and market position as we look ahead to a post-COVID world. First, the global network and the slate. The encouraging signs we see at the Asian box office grew even stronger in the first quarter. In China, the box office rebound and the robust pickup in installations drove revenue recovery to pre-pandemic levels of $26 million, in line with our first quarter of 2019, and that's without Hollywood films. We continue to deliver strong box office and grow indexing across both local language and Hollywood titles. It's a trend that extends to Japan as well. IMAX has now delivered its number one and number two all-time highest grossing Japanese films during the pandemic with Demon Slayer and Shin Evangelion, and that's the highest grossing films of all time in IMAX. Since last April, we've achieved a massive $1.2 million per screen average in Japan, again, largely without Hollywood films. The first quarter also gave us conclusive proof that pent-up demand for moviegoing exists beyond Asia. Godzilla vs. Kong blew away expectations and has grossed more than $400 million at the global box office, and six of the film's top 10 highest grossing markets in its first weekend of global release were outside of Asia with very strong performances in North America, Mexico, Russia, Spain, Australia, and Saudi Arabia. More recently, the domestic box office saw its best week of the pandemic era last weekend with the North American debut of Mortal Kombat and Demon Slayer. We continue to see opportunity for the remainder of the year with blockbuster releases including Quiet Place 2, Fast 9, multiple Marvel films including Black Widow, James Bond, Dune, and Top Gun, and many of those have IMAX DNA in them, and 2022 looks to be remarkably strong with multiple Marvel and DC films as well as new installments of Jurassic World, Mission: Impossible, and of course, Avatar 2. Just this quarter, we re-released Avatar along with the market in China, and only 1% of the screens. We did about 30% of the re-release. Turning to our results, IMAX continues to drive financial improvement. In the first quarter, we delivered year-over-year quarterly growth in revenue, gross margins, and EBITDA, our first quarter of year-over-year box office growth in the pandemic era. With the robust state of the capital markets, we chose to add additional liquidity through a convertible debt offering. I'll let Patrick walk through the details, but the headline is this: We're able to add more than $200 million of additional liquidity while significantly reducing our total annual interest cost. While we have always benefited from a solid balance sheet, this transaction gives us additional security and the flexibility to invest in our business for years to come. I'd like to look at IMAX beyond COVID. Given the early trends we are seeing around the globe, we are very confident in our position in the out-of-home entertainment market. To build on our momentum, we're exploring ways to leverage our brand and technology for in-home entertainment and the streaming market. Through IMAX Enhanced, we optimize blockbuster content for in-home consumption and provide the best movie experience outside the theater. Using our proprietary technology, we digitally remaster exclusive content to be delivered through high-end consumer devices and streaming platforms around the world. IMAX Enhanced is available to stream in markets including North America, Europe, China, and Japan, and IMAX Enhanced certifies devices that can be purchased through more than 20 leading consumer electronics manufacturers, including Sony and TCL. In the first quarter, we unveiled our single biggest drop of new enhanced content yet, adding more than 50 new Sony titles and international hits, including last year's top box office performer, The Eight Hundred, out of China. More than 100 films are now available through Enhanced from recent hits like Spider-Man: Far From Home to classics like Top Gun to incredible documentaries like A Beautiful Planet, and we will continue to grow that ecosystem with new partners and more content. In tandem, we've worked hard over the last year on an artificial intelligence strategy to understand whether there is a significant business in using machine learning for image enhancement. We believe we can develop potentially transformative products meeting the need for fast, effective, and low-cost enhancement across professional and personal content, and we bring real, unique advantages to the table in this effort. IMAX film cameras capture images in stunning 12K resolution. We have greater access than anyone to the best, highest resolution content in the world over the last number of decades. That content is unique, and it's invaluable in teaching an artificial intelligence tool how to up-rez content. Furthermore, our relationships with creators and content owners put us in a prime position to market such a solution. As such, we've created IMAX AI, a joint venture with an AI company called Maximus, founded by entrepreneur Dr. Daniel Nadler. Daniel is best known as the founder of Kensho Technologies, an