Reading International Reports Fourth Quarter and Full Year 2022 Results
Earnings Call Webcast to Discuss 2022 Fourth Quarter and Full Year Financial Results
Scheduled to Post to Corporate Website on
President and Chief Executive Officer,
“For both Q4 2022 and the full year 2022, we delivered improved operating results across each of our global real estate divisions. We maintained strong operational performance in
Key Financial Results for Fourth Quarter of 2022
The below Q4 2022 operational results were primarily driven by a decrease in the number and quality of movies released theatrically in Q4 2022 compared to Q4 2021.
- Worldwide revenues of
$47.2 million decreased by 5.4% (or$2.7 million ) compared to Q4 2021. - Operating loss of
$8.4 million increased from a loss of$4.3 million in Q4 2021. - Net income decreased from a gain of
$0.3 million in Q4 2021 to a net loss of$13.2 million . - Basic earnings per share (“EPS”) decreased to a loss per share (“LPS”) of
$0.60 compared to an EPS of$0.02 in Q4 2021. - Adjusted EBITDA was negative
$4.7 million , compared to positive Adjusted EBITDA of$2.8 million in Q4 2021. - The Australian dollar and
New Zealand dollar average exchange rates weakened against theU.S. dollar by 9.9% and 13.2%, respectively, compared to the same period in the prior year, which contributed to our loss for the period, and negatively impacted our overall financial results.
Key Financial Results for the Full Year 2022
- At
$203.1 million , our 2022 worldwide revenues increased 46% compared to 2021, due to a generally more robust movie slate and an increased number of operational cinema days compared to 2021, despite unfavorable foreign exchange rates. - Our 2022 operating loss of
$28.5 million improved by 32% compared to 2021. - Due to the successful monetization of our properties in Manukau (
New Zealand ),Coachella (California ),Auburn (Australia ),Royal George Theatre (Chicago ) and Invercargill (New Zealand ) in the first nine months of 2021, which was not replicated in 2022, we reported:- Net Loss of
$36.2 million compared to Net Income of$31.9 million in 2021. - Basic LPS of
$1.64 in 2022, compared to Basic EPS of$1.46 in 2021. - Negative Adjusted EBITDA of
$0.1 million in 2022 compared to an Adjusted EBITDA of$74.2 million in 2021.
- Net Loss of
- The Australian dollar and
New Zealand dollar average exchange rates weakened against theU.S. dollar by 7.6% and 10.2%, respectively, compared to the same period in the prior year, which contributed to our loss for the period, and negatively impacted our overall financial results.
Key Highlights from Our Cinema Business
During 2022, our cinema operations began to return to normalcy as health and safety measures related to the COVID-19 pandemic subsided and major movie studios increased their release of blockbuster films with movies like Top Gun: Maverick, Doctor Strange: In The Multiverse of Madness, Black Panther: Wakanda Forever, and Avatar: The Way of Water. Continuing the trend of improving operational results over the last few years since the start of the COVID-19 pandemic, for the year-ended
As of the date of this earnings release, all of our cinemas are open other than our Courtenay Central cinema in
Reinforcing our commitment to the long term viability of the cinema business, during 2022, we invested in our cinema portfolio: (i) on
Key Highlights from Our Real Estate Business
With respect to our global real estate division during the fourth quarter 2022, and compared to the fourth quarter 2021, (i) our revenues increased by 62% to
With respect to full year 2022 results for our global real estate division, and compared to the full year 2021, (i) our revenues increased by 32% to
The improved Q4 2022 and full year 2022 operating results for our global real estate division were due to a variety of factors, including (i) reduced tenant vacancy rates across our real estate divisions, (ii) increased percentage rent revenue received from our Australian third party tenants, (iii) recognition of rental income from Petco, (iv) regarding our 2022 real estate segment metrics, the segment revenues and income reflect our decision to re-start charging intercompany cinema rent to our Reading Cinemas in properties where we own the underlying land, an intercompany charge that we had abated during 2021, and (v) improved operational results from our live theatres in
Our Balance Sheet, Cash, and Liquidity
As of
- On
March 3, 2022 , we exercised the first of two six-month options to extend the Cinemas 123 Term Loan, taking the maturity toApril 1, 2023 . OnMarch 15, 2023 , we further extended the maturity toJuly 3, 2023 and are working currently with our existing lender to complete a longer-term refinance of the Cinemas 123. - Throughout 2022, we repaid
$12.75 million on our Bank of America term loan. OnNovember 29, 2022 , we extended the maturity date toMarch 1, 2024 . And, onMarch 30, 2023 , we executed an amendment, which further extends the maturity date toSeptember 4, 2024 and creates a new re-payment schedule.
For more information about our borrowings, please refer to Note 12 – Borrowings of our Annual Report on Form 10-K for the year 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 on
About
Reading’s cinema subsidiaries operate under multiple cinema brands: Reading Cinemas,
Additional information about Reading can be obtained from the Company's website: http://www.readingrdi.com.
Cautionary Note Regarding Forward-Looking Statements
This earnings release contains a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995, including those related to our expected ability to keep our cinemas and theatres open to the public and the availability of compelling movie content; our expected operated results; our belief regarding our business structure and diversification strategy; our belief regarding the quality and appeal of upcoming movie releases in 2023; our expectations regarding the opening dates of the Angelika Film Center at
Given the variety and unpredictability of the factors that will ultimately influence our businesses and our results of operation, no guarantees can be given that any of our forward-looking statements will ultimately prove to be correct. Actual results will undoubtedly vary and there is no guarantee as to how our securities will perform either when considered in isolation or when compared to other securities or investment opportunities.
