Cinema Business Continues Strong Rebound
Best Third Quarter Total Revenue, Operating Income & Adjusted EBITDA Since Q4 2019
Earnings Call Webcast to Discuss Third Quarter Financial Results
Scheduled to Post to Corporate Website on
President and Chief Executive Officer,
“With the highly anticipated 2023 holiday movie line-up, including Hunger Games: The Ballad of Songbirds and Snakes, Wish, Napolean, Migration, Wonka, The Color Purple, and Aquaman and the Lost Kingdom, and the recently announced end to the
Key Financial Results –Third Quarter 2023
- Global revenue of
$66.6 million grew by 30% from$51.2 million compared to the third quarter of 2022, primarily due to (i) a stronger film slate led by Barbie and Oppenheimer and (ii) rent recognized in Q3 2023 from Petco, our tenant who opened their flagship store at44 Union Square to the public onJune 1, 2023 . - Operating income of
$1.0 million , improved by 115% from an operating loss of$6.7 million , compared to the third quarter of 2022, driven by (i) improved cinema segment results, and (ii) rent recognized in Q3 2023 from our Petco tenancy at44 Union Square property. $6.1 million in positive Adjusted EBITDA grew by 59% vs. the third quarter 2022.- Our net loss attributable to
Reading International, Inc. for the third quarter, decreased from a loss of$5.2 million to a loss of$4.4 million , compared to Q3 2022, due to improved segment revenues, decreased depreciation and amortization expense, partially offset by increased interest expense, and decreased other income. - The Australian dollar and
New Zealand dollar average exchange rates weakened against theU.S. dollar by 4.1% and 1.2%, 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, since about 50% of our total revenue is generated inAustralia and New Zealand .
Key Financial Results – Nine Months of 2023
- Global revenue of
$177.4 million for the nine months endedSeptember 30, 2023 , increased by 14% from$155.9 million for the same period in 2022, primarily driven by improved performance across our worldwide cinema circuit due to a stronger movie slate and the new rental stream from Petco at44 Union Square , partially offset by decreases in the value of the Australian andNew Zealand currencies. - Operating loss was reduced by 75% to an operating loss of
$5.1 million for the nine months endedSeptember 30, 2023 , compared to an operating loss of$20.1 million for the same period in 2022 due to (i) improved cinema performance from a stronger movie slate and a higher number of wide released movies, (ii) Petco rent at our44 Union Square property that started in Q4 2022, (iii) impairment expense of$1.5 million that was incurred in the same period in 2022 that was not incurred in 2023, and (iv) lower depreciation and amortization due to a delay in CAPEX spending. - Adjusted EBITDA increased by 120% to an Adjusted EBITDA of
$10.0 million for the nine months endedSeptember 30, 2023 . - Basic loss per share of
$0.82 for the nine months endedSeptember 30, 2023 , improved by approximately 21% compared to a basic loss per share of$1.04 for the same period in 2022. - Net loss attributable to
Reading International, Inc. was$18.3 million for the nine months endedSeptember 30, 2023 , an improvement of 20% compared to a net loss of$23.0 million for the same period in 2022. - The Australian dollar and
New Zealand dollar average exchange rates weakened against theU.S. dollar by 5.4% and 4.4%, 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
At
Other notable mentions that occurred during the third quarter were: the opening of an eight-screen boutique cinema at
In addition, in an effort to improve the overall future profitability of the
Key Real Estate Business Highlights
Real estate segment revenue for Q3 2023 increased by 24% to
Real estate segment revenue for the nine months ended
The changes between the third quarter of 2023 and the third quarter of 2022 were primarily attributable to the rent recognized in Q3 2023 from Petco at