AI and data science firm he sold to S&P Global in 2018 for $550 million, at the time the highest sale of any AI property ever created. Maximus brings not only pedigree and proven success but an entrepreneurial, agile approach. We've been working with Daniel and his team for a year as our post-production and tech teams help develop a proprietary algorithm that can up-rez content to 4K, 8K, and beyond, and most importantly, at very high speeds and low costs. We see virtually limitless applications for such a solution, from high-speed enhancement of library content for streaming to real-time up-conversion of live sports and entertainment to potential technologies for consumer devices. Think of the decades of content stuck in standard definition and untapped for streaming: classic sports footage, iconic films and series, important news and documentary content, or what you could do with live up-conversion in a world of increasingly globalizing sports leagues. Over time, we believe this JV will develop new products and services that will help us continue to grow our IMAX Enhanced business as well. And as such, we've moved IMAX Enhanced under the IMAX AI joint venture to ensure these efforts are tightly aligned. In sum, we see a potentially large market opportunity leveraging our strong brand, technology, and relationships without material OpEx or CapEx investment. We look forward to sharing more of this as our partnership progresses. To conclude, we are encouraged by the signs we're seeing in the global marketplace. The IMAX experience has been in strong, growing demand around the world, and we are strengthening our position as one of the world's premier entertainment experiences. We look forward to building on our unique, privileged position in the entertainment ecosystem, driving new opportunities for growth and creating value for our shareholders. On a final note, as I'm sure you read in our press release, Patrick McClymont will be leaving IMAX next month to embark on a new chapter and taking a role as CFO of a private company. On behalf of all of us at IMAX, I want to sincerely thank him for his lasting contribution to the company. He has been a trusted, valued partner to me and our entire senior management team throughout the tenure as we continue to grow our network and strengthen our global brand, and particularly as we've navigated through the issues over the past pandemic year. Patrick, I wish you and your family all the best of luck and success as you move on. As we search for new CFO, I'm very pleased to share that Joe Sparacio, who served as CFO for IMAX for nearly a decade immediately prior to Patrick, is rejoining the company on a temporary basis as interim CFO. Most recently, Joe served as Chief Financial Officer of Entertainment One. There he served under Darren Throop, CEO of eOne at the time and a longtime member of the IMAX board of directors, and Joe was instrumental in eOne's $3.8 billion sale to Hasbro in 2019. Joe's knowledge and expertise with the IMAX business will help ensure a smooth transition as we complete our search for a permanent replacement for Patrick. Thanks again for all of you for joining us today. Please continue to do everything you can to stay safe and healthy. With that, I'll turn it over to Patrick. Thanks, Rich, and good morning, everyone. I'll start by thanking Rich and everyone at IMAX for a hugely productive and enjoyable four-plus years. I'm proud of everything that we have accomplished. It has been both professionally rewarding and extremely fun to work with such a highly capable and motivated team. While leaving a great situation is always a tough decision, I'm ready to try something new and very different. I'll be joining a private company at an early stage. I'm looking forward to a different experience and new challenge, having spent the bulk of my career at well-established global firms. I specifically want to thank the IMAX Finance team, who I've thoroughly enjoyed working with and who have added so much value for IMAX. I leave confident that the finance organization is in great shape and the company is in excellent financial position. As we proved through the pandemic, IMAX is a powerful global brand, a robust and flexible business model, and a strategy that will deliver long-term growth as our fans around the world return. As Rich mentioned, we posted another quarter of sequential box office improvement as our business in Asia continues to capitalize on a strong slate of local language films and substantial pent-up demand for out-of-home entertainment. Our results once again demonstrate our differentiated financial model. We are an asset-light licensing business with low fixed costs, minimal ongoing CapEx requirements, and high incremental margins. We ended the first quarter with $268 million in cash and $283 million of debt. $112 million of cash was held at IMAX China and $156 million at IMAX Corp. Our strong financial and operating results allowed us to access the capital markets, raising additional liquidity at very attractive rates. In March, we closed our convertible debt