Cinema Business Continues to Rebound
Achieved Best Quarterly Total Revenue & Operating Income Since the COVID-19 Pandemic
July Sets Cinema Revenue Records
Earnings Call Webcast to Discuss Second Quarter Financial Results
Scheduled to Post to Corporate Website on Wednesday, August 16, 2023
NEW YORK, Aug. 14, 2023 (GLOBE NEWSWIRE) -- Reading International, Inc. ( RDI) (the “Company”), an internationally diversified cinema and real estate company with operations and assets in the United States, Australia, and New Zealand, today announced its results for the second quarter ended June 30, 2023.
President and Chief Executive Officer, Ellen Cotter said, “Our second quarter operating results were strong, with $65 million in global total revenue and $1.8 million of global operating income, delivering the best performance since the fourth quarter of 2019. Our global cinema business delivered operating income of $4.5 million, which is also the highest since the fourth quarter 2019, driven by a significantly stronger movie slate, including the phenomenal theatrical release of The Super Mario Bros. Movie, which has grossed $1.3 billion in Worldwide Box Office to become the second highest grossing animated picture of all-time. The Angelika in New York City realized a house record for the highest grossing opening week ever with Director Wes Anderson’s Asteroid City, reinforcing our confidence in our specialty business. And, looking forward to the third quarter, in July 2023, our global circuit delivered the highest monthly total cinema revenue in the Company’s history, due to the unprecedented success of Barbenheimer, the double feature of Barbie and Oppenheimer. As we begin to return to pre-pandemic Box Office levels, we remain optimistic about the future of the cinema exhibition industry.”
Ms. Cotter continued, “Our real estate business contributed to the second quarter’s operational success by delivering $5.2 million in revenue and $1.3 million in income, which also represents the highest quarterly real estate revenue and operating income since the fourth quarter of 2019, driven primarily by the new rental stream from the Petco lease at 44 Union Square in New York City and the continued solid performance of our Australian real estate portfolio.”
Ms. Cotter concluded, “Despite the current challenging inflationary environment, we are focused on addressing multiple debt maturities in 2023 and 2024. Additionally, we are monitoring the WGA and SAG-AFTRA strikes and potential impacts to the 2023 and 2024 movie release schedules. To address these liquidity pressures, we are working with our lenders to restructure certain debt facilities and we have selected certain real estate assets for potential monetization and listed them for sale. We continue to believe that our ‘two business/three country’ diversified business structure will enable us to deliver greater returns for our stockholders in the future.”
Key Financial Results –Second Quarter 2023
- Global revenue of $65.1 million for the quarter ended June 30, 2023, increased from $64.5 million compared to the second quarter of 2022, primarily due to (i) improved performance from the U.S. cinema business and (ii) rent recognized in Q2 2023 from our Petco tenancy at our 44 Union Square property that did not occur in the same period of the prior year. Petco’s 44 Union Square flagship store opened to the public on June 1, 2023.
- Operating income of $1.8 million, improved by 214% from an operating loss of $1.6 million, compared to the second quarter of 2022, driven by (i) a 140.0% improvement in the U.S. cinema business, (ii) rent recognized in Q2 2023 from our Petco tenancy at our 44 Union Square property that opened to the public on June 1, 2023, and (iii) no impairment charges in Q2 2023, as compared to the $1.5 million impairment charges we reported in Q2 2022.
- $6.7 million in positive Adjusted EBITDA.
- Our net loss attributable to Reading International, Inc. for the quarter ended June 30, 2023, increased from a loss of $2.4 million to a loss of $2.8 million, compared to Q2 2022, due primarily to increased interest expense, partially offset by our improved operating income. Our interest expense increased 46.8%, from $3.4 million to $4.9 million, compared to Q2 2022, despite a slight reduction in overall indebtedness.
