New York, NY ( April 1, 2024 ) - Reading International, Inc. (NASDAQ: RDI) (“Reading” or our “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 fourth quarter and year ended December 31, 2023.
Full Year 2023 Summary compared to 2022
Notwithstanding the Writers and Actors strikes (the “2023 Hollywood Strikes”) that effectively shut down Hollywood for months in 2023 and a 525-point spike in interest rates since March 2022, new movie releases are being well received by movie patrons and, generally speaking, things are moving in the right direction for our Company.
Total Revenues increased by 10% to $222.7 million from $203.1 million.
Operating Loss reduced by 58% to $12 million from $28.5 million.
Adjusted EBITDA significantly increased by $7.82 million from a negative $0.06 million to a positive $7.76 million, and excluding the impact of our real estate monetizations in 2021 and 2023, 2023 represented our highest Adjusted EBITDA since the pandemic.
Each of our global cinema and real estate operating divisions grew operating income year-over-year in 2023.
Basic loss per share improved by 16% to $1.38 compared to $1.64 for 2022.
Net loss attributable to Reading improved 15% to $30.7 million compared to $36.2 million for 2022. Our 2023 results included $19.4 million of interest and $18.4 million of depreciation and amortization.
These improved key financial metrics came despite the weakening of the Australian and New Zealand dollar average exchange rates against the U.S. dollar by 4.3% and 3.3%, respectively, compared to 2022. This foreign exchange weakening contributed to our loss for the period, and negatively impacted our overall financial results since about 50% of our total revenue is generated in Australia and New Zealand.
Fourth Quarter 2023 Summary compared to fourth quarter 2022
Total Revenues decreased by 4.0% (or $1.9 million) to $45.3 million compared to $47.2 million.
Operating Loss improved 17.2% to $7 million compared to a net loss of $8.4 million.
Net loss improved 6.3% to $12.4 million compared to a loss of $13.2 million, primarily driven by improved cinema results in terms of lower operating expenses and lower depreciation and amortization charges due to delays in Capex spending.
Basic Loss per Share improved 6.7% (or $0.04) to a loss of $0.56 compared to a loss of $0.60. Excluding the impact of real estate monetizations, this Basic Loss per Share was the best fourth quarter result since the pandemic.
Adjusted EBITDA improved 51% to negative $2.2 million, compared to negative $4.6 million.
The Australian dollar average exchange rates weakened against the U.S. dollar by 0.8%, compared to Q4 2022, while the New Zealand dollar average exchange rates stayed relatively flat against the U.S. dollar compared to Q4 2022. The exchange rate fluctuation contributed to our loss for the period, and negatively impacted our overall financial results.
Key Points
Cinema Business
Due to blockbuster and record setting industry releases such as Barbie, The Super Mario Bros. Movie, Oppenheimer, Guardians of the Galaxy Vol. 3, and Spider-Man: Across the Spider-Verse, our 2023 global cinema revenues increased 9% to $207.6 million and our global cinema operating income of $0.1 million improved 101% compared to an operating loss of $11.7 million in 2022. This increased revenue came despite closing three underperforming theaters in the U.S. and one theater in New Zealand during 2023, but also reflect the opening of Angelika Cinemas at South City Square in Brisbane Australia, Reading Cinemas with TITAN LUXE in Busselton, Western Australia and the takeover of an existing cinema in Armadale in Western Australia.
The unprecedented 2023 Hollywood Strikes impacted our Q4 2023 results and created real challenges for early 2024. Film production was halted by the major studios and streamers in May 2023 with the commencement of the Writers’ Strike. Then, the subsequent SAG Strike resulted in the prohibition of screen actors from doing publicity, marketing and promotion on any film produced by the major studios. The gross box office of certain cast driven films released after July 2023 failed to meet their potential and major studios and film distributors moved certain films off the 2023 theatrical release schedule.
Despite the film product challenges posed by the 2023 Hollywood Strikes, our operational teams delivered on various metrics. In 2023, we generated all-time record highs for (i) F&B spend per person at each cinema division, (ii) cash flow pre-occupancy per person in the U.S. and Australian cinema divisions and (iii) our highest Other Cinema Revenue in the U.S.
Net profit for the 2023 year and fourth quarter was also materially adversely impacted by (i) a further increase in interest rates, which increased our interest expense by another approximately $1.6 million in 2023, and (ii) the continued decline in the value of the Australian and New Zealand dollar compared to the U.S. dollar, which was offset by the sale of our Maitland property, which generated a $0.8 million gain.