offering, raising $230 million of five-year convertible notes with a coupon of 50 basis points and a conversion price of $28.75, a 35% premium at the time of the offering. We purchased a capped call, which effectively raised the conversion price of the shares to north of $37 per share or a 75% premium. After taking into account the price of the capped call, our effective cost of debt is approximately 2.2%. We repaid $255 million of our revolving credit facility, leaving $45 million outstanding, and we completed a second amendment to our credit facility. Under the amendment, our senior secured net leverage ratio covenant is suspended through the first quarter of 2022. Additionally, for the second and third quarters of 2022, while we will be subject to our three-and-a-quarter senior secured net leverage ratio covenant, in calculating trailing 12-month EBITDA, we can substitute quarterly EBITDA from Q3 and Q4 of 2019 pre-pandemic. This will be in lieu of EBITDA for those quarters of the corresponding quarters in 2021. Combined, these steps provide flexibility and clarity through Q3 of 2022. I would like to point out that the full $300 million of borrowing capacity under our credit facility remains fully available to the company. After taking into account the repayment of our credit facility, our annualized cash interest will decline by approximately $4.3 million. We are very pleased by the results of the financing. We were able to add more than $200 million of liquidity while decreasing our cash interest. Even when taking into account the cost of the capped call, our total annualized interest cost will decrease. As I discuss our first quarter results, please remember year-over-year results reflect the partial closure of our network in both Q1 2020 and Q1 2021. In Q1 2020, China shut down theaters at the end of January, right before the start of the all-important Chinese New Year holiday. In Q1 2021, our business in China was open and benefited from a record Chinese New Year holiday, while the rest of the world was only partially open with limited new Hollywood content available. Compared to Q1 2020, total revenue increased 11% to $38.8 million, with an Adjusted EBITDA of $2.8 million versus prior year EBITDA loss of $4.4 million. IMAX Technology Network revenue increased 22% to $20.3 million in the first quarter as the reopening of the company's network, particularly in Asia, drove our first year-over-year increase in quarterly box office since the onset of the pandemic. Gross margin for this business was $10 million, which increased by more than $7 million due to the higher box office revenue and lower costs. IMAX Technology sales and maintenance revenue increased 12.5% to $17 million on higher IMAX maintenance sales associated with the continuing reopening of our network. Gross margins for this business increased 49% to $7 million on higher revenue and the benefit of cost reductions taken during the pandemic. We installed nine new IMAX systems in the quarter versus five in the year-ago period. SG&A, excluding stock-based compensation, declined 19% to $20.3 million in the quarter. SG&A benefited from the cost actions we took throughout the pandemic, as well as $1.2 million of COVID-19-related government relief. This benefit was offset by $4 million of cost typically allocated to cost of goods sold, but which remained in SG&A. EPS loss of $0.25 per share improved year-over-year on higher revenue, lower costs connected to ongoing cost actions we took throughout the pandemic, and a lower level of anticipated credit losses. The company took a non-cash valuation allowance to reduce the value of its deferred tax assets of $7 million or $0.12 per share. As a result of the pandemic-unrelated uncertainty, accounting rules prevent us from carrying deferred tax assets in certain tax jurisdictions. During the quarter, IMAX sold its stake in Maoyan Entertainment for gross proceeds of $17.8 million and recorded a $5.2 million gain. In the first quarter, we spent $2 million on capital expenditures. To wrap up, we continue to believe IMAX is extremely well-positioned to benefit from the rebound of moviegoing as vaccine distribution accelerates around the world and Hollywood blockbusters return to cinemas. As we expected, we are beginning to see signs that our experience in Asia is being repeated in the United States. Audiences are returning to movies and choosing IMAX in large numbers. We have the balance sheet and business model to benefit from the broad reopening of the global economy, and there is a highly promising slate of IMAX-friendly titles waiting to be released in the second half of the year. I remain confident the best for IMAX is yet to come. With that, I'll turn the call over to the operator for Q&A. Thank you, sir. If you would like to ask a question, please signal by pressing Star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press Star 1 to ask a question. We will pause for just a moment to allow everyone the opportunity to signal for questions. Our first question comes from Eric Handler with MKM Partners. Good morning, and