- The Australian dollar and New Zealand dollar average exchange rates weakened against the U.S. dollar by 6.5% and 4.8%, respectively, compared to the same period in the prior year, which contributed to our loss for the period, and negatively impacted our overall international financial results, noting that about 50% of our total revenue are generated in Australia and New Zealand.
Key Financial Results – Six Months of 2023
- Global revenue of $110.9 million for the six months ended June 30, 2023, increased by 6% from $104.7 million for the same period in 2022, primarily driven by improved performance in our U.S. cinema business due to a stronger movie slate and the new rental stream from Petco at 44 Union Square offset somewhat by decreases in the value of the Australian and New Zealand currencies.
- Operating loss was reduced by 54.3% to an operating loss of $6.1 million for the six months ended June 30, 2023, compared to an operating loss of $13.3 million for the same period in 2022 due to (i) improved cinema performance due to a stronger movie slate and a higher number of wide released movies offset somewhat by decreases in the value of the Australian and New Zealand currencies, (ii) Petco rent at our 44 Union Square property that started in Q4 2022, (iii) absence of impairment expenses in Q2 2023, as compared to the $1.5 million impairment charge we reported in Q2 2022, and (iv) lower depreciation and amortization due to a delay in capex spending.
- Adjusted EBITDA increased by 443% to an Adjusted EBITDA of $3.8 million for the six months ended June 30, 2023.
- Basic loss per share of $0.63 for the six months ended June 30, 2023 improved by approximately 22% compared to a basic loss per share of $0.81 for the same period in 2022.
- Net loss attributable to Reading International, Inc. was $13.9 million for the six months ended June 30, 2023, improved by 22% compared to a net loss of $17.8 million for the same period in 2022.
- The Australian dollar and New Zealand dollar average exchange rates weakened against the U.S. dollar by 6.0% and 5.9%, respectively, compared to the same period in the prior year, which contributed to our loss for the period, and negatively impacted our overall international financial results.
Key Cinema Business Highlights
Notwithstanding that, at $61.1 million, our Q2 2023 cinema segment revenue remained relatively flat, decreasing by 1% compared to Q2 2022, our Q2 2023 cinema segment operating income of $4.5 million improved by 30% compared to Q2 2022 due to the lack of cinema impairment charges for the quarter, as opposed to Q2 2022 when we took a $1.5 million impairment charge. Cinema segment revenue for the six months ended June 30, 2023 of $103.0 million increased by 4% compared to the same period in 2022. Cinema segment operating loss for the six months ended June 30, 2023, improved by 96% to a loss of $0.1 million compared to a loss of $3.8 million the same period in 2022.
Over the last few years, we have continued to focus on the implementation of our cinema business plan: the enhancement of our food and beverage offerings, procuring additional cinema liquor licenses, and refurbishing our older cinemas with luxury seating (and/or larger screen formats). In Q1 2023, we took over the operation of an existing six screen cinema in Armadale, a suburb of Perth in Western Australia, and by the end of 2023, we anticipate adding an eight-screen boutique cinema at South City Square, Brisbane QLD that will operate under the Angelika Film Center brand, as well as adding a five-screen Reading Cinemas with TITAN LUXE in Busselton, Western Australia. Both new cinemas will be state-of-the-art facilities with recliner seating and elevated food and beverage offerings (including alcoholic beverages). We have an additional cinema in the pipeline for Australia, located in Noosa (Queensland) and one additional cinema in New Zealand, each anticipated to open in 2026.
Key Real Estate Business Highlights
Real estate segment revenue for Q2 2023 increased by 29% to $5.2 million, compared to Q2 2022. Real estate segment operating income for Q2 2023 increased by over 100% to $1.3 million compared to a real estate segment operating loss of $0.1 million in Q2 2022.
Real estate segment revenue for the six months ended June 30, 2023 increased by 25% to $10.3 million, compared to the same period in 2022. Real estate segment operating income for the six months ended June 30, 2023 increased by over 100%, to $2.3 million, compared to the same period in 2022.