Real Estate Business
With respect to our global real estate division, revenues increased by 18% to $19.9 million from $16.8 million in 2022 and our operating income increased to $3.8 million year-over-year compared to $0.5 million in 2022. These improvements were driven by (i) rent revenues from Petco, our tenant which opened a successful flagship retail store at 44 Union Square in NYC, (ii) the steady revenue from our 75 third-party tenant Australian real estate portfolio that finished 2023 with a 97% occupancy rate and (iii) the year-over-year improved results of our Live Theatre division (Minetta Lane Theatre and Orpheum Theatres in New York City).
Compared to the fourth quarter 2022, our fourth quarter 2023 global real estate division (i) revenues slightly decreased from $4.6 million to $4.5 million and (ii) operating income decreased by 8% to $0.58 million, compared to an income of $0.63 million.
In mid-March 2024, we appointed George Comfort & Sons (www.gcomfort.com) as our new exclusive leasing agent for 44 Union Square in NYC. Our new leasing agent is a New York City based firm with expertise in positioning properties and optimizing value in complex urban environments. We anticipate that George Comfort will bring a creative and fresh approach to activating leasing or other monetization strategies for the remaining floors of 44 Union Square.
Balance Sheet and Liquidity
As of December 31, 2023, our cash and cash equivalents were $12.9 million, of which $7.1 million, $5.2 million and $0.7 million were held in the U.S., Australia and New Zealand, respectively. As of December 31, 2023, our total outstanding bank borrowings were $210.3 million against total book value assets of $533.1 million.
To support our overall liquidity, we recently monetized two assets. On October 25, 2023, we monetized our underperforming Maitland Australia (NSW) property for A$2.8 million, and leased back the 4-screen Reading Cinema on a short-term basis. On February 23, 2024, we monetized our office building at 5995 Sepulveda Blvd. Culver City, California for $10.0 million.
During 2023 and into 2024, we completed amendments to certain debt facilities.
– March 27, 2024 – Bank of America/Bank of Hawaii extended our loan maturity date to August 18, 2025, together with relaxation of certain financial covenants.
– January 26, 2024 – Santander extended our loan maturity date to June 1, 2024.
– September 29, 2023 – Valley National Bank extended our loan maturity date to October 1, 2024.
– November 28, 2023 – Westpac extended our loan maturity date to January 1, 2025.
We are currently reviewing all of our real estate assets to identify further asset monetization alternatives to raise additional liquidity to the extent needed in order to maintain a stable foundation into the future. We expect that by the end of 2024, we will monetize the fee interests under certain of our international cinemas, while retaining leasehold interests. In addition, we are currently evaluating alternatives for our 26.6-acre industrial site in Williamsport, Pennsylvania. Together with our 25% minority interest partner in the Cinemas 123 in New York City, we are exploring a sale of all or part of the Cinemas 123 property or of our interest in that asset.
President and Chief Executive Officer, Ellen Cotter said, “We’re pleased again with our year-over-year top line progress post-pandemic. Not only did we deliver our highest Total Revenues since the pandemic’s start, but also the highest operating income and, excluding 2021 when we delivered $144.7 million in gross real estate asset sales, the highest EBITDA since the start of the pandemic. Disappointingly, the 2023 Hollywood Strikes impacted our cinema revenues given the delays in major studio releases in 2023 and continuing into Q1 2024. However, we believe that the impacts of the Hollywood Strikes are temporary and more and better film releases should commence toward the end of 2024 and into 2025, driving, we hope, better cinema revenues for us.
The 2025 movie release schedule looks exciting and encouraging. Disney’s line-up includes almost double the number of releases compared to 2024 and should benefit greatly from Disney’s reported re-focus on creativity and novel storylines. Additionally, in 2025, James Cameron will deliver “Avatar 3”, Tom Cruise returns in “Mission: Impossible 8”, Universal will release a new Jurassic World film and Warner Bros. will release James Gunn’s “Superman” from DC Studios.
As our global cinema business continues its recovery, our real estate operations strengthen and we navigate current global economic challenges, our ‘two business/three country’ diversified business structure, together with our dedicated global executive and employee team, will continue to serve as the foundation for our Company’s ability to deliver long-term value for our stockholders.”
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About Reading International, Inc.
Reading International, Inc. (NASDAQ: 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. Reading’s live theatres are owned and operated by its Liberty Theaters subsidiary, under the Orpheum and Minetta Lane names. Reading’s 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 the Company’s website: http://www.readingrdi.com.