thanks for the question. Two questions for you. First, now that things are gradually reopened, do you have any improved visibility on what your install outlook could be for this year for your systems? And then secondly, given that it's clear that people are opting for premium experiences like IMAX as they return to movie theaters, is that driving studios to have more discussions with you about seeing more films with IMAX DNA? So, on the first question, Eric, no, about visibility into installs. I mean, we have an internal budget. We have inventory. We have a general idea of what we're doing. But given the changes and how quickly things move around, look what happened in India in the last couple of weeks, we don't think it's prudent to give guidance on installs at this time. In terms of the move to premium, and by the way, coincidentally, just this morning, The Hollywood Reporter put out an excellent article about the move to premium on a global basis. It certainly has increased the number of discussions with studios, but not only studios, directors, talent, all kinds of people, because I think a lot of people realize that some of the changes the pandemic is going to leave behind, things like shorter windows, which we're seeing, the need to distinguish yourself and stand out, that all those roads lead to IMAX. So we've gotten, and not just in the U.S., on a global basis. So we've had much more discussions than we've had before about how IMAX could be utilized to differentiate a product offering and make it stand out and really drive people to it. Thank you, and Patrick, best of luck to you. Thank you, Eric. Appreciate it. Thank you. Our next question comes from Alexia Quadrani with JPMorgan. Hi. Thank you very much. I just wanted to sort of circle back about where you think things will end up on the windowing. I'm a little bit, I know Cinemark is not a huge partner for you, but it is still a partner, and I'm curious if you think everybody will come together in agreement, and when you have these big blockbusters coming out over the next couple of months, whether it's Black Widow or Cruella, will they be at a place where they can play all these movies and you'll have the large majority of your partners kind of up and running and ability to show these bigger films? I think about it in two pieces, Alexia. One is pandemic and one is post-pandemic. And I think a really good insight into where it's going to end up was what HBO Max did in Warner. And that's during the pandemic, they tested the day-and-date concept, and they're running their slate out that way for the remainder of the year. But as you know, in 2022, they announced a 45-day window. And Paramount also announced a 45-day window. Universal has, for blockbusters, more or less a 45-day window. Sony has a longer window. And your question circled back to Disney. So they've decided to launch Cruella and Black Widow on PVOD day-and-date, not for $30, roughly, not on streaming. It's hard to predict, but I think with the rest of the industry kind of centering on a 45-day window, my best guess would be when things get back to normal, that's where I think Disney will end up. But I don't know that for certain, but that's very much what it feels like. And again, for IMAX, a 45-day window is very good. As you know, we only play movies for one or two weeks at a time. In an exceptional case, it would be three weeks. And even when you look at the Godzilla results, the most impressive thing to me was that we sold out roughly 1,000 shows over a weekend at limited capacity, even though it was available day-and-date for that movie on HBO Max. So I don't think IMAX really competes with that streaming window. People have always been willing to pay a price premium. People want to go to something special. They want to get out of their houses. So we've never been that caught up in it. But to be a direct answer to your question, I think it'll likely settle on 45 days. But Will, do you think the, I guess I didn't phrase my question very well. The theaters and the studios, how Cinemark set out in terms of Raya, will they come to an agreement, and therefore you'll have all your exhibitors able to show some of these movies that we played in IMAX? I mean, do you think Cinemark will ultimately come to an agreement with Disney on the splits and therefore show these films, which obviously will be a benefit to you? So I don't have a direct line into Cinemark. I'm very close with Mark Zoradi, the CEO. I haven't discussed this issue with him at all, so I can't comment on that. But I think both Cruella and Black Widow will play in the majority of theaters and the majority of IMAX theaters. So it'll ultimately, whether it's Black Widow or Cruella, all these eventually will set out in the new normal, and you'll have the theaters sort of displaying the movies, and it will be, you're not concerned about the longer-term disruption, I guess, about the window changing, it sounds like. Not for IMAX. I'm not concerned about it. As I said, even in day-and-date, and even look at Mortal Kombat, I mean, the results in