To support our currently anticipated liquidity needs, we have listed the following assets for sale: (i) our office building at
On
Key Balance Sheet, Cash, and Liquidity Highlights
As of
On
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
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio webcast on our corporate website on
A pre-recorded question and answer session will follow our formal remarks. Questions and topics for consideration should be submitted to InvestorRelations@readingrdi.com by
About
Reading’s cinema subsidiaries operate under multiple cinema brands: Reading Cinemas,
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
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
Unaudited Consolidated Statements of Operations
(Unaudited;
Quarter Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue | ||||||||||||||||
Cinema | $ | 62,688 | $ | 48,359 | $ | 165,731 | $ | 147,476 | ||||||||
Real estate | 3,875 | 2,837 | 11,694 | 8,432 | ||||||||||||
Total revenue | 66,563 | 51,196 | 177,425 | 155,908 | ||||||||||||
Costs and expenses | ||||||||||||||||
Cinema | (53,278 | ) | (45,308 | ) | (146,297 | ) | (134,579 | ) | ||||||||
Real estate | (2,281 | ) | (2,352 | ) | (6,600 | ) | (6,715 | ) | ||||||||
Depreciation and amortization | (4,580 | ) | (5,010 | ) | (13,908 | ) | (15,781 | ) | ||||||||
Impairment expense | — | — | — | (1,549 | ) | |||||||||||
General and administrative | (5,405 | ) | (5,257 | ) | (15,693 | ) | (17,364 | ) | ||||||||
Total costs and expenses | (65,544 | ) | (57,927 | ) | (182,498 | ) | (175,988 | ) | ||||||||
Operating income (loss) | 1,019 | (6,731 | ) | (5,073 | ) | (20,080 | ) | |||||||||
Interest expense, net | (5,072 | ) | (3,693 | ) | (14,063 | ) | (10,242 | ) | ||||||||
Gain (loss) on sale of assets | — | (59 | ) | — | (59 | ) | ||||||||||
Other income (expense) | 267 | 5,455 | 356 | 8,445 | ||||||||||||
Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures | (3,786 | ) | (5,028 | ) | (18,780 | ) | (21,936 | ) | ||||||||
Equity earnings of unconsolidated joint ventures | 217 | 61 | 443 | 233 | ||||||||||||
Income (loss) before income taxes | (3,569 | ) | (4,967 | ) | (18,337 | ) | (21,703 | ) | ||||||||
Income tax benefit (expense) | (896 | ) | (332 | ) | (313 | ) | (1,492 | ) | ||||||||
Net income (loss) | $ | (4,465 | ) | $ | (5,299 | ) | $ | (18,650 | ) | $ | (23,195 | ) | ||||
Less: net income (loss) attributable to noncontrolling interests | (65 | ) | (122 | ) | (361 | ) | (228 | ) | ||||||||
Net income (loss) attributable to | $ | (4,400 | ) | $ | (5,177 | ) | $ | (18,289 | ) | $ | (22,967 | ) | ||||
Basic earnings (loss) per share | $ | (0.20 | ) | $ | (0.23 | ) | $ | (0.82 | ) | $ | (1.04 | ) | ||||
Diluted earnings (loss) per share | $ | (0.20 | ) | $ | (0.23 | ) | $ | (0.82 | ) | $ | (1.04 | ) | ||||
Weighted average number of shares outstanding–basic | 22,273,423 | 22,043,823 | 22,208,757 | 22,011,755 | ||||||||||||
Weighted average number of shares outstanding–diluted | 22,273,423 | 22,043,823 | 22,208,757 | 22,011,755 |
Consolidated Balance Sheets
(
2023 | 2022 | |||||||
ASSETS | (unaudited) | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 11,925 | $ | 29,947 | ||||
Restricted cash | 5,714 | 5,032 | ||||||
Receivables | 5,779 | 6,206 | ||||||
Inventories | 1,488 | 1,616 | ||||||
Derivative financial instruments - current portion | 17 | 907 | ||||||
Prepaid and other current assets | 4,243 | 3,804 | ||||||
Land and property held for sale | 12,362 | — | ||||||
Total current assets | 41,528 | 47,512 | ||||||
Operating property, net | 261,614 | 286,952 | ||||||
Operating lease right-of-use assets | 180,718 | 200,417 | ||||||
Investment and development property, net | 8,336 | 8,792 | ||||||
Investment in unconsolidated joint ventures | 4,488 | 4,756 | ||||||
24,597 | 25,504 | |||||||
Intangible assets, net | 2,110 | 2,391 | ||||||
Deferred tax asset, net | 489 | 447 | ||||||
Other assets | 8,717 | 10,284 | ||||||