The changes between the second quarter of 2023 and the second quarter of 2022 were primarily attributable to the rent recognized in Q2 2023 from our Petco tenancy at our 44 Union Square property that did not occur in the same period of the prior year.
To support our currently anticipated liquidity needs, as of today, we have listed the following assets for sale: (i) our office building at 5995 Sepulveda Blvd. Culver City, California, (ii) 26-acre industrial site in Williamsport, Pennsylvania and (iii) our cinema property in Maitland, NSW in Australia. In addition, along with our 25% minority interest partner of the Cinemas 123 in New York City, we have decided to explore a sale in whole or in part of the Cinemas 123 property or otherwise reduce our interest in that asset.
Key Balance Sheet, Cash, and Liquidity Highlights
As of June 30, 2023, our cash and cash equivalents were $15.5 million. As of June 30, 2023, we had total gross debt of $213.8 million, reflecting a slight reduction from the December 31, 2022 balance of $215.6 million. As of June 30, 2023, our assets had a total book value of $552.2 million as compared to a book value of $587.1 million as of December 31, 2022.
On June 29, 2023, we executed a further modification of our Cinemas 123 Term Loan which extended the maturity date to October 3, 2023. On August 13, 2023, we executed an Amendment Deed to our financing arrangement with National Australia Bank that, among other things, extended our maturity date to July 31, 2025. We are working with our other lenders to restructure our existing debt and extend upcoming maturity dates.
For more information about our borrowings, please refer to Part I – Financial Information, Item 1 – Notes to Consolidated Financial Statements-- Note 12 – Borrowings of our Form 10-Q for the quarter ended June 30, 2023.
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio webcast on our corporate website on Wednesday, August 16, 2023, which will feature prepared remarks from Ellen Cotter, President and Chief Executive Officer; Gilbert Avanes, Executive Vice President, Chief Financial Officer and Treasurer; and Andrzej Matyczynski, Executive Vice President - Global Operations.
A pre-recorded question and answer session will follow our formal remarks. Questions and topics for consideration should be submitted to [email protected] by 5:00 p.m. Eastern Time on August 15, 2023. The audio webcast can be accessed by visiting https://investor.readingrdi.com/financials on August 16, 2023.
About Reading International, Inc.
Reading International, Inc. ( RDI), an internationally diversified cinema and real estate company operating through various domestic and international subsidiaries, is a leading entertainment and real estate company, engaging in the development, ownership, and operation of cinemas and retail and commercial real estate in the United States, Australia, and New Zealand.
Reading’s cinema subsidiaries operate under multiple cinema brands: Reading Cinemas, Angelika Film Centers, Consolidated Theatres, and the State Cinema by Angelika. Its live theatres are owned and operated by its Liberty Theaters subsidiary, under the Orpheum and Minetta Lane names. Its signature property developments are maintained in special purpose entities and operated under the names Newmarket Village, Cannon Park, and The Belmont Common in Australia, Courtenay Central in New Zealand, and 44 Union Square in New York City.
Additional information about Reading can be obtained from our Company's website: http://www.readingrdi.com.