IMAX appear in the indexing very little affected by day-and-date, and it's not going to be day-and-date. It's going to be significantly better than that. As I said, I should add, I think actually it's an opportunity for IMAX. It relates a little bit to the question Eric asked right before that. And the reason is, if you want to eventicize a movie and you want to publicize it for your streaming service or whatever your ancillary is, there have been studies over more than the last decade that show that people like the movie better. It gets a higher CinemaS core when they see it in IMAX than when they see it on a regular screen or certainly on a TV screen. So you're creating more value to the content chain. So people will want to double down on IMAX because that's the way they're going to monetize the whole property. So one could argue the shorter window is good for us. I guess to that point, is there any interest or need to change or lean into your marketing strategy a bit more to highlight that this is more of an event now that there is pent-up demand and people are so anxious to come out of their homes? Or do you think that's where you are already, does its job? I think the studios will put more money into that because they'll want to create more of an event and publicize the IMAX release more to kind of curate for the public that this is really a special movie. And I think we'll make some tweaks. For example, I think we would do things by saying, "You only have one more week to see it in IMAX," or to create more of a sense of urgency. I don't think it'll be a drastic overhaul. Okay. Thank you. And best of luck, Patrick. Thank you. Thank you. Our next question comes from Chad Beynon with Macquarie. Hi, good afternoon. Good morning. Thanks for taking my question. Wanted to start with China, which was a bright spot in the quarter. Can you help us think about how the slate looks for the upcoming May Golden Week and then how this Golden Week period historically compares to October Golden Week? I know back in October of 2020, you had a very successful outcome, and I think that was led by 800. But just trying to get a sense of how important this week is and what the local lineup may look like. Thank you. Thanks for the question. Typically, there are one or two big blockbusters during Golden Week. For whatever reason, this year, it's much more spread out, so there's not an obvious breakout hit like there's been in the past. And I think there's something like 12 or 13 movies being released. From IMAX's point of view, that's not as advantageous because there wasn't like we could go and find the 800, like you point out, and say, "This is the movie." So I don't think it's going to be a breakout period for us this year. I think we pick movies as good as any of the movies out there in general. But I don't think it'll be a breakout Golden Week period. The slate for the rest of the year, though, I don't have it off the top of my head. I remember one that used our cameras called Mozart from Space because obviously it has a very unique name. But there are a few movies like that that we have a fair amount of confidence in coming out later in the year, but not Golden Week. Thank you. And then what have you guys learned, you and your partners learned just in terms of price elasticity during this period, I guess, outside of the U.S., but then also in the U.S. with Godzilla and Mortal Kombat? Do you expect for pricing to be pretty strong, particularly in your well-located units in big cities? Do you think they'd decide to push it, or do you think your partners kind of ease into pricing with your customers? So I can tell you in China that during Chinese New Year holiday, pricing was very strong, and there was no deterioration from where it was in 2019. In Japan, for this string of hits, pricing has been very strong. We haven't seen any deterioration. I haven't looked at it, and this is anecdotal, but I believe that pricing for Godzilla and Mortal Kombat has been consistent with pricing before the pandemic. We'll have to see how strong demand is, and we'll have to see what the capacity restrictions are. I don't anticipate any weakness, but part of your question is, given all the liquidity out there and given the demand and the limitation of our screens, will we be able to raise prices? We'll see. I don't know. Certainly, the macro trends would be in favor of not a lot of resistance to raising prices, but we'll have to wait and see. Thanks, Rich. And best of luck, Patrick. Thank you, Chad. Thank you. Our next question comes from Mike Hickey with The Benchmark Company. Hey, Rich. Patrick, Brett, good morning, guys. Congrats on your results. Patrick, awesome working with you, man, the last four years. Best of luck to you. I guess question, Rich, is you definitely seem fired up on AI here, and it does look like a really interesting opportunity for an ancillary revenue stream for you. So maybe can you double-click on AI, just thinking about CapEx needed to grow this business? How do you think about monetization and sort of where you are in the process of