New York, NY ( August 14, 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 Second Quarter ended June 30, 2024.
Second Quarter 2024 Summary Results
The anticipated lingering effects of the 2023 Hollywood Strikes negatively impacted our second quarter 2024 global box office as the movie line-up featured not only fewer blockbuster films due to changes in studio release dates, but also a number of underperforming films. The expected hit to the box office, which was most pronounced in April and May 2024, permeated our key financial results leading to an overall weaker quarter compared to Q2 2023. The 2023 Hollywood Strike impacts began to dissipate in June 2024 with the release of the record setting Inside Out 2, which has now become the highest grossing animated film of all time, and the overperforming Bad Boys: Ride or Die. Reflecting the June 2024 momentum, compared to the first quarter 2024, during the second quarter 2024 each of the Company’s cinema divisions reported (i) increases in total segment revenue and (ii) improvements in the total operating loss.
During Q2 2024 and for the first half of 2024, our global real estate division reported a slight decrease in revenues and a decrease in operating income compared to the same periods in 2023 due to lower results from our U.S. and NZ Real Estate divisions, which were balanced by stronger results from our Australian real estate division.
Key Financial Results – Second Quarter 2024
Total Revenues were $46.8 million compared to $65.1 million in Q2 2023.
Operating Loss was $4.4 million compared to Operating Income of $1.8 million in Q2 2023.
Adjusted EBITDA loss was $0.2 million compared to Adjusted EBITDA of $6.7 million in Q2 2023.
Basic loss per share was $0.42 compared to a loss of $0.12 in Q2 2023.
Net loss attributable to Reading was $9.3 million compared to a loss of $2.8 million in Q2 2023.
Key Financial Results – Six Months of 2024
Total Revenues were $91.9 million compared to $110.9 million for the first six months of 2023.
Operating Loss was $11.9 million compared to a loss of $6.1 million for the same period in 2023.
Adjusted EBITDA loss was $4.2 million compared to Adjusted EBITDA of $3.8 million for the same period in 2023.
Basic loss per share was $1.01 compared to a loss of $0.63 for the first six months of 2023.
Net loss attributable to Reading was $22.6 million compared to a loss of $13.9 million for the same period in 2023.
During the second quarter 2024, our revenues were impacted by foreign exchange in that both the Australian and New Zealand dollar average exchange rates weakened against the U.S. dollar by 1.3% and 2.1%, respectively, compared to Q2 2023.
President and Chief Executive Officer, Ellen Cotter said, “While the 2023 Hollywood Strikes have had an appreciable financial impact on each of our cinema divisions to date in 2024, we look to recent results for confidence in our ability to withstand this latest disruption. Inside Out 2, which opened in our U.S. and Australian cinemas on June 14/13, 2024, has been a resounding success. Then, Deadpool & Wolverine, which recently ranked the second $1 billion 2024 movie at the global box office after Inside Out 2, drove our global cinema cash flow in July 2024 to be in the top five highest months since the pandemic began. And, just this past weekend, It Ends with Us, a female driven movie based on a bestselling novel which appears to have become an event movie, has now exceeded all box office expectations by delivering a global debut of $80 million. With highly anticipated releases such as Beetlejuice Beetlejuice, Joker: Folie à Deux, Moana 2, Wicked and Mufasa: The Lion King, we look forward to the last half of 2024. Looking ahead to 2025, we’re encouraged by the box office potential for James Cameron’s Avatar 3, a new Jurassic World film from Universal, Tom Cruise in Mission: Impossible 8, The Fantastic Four, and James Gunn’s Superman from DC Studios for Warner Bros.”
Ms. Cotter added, “As our global cinema business continues its recovery over the balance of 2024 and beyond, we are proactively taking steps to improve our liquidity to address upcoming debt maturities and our interest expense which has spiked due to the fastest rate hike cycle in history (up 525 basis points since March 2022). Over the past six months, we sold our Culver City office building for $10 million (using the proceeds to retire $8.4 million of debt and reduce ongoing G&A expense). In addition, we have taken steps to market our Cannon Park property in Townsville Australia. Despite this initiative, we do not anticipate any adverse impact on our cinema operations, as we will continue to operate our cinema at this location. In Wellington, New Zealand, we are marketing a unique opportunity to acquire our five contiguous parcels assembled in the entertainment core of New Zealand’s capital city. We believe this once-in-a-lifetime opportunity offers significant development options. We intend to reserve the right to operate any cinema constructed on these Wellington properties ensuring the future continuity of our cinema business.
“We believe that, with the expected closing of these asset monetizations, together with improving box office trends that are reinforcing the power of the theatrical release window, our Company and our stockholders are well positioned for a better 2025 and beyond.”
Key Points
Cinema Business
The disruption caused by the 2023 Hollywood Strikes and the weaker performance of the Australian and New Zealand dollars drove our Q2 2024 financial results to decrease compared to the same period in 2023: (i) global cinema revenue decreased 30% to $42.9 million and (ii) global operating income dropped to a loss of $1.3 million from operating income of $4.5 million. Our global cinema financial results for the six months ended June 30, 2024, were likewise impacted compared to the first six months of 2023: (i) global cinema revenue decreased by 18% to $84.2 million and (ii) global cinema segment operating loss increased to $5.4 million from a loss of $0.1 million.