Cautionary Note Regarding Forward-Looking Statements
This earnings release contains forward-looking statements within the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "may," "will," "expect," "believe," "intend," "future," and "anticipate" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expected operating results; our expectations regarding the success of movies released for the remainder of 2023; our expectations regarding the WGA and SAG-AFTRA strikes and their impacts on the cinema exhibition industry; our belief regarding our diversified business/country diversification strategy; and our expectations regarding the timing of adding new cinemas to our circuits in Australia and New Zealand. The record setting results referenced in this press release are not necessarily indicative of future results.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed throughout Part I, Item 1A – Risk Factors and Part II, Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the most recently ended fiscal year and our other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement made by us in this Earnings Release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Reading International, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(Unaudited; U.S. dollars in thousands, except per share data)
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | ||||||||||||||||
| Cinema | $ | 61,056 | $ | 61,770 | $ | 103,042 | $ | 99,117 | ||||||||
| Real estate | 3,999 | 2,741 | 7,819 | 5,595 | ||||||||||||
| Total revenue | 65,055 | 64,511 | 110,861 | 104,712 | ||||||||||||
| Costs and expenses | ||||||||||||||||
| Cinema | (51,364 | ) | (50,769 | ) | (93,019 | ) | (89,271 | ) | ||||||||
| Real estate | (2,104 | ) | (2,206 | ) | (4,319 | ) | (4,363 | ) | ||||||||
| Depreciation and amortization | (4,689 | ) | (5,247 | ) | (9,329 | ) | (10,771 | ) | ||||||||
| Impairment expense | — | (1,549 | ) | — | (1,549 | ) | ||||||||||
| General and administrative | (5,109 | ) | (6,312 | ) | (10,288 | ) | (12,107 | ) | ||||||||
| Total costs and expenses | (63,266 | ) | (66,083 | ) | (116,955 | ) | (118,061 | ) | ||||||||
| Operating income (loss) | 1,789 | (1,572 | ) | (6,094 | ) | (13,349 | ) | |||||||||
| Interest expense, net | (4,874 | ) | (3,343 | ) | (8,991 | ) | (6,548 | ) | ||||||||
| Other income (expense) | (86 | ) | 3,773 | 91 | 2,990 | |||||||||||
| Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures | (3,171 | ) | (1,142 | ) | (14,994 | ) | (16,907 | ) | ||||||||
| Equity earnings of unconsolidated joint ventures | 207 | 237 | 226 | 172 | ||||||||||||
| Income (loss) before income taxes | (2,964 | ) | (905 | ) | (14,768 | ) | (16,735 | ) | ||||||||
| Income tax benefit (expense) | 103 | (1,538 | ) | 583 | (1,160 | ) | ||||||||||
| Net income (loss) | $ | (2,861 | ) | $ | (2,443 | ) | $ | (14,185 | ) | $ | (17,895 | ) | ||||
| Less: net income (loss) attributable to noncontrolling interests | (83 | ) | (7 | ) | (296 | ) | (105 | ) | ||||||||
| Net income (loss) attributable to Reading International, Inc. | $ | (2,778 | ) | $ | (2,436 | ) | $ | (13,889 | ) | $ | (17,790 | ) | ||||
| Basic earnings (loss) per share | $ | (0.12 | ) | $ | (0.11 | ) | $ | (0.63 | ) | $ | (0.81 | ) | ||||
| Diluted earnings (loss) per share | $ | (0.12 | ) | $ | (0.11 | ) | $ | (0.63 | ) | $ | (0.81 | ) | ||||
| Weighted average number of shares outstanding–basic | 22,262,214 | 22,040,512 | 22,183,618 | 21,995,186 | ||||||||||||
| Weighted average number of shares outstanding–diluted | 23,502,506 | 22,952,960 | 23,423,910 | 22,907,634 | ||||||||||||
Reading International, Inc. and Subsidiaries
Consolidated Balance Sheets
(U.S. dollars in thousands, except share information)
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | (unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 15,511 | $ | 29,947 | ||||
| Restricted cash | 6,330 | 5,032 | ||||||
| Receivables | 5,447 | 6,206 | ||||||
| Inventories | 1,522 | 1,616 | ||||||
| Derivative financial instruments - current portion | 64 | 907 | ||||||
| Prepaid and other current assets | 5,725 | 3,804 | ||||||
| Land and property held for sale | 11,656 | — | ||||||
| Total current assets | 46,255 | 47,512 | ||||||
| Operating property, net | 267,558 | 286,952 | ||||||
| Operating lease right-of-use assets | 189,008 | 200,417 | ||||||
| Investment and development property, net | 8,502 | 8,792 | ||||||
| Investment in unconsolidated joint ventures | 4,538 | 4,756 | ||||||