monetizing? And if you think, I guess, when you think this could be a material contributor, if at all? I think it's too early to try and quantify what the effect of AI will be financially. We think we're onto something. I mean, we could have partnered with a lot of big AI companies. Maximus not only had Daniel Nadler, which I described, but the same team that was a team behind Kensho, the one which I mentioned was the largest AI sale in the history of sale of private companies of AI. And it's a relatively small team. It's mostly people from Harvard and MIT and PhDs. It's a very high-caliber team. And I alluded to this in the remarks, but to go a little bit deeper, the way AI works, it's like teaching a child, except it's a lot faster than a child. And you put data in, and then in very high speeds, it can learn and spit it out. IMAX has the best teaching data in the world because the resolution is higher, and we also know a lot about images, and we also have the brand. We really don't know yet what the market is going to be. We think there's a potentially big market out there. We spent a year, as I said, refining some of the elements of the technology. We've started some very early discussions to kick around and see where it goes, but we just don't know. As I mentioned on the call, we folded IMAX Enhanced into that. We're partners with streamers, electronics manufacturers, studios around the world. Enhanced, including I mentioned Sony and TCL, but it also includes Tencent. It also includes Rakuten in Europe, Fandango, a number of other people. There are still ongoing discussions. Remember, what Enhanced does, it up-reses content in a different technology, not an AI technology. We've gotten some pretty good traction with that early on. We hope to use the business that we've developed there and the relationships along with technology that Maximus brings to the table to create a business around it. It's way too early to put numbers around it. And Mike, on your first point, I was just going to say, Mike, your first point, your question around CapEx, one of the things we find very attractive about this, by its very nature, is highly scalable. And so depending on which path we go down, there will be startup costs and OpEx and potentially some CapEx. But the nature of AI solutions and tools is how they add value is being highly scalable. And that aligns with how we think about our own business, which is we are an asset-light business, and that to us makes a ton of sense for IMAX. Yeah. Thanks, Patrick. And Mike, just before you go on, just to give you an example, to up-res a movie to 4K or 8K using existing technology is a fairly expensive proposition. At the high end, if you're Scorsese or you're doing Apocalypse Now, it's super expensive. But I think the cost to do it is in the tens of thousands of dollars. To up-res an image in AI, it's the cost of electricity. So that just tells you why we're excited about the possibility, but we have to figure out the market size. Nice. Thanks, guys, for that. Appreciate that. The next question would be on the pent-up demand you're seeing for movies. Obviously, you're seeing more than anecdotal. I think it's instinctive that people are ready to see the movies again. But when you look at behavior in China, which I guess has been far more normalized than what we have here in the U.S. or international ex-China, are you seeing any indications of sort of a slowdown there or more normalized viewing behavior sort of post-Chinese New Year, Rich, when you look at that market? And I'm curious, I guess the question is, how long do you think we can stay elevated here with that pent-up demand? I mean, certainly, summer 2021 is exciting. Are we going to be still excited in 2022? Are we back to sort of normal movie-going in a year or so? I'm also curious what you're seeing in China in terms of when you look at the growth, ticket pricing versus attendance in terms of driving growth in the first quarter for you? Thanks, guys. I mean, obviously, in the longer term, it's a function of the content as well as consumer demand, and there's fantastic content for both 2021 and 2022. I went through some of it for 2022, but I didn't go through all of it, but including Spider-Man, I didn't mention. Mission: Impossible, I didn't mention. I mean, through the end of 2022, it's like the All-Star team of content coming out. So on the content point of view, and Avatar, to remind people that IMAX did over $200 million in Avatar when I think we had 150 screens, and now we have 1,600 screens. I wouldn't suggest it's linear, but there's obviously a lot of demand for seeing that property in IMAX. So I think we have tailwinds at least from this year and next year going forward. In the pent-up demand category, I mean, I do think J.J. Abrams was quoted as saying, "The reason the roaring '20s were roaring was because of the Spanish flu pandemic, and people came out of it, and I do think, especially when we come out of this with government programs and the liquidity sloshing around the system and people sitting at home, again, just