Total assets | $ | 532,597 | $ | 587,055 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 41,896 | $ | 42,590 | ||||
Film rent payable | 3,462 | 5,678 | ||||||
Debt - current portion | 40,402 | 37,279 | ||||||
Subordinated debt - current portion | 776 | 747 | ||||||
Taxes payable - current | 2,390 | 300 | ||||||
Deferred revenue | 8,616 | 10,286 | ||||||
Operating lease liabilities - current portion | 22,977 | 23,971 | ||||||
Other current liabilities | 6,673 | 813 | ||||||
Total current liabilities | 127,192 | 121,664 | ||||||
Debt - long-term portion | 138,560 | 148,688 | ||||||
Subordinated debt, net | 27,117 | 26,950 | ||||||
Noncurrent tax liabilities | 5,842 | 7,117 | ||||||
Operating lease liabilities - non-current portion | 180,002 | 200,037 | ||||||
Other liabilities | 11,829 | 19,320 | ||||||
Total liabilities | $ | 490,542 | $ | 523,776 | ||||
Commitments and contingencies (Note 15) | ||||||||
Stockholders’ equity: | ||||||||
Class A non-voting common shares, par value | ||||||||
33,528,994 issued and 20,592,834 outstanding at | ||||||||
33,348,295 issued and 20,412,185 outstanding at | 236 | 235 | ||||||
Class B voting common shares, par value | ||||||||
1,680,590 issued and outstanding at | 17 | 17 | ||||||
Nonvoting preferred shares, par value | ||||||||
or outstanding shares at | — | — | ||||||
Additional paid-in capital | 154,903 | 153,784 | ||||||
Retained earnings/(deficits) | (67,104 | ) | (48,816 | ) | ||||
(40,407 | ) | (40,407 | ) | |||||
Accumulated other comprehensive income | (5,647 | ) | (1,957 | ) | ||||
41,998 | 62,856 | |||||||
Noncontrolling interests | 57 | 423 | ||||||
Total stockholders’ equity | 42,055 | 63,279 | ||||||
Total liabilities and stockholders’ equity | $ | 532,597 | $ | 587,055 |
Segment Results
(Unaudited;
Quarter Ended | Nine Months Ended | |||||||||||||||||||||
% Change Favorable/ | % Change Favorable/ | |||||||||||||||||||||
(Dollars in thousands) | 2023 | 2022 | (Unfavorable) | 2023 | 2022 | (Unfavorable) | ||||||||||||||||
Segment revenue | ||||||||||||||||||||||
Cinema | ||||||||||||||||||||||
$ | 34,232 | $ | 24,676 | 39 | % | $ | 90,058 | $ | 72,532 | 24 | % | |||||||||||
24,186 | 20,014 | 21 | % | 64,338 | 63,797 | 1 | % | |||||||||||||||
4,270 | 3,670 | 16 | % | 11,335 | 11,147 | 2 | % | |||||||||||||||
Total | $ | 62,688 | $ | 48,360 | 30 | % | $ | 165,731 | $ | 147,476 | 12 | % | ||||||||||
Real estate | ||||||||||||||||||||||
$ | 1,614 | $ | 527 | >100 | % | $ | 5,002 | $ | 1,788 | >100 | % | |||||||||||
3,063 | 3,154 | (3) | % | 9,191 | 9,336 | (2) | % | |||||||||||||||
380 | 390 | (3) | % | 1,145 | 1,141 | — | % | |||||||||||||||
Total | $ | 5,057 | $ | 4,071 | 24 | % | $ | 15,338 | $ | 12,265 | 25 | % | ||||||||||
Inter-segment elimination | (1,181 | ) | (1,232 | ) | 4 | % | (3,644 | ) | (3,833 | ) | 5 | % | ||||||||||
Total segment revenue | $ | 66,564 | $ | 51,199 | 30 | % | $ | 177,425 | $ | 155,908 | 14 | % | ||||||||||
Segment operating income (loss) | ||||||||||||||||||||||
Cinema | ||||||||||||||||||||||
$ | 331 | $ | (3,988 | ) | >100 | % | $ | (3,182 | ) | $ | (12,343 | ) | 74 | % | ||||||||
3,513 | 1,577 | >100 | % | 6,372 | 5,836 | 9 | % | |||||||||||||||
551 | 274 | >100 | % | 1,066 | 605 | 76 | % | |||||||||||||||
Total | $ | 4,395 | $ | (2,137 | ) | >100 | % | $ | 4,256 | $ | (5,902 | ) | >100 | % | ||||||||
Real estate | ||||||||||||||||||||||
$ | (229 | ) | $ | (1,159 | ) | 80 | % | $ | (214 | ) | $ | (3,273 | ) | 93 | % | |||||||
1,333 | 1,351 | (1) | % | 3,972 | 4,045 | (2) | % | |||||||||||||||
(184 | ) | (337 | ) | 45 | % | (546 | ) | (897 | ) | 39 | % | |||||||||||
Total | $ | 920 | $ | (145 | ) | >100 | % | $ | 3,212 | $ | (125 | ) | >100 | % | ||||||||
Total segment operating income (loss) (1) | $ | 5,315 | $ | (2,282 | ) | >100 | % | $ | 7,468 | $ | (6,027 | ) | >100 | % |
(1) Total segment operating income is a non-GAAP financial measure. See the discussion of non-GAAP financial measures that follows.
Reconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss)
(Unaudited;
Quarter Ended | Nine Months Ended | |||||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net Income (loss) attributable to | $ | (4,400 | ) | $ | (5,177 | ) | $ | (18,289 | ) | $ | (22,967 | ) | ||||
Add: Interest expense, net | 5,072 | 3,693 | 14,063 | 10,242 | ||||||||||||
Add: Income tax expense (benefit) | 896 | 332 | 313 | 1,492 | ||||||||||||
Add: Depreciation and amortization | 4,580 | 5,010 | 13,908 | 15,781 | ||||||||||||
Adjustment for infrequent events and discontinued operations | — | — | — | — | ||||||||||||
EBITDA | $ | 6,148 | $ | 3,858 | $ | 9,995 | $ | 4,548 | ||||||||
Adjustments for: | ||||||||||||||||
Gain on insurance recoveries | — | — | — | — | ||||||||||||
None | — | — | — | — | ||||||||||||
Adjusted EBITDA | $ | 6,148 | $ | 3,858 | $ | 9,995 | $ | 4,548 |
Reconciliation of Total Segment Operating Income (Loss) to Income (Loss) before Income Taxes
(Unaudited;
Quarter Ended | Nine Months Ended | |||||||||||||||
(Dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Segment operating income (loss) | $ | 5,315 | $ | (2,282 | ) | $ | 7,468 | $ | (6,027 | ) | ||||||
Unallocated corporate expense | ||||||||||||||||
Depreciation and amortization expense | (172 | ) | (258 | ) | (527 | ) | (804 | ) | ||||||||
General and administrative expense | (4,124 | ) | (4,190 | ) | (12,014 | ) | (13,249 | ) | ||||||||
Interest expense, net | (5,072 | ) | (3,694 | ) | (14,063 | ) | (10,242 | ) | ||||||||
Equity earnings of unconsolidated joint ventures | 217 | 61 | 443 | 233 | ||||||||||||
Gain (loss) on sale of assets | — | (59 | ) | — | (59 | ) | ||||||||||
Other income (expense) | 267 | 5,455 | 356 | 8,445 | ||||||||||||
Income (loss) before income tax expense | $ | (3,569 | ) | $ | (4,967 | ) | $ | (18,337 | ) | $ | (21,703 | ) | ||||
Non-GAAP Financial Measures
This Earnings Release presents total segment operating income (loss), EBITDA, and Adjusted EBITDA, which are important financial measures for our Company, but are not financial measures defined by
These measures should be reviewed in conjunction with the relevant
Total segment operating income (loss) – We evaluate the performance of our business segments based on segment operating income (loss), and management uses total segment operating income (loss) as a measure of the performance of operating businesses separate from non-operating factors. We believe that information about total segment operating income (loss) assists investors by allowing them to evaluate changes in the operating results of our Company’s business separate from non-operational factors that affect net income (loss), thus providing separate insight into both operations and the other factors that affect reported results.
EBITDA – We use EBITDA in the evaluation of our Company’s performance since we believe that EBITDA provides a useful measure of financial performance and value. We believe this principally for the following reasons:
We believe that EBITDA is an accepted industry-wide comparative measure of financial performance. It is, in our experience, a measure commonly adopted by analysts and financial commentators who report upon the cinema exhibition and real estate industries, and it is also a measure used by financial institutions in underwriting the creditworthiness of companies in these industries. Accordingly, our management monitors this calculation as a method of judging our performance against our peers, market expectations, and our creditworthiness. It is widely accepted that analysts, financial commentators, and persons active in the cinema exhibition and real estate industries typically value enterprises engaged in these businesses at various multiples of EBITDA. Accordingly, we find EBITDA valuable as an indicator of the underlying value of our businesses. We expect that investors may use EBITDA to judge our ability to generate cash, as a basis of comparison to other companies engaged in the cinema exhibition and real estate businesses and as a basis to value our company against such other companies.
EBITDA is not a measurement of financial performance under generally accepted accounting principles in
EBITDA also fails to take into account the cost of interest and taxes. Interest is clearly a real cost that for us is paid periodically as accrued. Taxes may or may not be a current cash item but are nevertheless real costs that, in most situations, must eventually be paid. A company that realizes taxable earnings in high tax jurisdictions may, ultimately, be less valuable than a company that realizes the same amount of taxable earnings in a low tax jurisdiction. EBITDA fails to take into account the cost of depreciation and amortization and the fact that assets will eventually wear out and have to be replaced.
Adjusted EBITDA – using the principles we consistently apply to determine our EBITDA, we further adjusted the EBITDA for certain items we believe to be external to our core business and not reflective of our costs of doing business or results of operation. Specifically, we have adjusted for (i) legal expenses relating to extraordinary litigation, and (ii) any other items that can be considered non-recurring in accordance with the two-year
For more information, contact:Gilbert Avanes – EVP, CFO, and TreasurerAndrzej Matyczynski – EVP Global Operations (213) 235-2240
Source:
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