Despite the serious headwinds imposed by the 2023 Hollywood Strikes and the pandemic, (i) the Q2 2024 operating loss of $1.1 million of our U.S. Cinema division represented a financially stronger result than all but three calendar quarters since Q4 2019 (despite a 13% reduction in screen count due to the closure of underperforming cinemas), (ii) the Q2 2024 operating loss of $87K of our Australian Cinema division represented a financially stronger result than all but eight calendar quarters since Q4 2019 and (iii) the Q2 2024 operating loss of $95K of our New Zealand Cinema division represented a financially stronger result than all but seven calendar quarters since Q4 2019. While we are disappointed with our industry’s macro-operating conditions, the improvements in various operational strategies across each of our cinema divisions should position them to benefit from the much-improved movie slate expected over the next few years.
From an operational perspective, with respect to our food and beverage (“F&B”) efforts: (i) the Q2 2024 sales per person (“SPP”) of our Australian cinema division ranked the highest second quarter ever and (ii) despite Q2 2024 roll out of additional F&B discounts to drive revenues, the Q2 2024 F&B SPP of our U.S. cinema division ranked the highest second quarter ever for periods when our U.S. circuit was fully operating (i.e. excluding pandemic closure periods).
To further improve the overall profitability of our U.S. Cinema division, we closed an underperforming cinema in Texas whose lease expired in Q2 2024. This closure follows the closure of two theatres in Hawaii in Q3 2023 and one in Northern California in the Q4 2023.
Demonstrating our long-term belief in the cinema industry, our Board authorized management to proceed with the negotiation of a lease for a new Reading Cinema in Noosa (Queensland) in Australia.
Real Estate Business
With respect to our global real estate business, our Q2 2024 financial results compared to the same period in 2023 experienced declines: (i) our global real estate revenue decreased slightly by 4% to $5.0 million and (ii) global operating income dropped 26% to $0.9 million. Our global real estate business financial results for the six months ended June 30, 2024, compared to the first six months of 2023 followed a similar trajectory: (i) our global real estate revenue decreased by 3% to $9.9 million and (ii) operating income of $1.8 million decreased by 20%.
Our U.S. real estate business (which includes Live Theatres) posted its second-highest second-quarter revenue in our Company’s history.
The 2024 declines in performance compared to 2023 were primarily attributable to (i) the monetization of our Culver City office building and our Maitland property (NSW), in the first quarter of 2024 and the fourth quarter of 2023, respectively, and the related elimination of rental revenue associated with those assets, (ii) an increase in our legal expenses related to our Pennsylvania assets, and (iii) our Orpheum Theatre in New York City being “dark” for the months of May and June 2024.
Reflective of a 95% occupancy rate for our 74 third party tenant Australian portfolio, in Q2 2024 our Australian real estate division delivered (i) the highest second quarter revenues since the second quarter ended June 30, 2019 and (ii) the highest second quarter operating income since the second quarter ended June 30, 2018. These achievements come despite the June 2021 sale of our Auburn/RedYard (NSW) property, which had 17 third party tenants.
In April 2024, we extended our license agreement with an affiliate of Audible for the Minetta Lane Theatre by two years.
In September 2024 and for an open-ended run, the Orpheum Theatre debuts The Big Gay Jamboree, co-produced by the producers of Barbie and the creator of Titanique.
Balance Sheet and Liquidity
As of June 30, 2024,
Our cash and cash equivalents were $9.2 million.
Our total gross debt was $210.4 million representing a slight $0.1 million increase since December 31, 2023.
Our assets had a total book value of $494.9 million, compared to a book value of $533.1 million as of December 31, 2023.
Through Q2 2024, we worked closely with certain lenders to amend our existing debt facilities and extend upcoming maturity dates.
On April 4, 2024, we extended our loan with National Australia Bank (NAB) to July 31, 2026, and negotiated a Bridge Facility of A$20 million due March 31, 2025 (to be prepaid upon the sale of certain assets).
On April 23, 2024, we closed a 1-year extension on our 44 Union Square loan extending the maturity date to May 6, 2025. We have one remaining 1-year extension option.
On June 28, 2024, we entered into an Interest Rate Collar hedging agreement with NAB for A$50 million where the cap rate is 4.78% and floor rate is 4.18%. The termination date of the agreement is July 31, 2026.
On August 13, 2024, we executed a Variation of our Westpac loan in New Zealand which, among other things, increased our credit line by NZ$5.0 million.
We are currently working on a one-year extension of our loan from Santander Bank, which matured June 1, 2024.
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, Consolidated Theatres and the Angelika brand. Its live theatres are owned and operated by its Liberty Theaters subsidiary, under the Orpheum and Minetta Lane names. Its signature property developments, including Newmarket Village in Brisbane, Australia, and 44 Union Square in New York City, are maintained in special purpose entities.
Additional information about Reading can be obtained from our Company’s website: http://www.readingrdi.com.