anecdotally, so many people I know are planning trips now for later in the year, and they're much less price-sensitive than they otherwise would have been. It relates a little bit to the comment, Mike, that I made earlier about confronting your mortality. I think whatever your age is, you kind of think you have forever to do everything. But I think after this rush and being locked in and seeing what we went through, I think people are going to say, "Experience it now rather than wait and see what happens." And on a much smaller scale, obviously, but I think social experiences, getting out, being with friends, being able to skate, I think there's going to be a lot of tailwind there. Nice. I guess one more quick one. With the shorter windows, Rich, and what looks to be sort of a migration to the premium experience for moviegoers that you noted, do you think you'll see more domestic competition for PLF screens? On the flip side, do you think there's an opportunity to get an installation boom domestically? If you remember, which I'm sure you do, IMAX has exclusive zones. On 42nd Street in New York, we're in the AMC. We can't be in the Regal across the street, although they'd like us there, and we'd like to go there. I think there's some room for growth in North America, but not a lot in screens. I think there's a lot of room for growth globally. A lot of those markets, like Japan, we have 30-something theaters open now, and we have a target in the next few years of possibly 100 zones in Japan. The Middle East is another one, Saudi Arabia. I think there are markets where you'll see an enormous amount of growth. I think you'll see some growth in North America, but not that kind of rapid growth. In terms of competition in North America, you have to remember that the 80/20 rule is in North America, which is most of the business comes from 15%-20% of the screens. And IMAX is 85% of our network is in those top performers. And then beyond that, a lot of those have kind of IMAX copycat screens in them, the PLFs. And they are fairly penetrated in that market. So I don't think there's a lot of places to go. They could go to smaller markets, but the economics of those markets aren't going to support a large IMAX expansion or, I think, the development of a lot of other big screens. Nice. Thanks, guys. Best of luck. Thanks, Mike. Thank you. Our next question comes from Mike Ng with Goldman Sachs. Hi, good morning, and thank you for the question. I was just wondering if you could talk about whether you see the potential for a single film or a group of films that could deliver what would be considered a normal or post-pandemic level of box office performance and can serve as a proof point of a U.S. box office recovery and help us think about where the new baseline of box office will be. Just trying to get your sense of whether there's a litmus test in the near term that could help us all assess the health of the box office in the U.S. Thank you. Well, I mean, I think there'll be a bunch of small litmus tests, clearly, Mike. So for example, Quiet Place, which is coming out around Memorial Day, we know what the last one did. We'll see what this one did. And I think that'll be somewhat of a benchmark depending where capacity limitations are. You have to factor that in. I think Godzilla was a pretty good point. One of the facts I didn't mention on the call was something like I'm trying to remember, 1,000 of our shows sold out because of capacity limitations. But if you look at those 1,000, it was mostly all the primetime shows. So if we weren't at 25% or 30% capacity, we can all extrapolate. I don't know whether 1,000 would have sold out, but certainly we would have done a lot better, and the box office would have been better. In terms of big movies, it's not clear to me whether Black Widow will be a good test or not because obviously it's got a PVOD release, so you need a fully theatrical release with theatrical windows. The one I would bet on was Maverick, Top Gun, and I was hoping, obviously, along with a lot of other people, that that would have come out in July, but for a lot of reasons, including the movement of Black Widow, it moved to Thanksgiving, so I know it's a little later than we'd all like, but I think that will be a full test, assuming the pandemic remains under control at that point. Great. Thank you very much for the thoughts, Rich, and good luck to you, Patrick. Thank you, Mike. Thank you. Our next question comes from Jim Goss with Barrington Research. Thanks. Rich, continuing along this theme of how the benefits might accrue to 2021 versus 2022 and maybe beyond, the theaters, studios would want exclusive real estate, but there's a cost to delaying releases, and I know you maintain a strong relationship with all of your studio partners. I'm wondering how your sense is as to how the studios would allocate films to this year versus next year, given that it might bunch up too much in the second half of this year, but there's also a cost to delaying those releases, and I have a couple of others. Go ahead with that first. So Jim, on that one, I'm actually going out to LA next week, and I'm meeting with pretty much every studio. So I could answer that better next week than I can this week because I've been out there for a while. But more based on thought than on discussion, I think this year's slate is pretty much where it is. I think, at least in the U.S., the course of vaccinations and disease is pretty well known. Obviously, places like Europe and India are more uncertain. But I would be surprised to see much movement from 2021 to 2022 at this point. I think it's largely where it is. And I think 2022 is pretty set also. I think the studios have—you're right about cost of carry, but obviously interest rates are pretty low, so it's less cost of carry. But I think the studios have been less focused during the pandemic on the economics and more focused on their streaming strategies, their PVOD strategies, which to some extent makes sense, right, because people were in their houses. They weren't going to movies. But I think, so I don't think that's been paramount, the carrying cost at the point. I think as things open and box office numbers start to post, people will be more focused on that, which I guess supports my view that not a lot's going to move. Okay. I was also wondering, to the extent that some of the smaller films might be more at risk of moving to streaming, etc., is there any potential benefit to IMAX box office from a smaller slate of smaller films versus the blockbusters, which obviously need the first-run releases? I don't really think so, Jim. You look at every year, I don't know, seven or eight films make up a vast majority of our box office. People go to IMAX to see blockbusters and see them in a special way. I think the cost of marketing the smaller films and building awareness, and I also think the brand association of IMAX, the brand association is more with Top Gun: Maverick than it is with Marriage Story, and I don't think that's going to change. I think that's, I just don't think that's who we are. Okay. The last thing I'd ask is Japan is your current emerging market star, it seems. Are there other markets in the IMAX circuit capable of warranting more indigenous DMR treatments? Sure. I mean, I think the Middle East for sure and Saudi Arabia specifically. We have a backlog of something like 30 theaters there, but I think we only have three theaters open in the territory today. We have a couple more opening this year, and the per-screen averages there are extremely strong, so I expect when things get back to normal, there'll be activity going on there, and there already is a lot of discussions going on. I think China still has a fairly long way to go. Other places in the Middle East, in the Emirates, I think there's other examples in the Emirates. I'm just trying to think. LatAm, we're underpenetrated, but I think that might take longer to get started and come out of the pandemic. That's more or less where I see it, Jim. All right. Thanks very much. And Patrick, I'll add my congratulations and thanks to you. And it'll be good to see Joe back for at least a temporary period. Thank you, Jim. Appreciate it. Thank you. This concludes today's Q&A. I would now like to turn the call back over to Rich Gelfond for closing remarks. Thank you, operator, and thank you, everybody, and it's been a difficult year for all of us on a professional basis, a personal basis, every basis. I think for IMAX, we definitely feel like we're coming out of it right now. We've come out of it in Asia. And the only kind of caveat holding us back right now is the release of movies and particularly in North America, where the movies have seemed to have done pretty well, and then obviously the pandemic in places like India and Europe, but if you sat here, you can definitely feel it happening. Even a couple of months ago, people were saying, "Will people come back to the movies?" and now the dialogue has changed to, "When will people come back to the movies?" so we're feeling pretty good about where we sit, and we think we're on a path to recovery. I think the pandemic forced us to do kind of two things, which was batten down and, I think, look at what we're good at and not. I think our strengths have become apparent to a lot of constituencies, including the studios, the filmmakers, and investors. I think we've also used the period of time to try and figure out ways to move into other areas, such as in the home. And we've laid the groundwork for that. I've said I think it's too early to make firm predictions on where it goes, but we've tried to use this period of time to be strategic. I think we have, and hopefully the results will follow that. I think I'll end by saying many of you who've been around a while know Joe Sparacio. He knows the company extremely well. So we're really fortunate to be able to fill the gap until we can recruit with Joe. But Patrick's been a tremendous asset in helping strategically and professionally in a lot of ways in building IMAX. And we in the IMAX family wish him well. So thank you very much. Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.