Forward-looking statements made by us in this earnings release are based only on information currently available to us and speak only as of the date on which they are made. We undertake no obligation to publicly update or to revise any of our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. Accordingly, you should always note the date to which our forward-looking statements speak.
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. 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, among others, 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, as well as the risk factors set forth in any other filings made under the Securities Act of 1934, as amended, including any of our Quarterly Reports on Form 10-Q, for more information.
Consolidated Statements of Operations
(
| 2022 | 2021 | 2020 | ||||||||||
| Revenues | ||||||||||||
| Cinema | $ | 191,321 | $ | 126,812 | $ | 67,014 | ||||||
| Real estate | 11,794 | 12,248 | 10,848 | |||||||||
| Total revenues | 203,115 | 139,060 | 77,862 | |||||||||
| Costs and expenses | ||||||||||||
| Cinema | (178,768 | ) | (122,901 | ) | (91,065 | ) | ||||||
| Real estate | (8,947 | ) | (10,106 | ) | (8,578 | ) | ||||||
| Depreciation and amortization | (20,918 | ) | (22,746 | ) | (22,317 | ) | ||||||
| General and administrative | (21,416 | ) | (25,100 | ) | (16,998 | ) | ||||||
| Impairment of long-lived assets | (1,549 | ) | — | (217 | ) | |||||||
| Total costs and expenses | (231,598 | ) | (180,853 | ) | (139,175 | ) | ||||||
| Operating income (loss) | (28,483 | ) | (41,793 | ) | (61,313 | ) | ||||||
| Interest expense, net | (14,392 | ) | (13,688 | ) | (9,354 | ) | ||||||
| Gain (loss) on sale of assets | (54 | ) | 92,219 | (1 | ) | |||||||
| Other income (expense) | 6,817 | 3,762 | 293 | |||||||||
| Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures | (36,112 | ) | 40,500 | (70,375 | ) | |||||||
| Equity earnings of unconsolidated joint ventures | 271 | 258 | (449 | ) | ||||||||
| Income (loss) before income taxes | (35,841 | ) | 40,758 | (70,824 | ) | |||||||
| Income tax benefit (expense) | (819 | ) | (5,944 | ) | 4,967 | |||||||
| Net income (loss) | $ | (36,660 | ) | $ | 34,814 | $ | (65,857 | ) | ||||
| Less: net income (loss) attributable to noncontrolling interests | (476 | ) | 2,893 | (657 | ) | |||||||
| Net income (loss) attributable to |
$ | (36,184 | ) | $ | 31,921 | $ | (65,200 | ) | ||||
| Basic earnings (loss) per share | $ | (1.64 | ) | $ | 1.46 | $ | (3.00 | ) | ||||
| Diluted earnings (loss) per share | $ | (1.64 | ) | $ | 1.42 | $ | (3.00 | ) | ||||
| Weighted average number of shares outstanding–basic | 22,020,921 | 21,801,719 | 21,749,155 | |||||||||
| Weighted average number of shares outstanding–diluted | 22,956,245 | 22,406,816 | 22,215,511 | |||||||||
Consolidated Balance Sheets
(
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 29,947 | $ | 83,251 | ||||
| Restricted cash | 5,032 | 5,320 | ||||||
| Receivables | 6,206 | 5,360 | ||||||
| Inventories | 1,616 | 1,408 | ||||||
| Derivative financial instruments - current portion | 907 | 96 | ||||||
| Prepaid and other current assets | 3,804 | 4,871 | ||||||
| Total Current Assets | 47,512 | 100,306 | ||||||
| Operating properties, net | 286,952 | 306,657 | ||||||
| Operating lease right-of-use assets | 200,417 | 227,367 | ||||||
| Investment and development properties, net | 8,792 | 9,570 | ||||||
| Investment in unconsolidated joint ventures | 4,756 | 4,993 | ||||||
| 25,504 | 26,758 | |||||||
| Intangible assets, net | 2,391 | 3,258 | ||||||
| Deferred tax assets, net | 447 | 2,220 | ||||||
| Derivative financial instruments - non-current portion | — | 112 | ||||||
| Other assets | 10,284 | 6,461 | ||||||
| Total Assets | $ | 587,055 | $ | 687,702 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 42,590 | $ | 39,678 | ||||
| Film rent payable | 5,678 | 7,053 | ||||||
| Debt - current portion | 37,279 | 11,349 | ||||||
| Subordinated debt - current portion | 747 | 711 | ||||||
| Derivative financial instruments - current portion | — | 181 | ||||||
| Taxes payable | 300 | 10,655 | ||||||
| Deferred current revenue | 10,286 | 9,996 | ||||||
| Operating lease liabilities - current portion | 23,971 | 23,737 | ||||||
| Other current liabilities | 813 | 3,619 | ||||||
| Total Current Liabilities | 121,664 | 106,979 | ||||||
| Debt – long-term portion | 148,688 | 195,198 | ||||||
| Subordinated debt - non-current portion | 26,950 | 26,728 | ||||||
| Noncurrent tax liabilities | 7,117 | 7,467 | ||||||
| Operating lease liabilities - non-current portion | 200,037 | 223,364 | ||||||
| Other non-current liabilities | 19,320 | 22,906 | ||||||
| Total Liabilities | $ | 523,776 | $ | 582,642 | ||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Class A non-voting common shares, par value |
||||||||
| 33,348,295 issued and 20,412,185 outstanding at |
||||||||
| issued and 20,262,390 outstanding at |
$ | 235 | $ | 233 | ||||
| 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 | 153,784 | 151,981 | ||||||
| Retained earnings (accumulated deficit) | (48,816 | ) | (12,632 | ) | ||||
| (40,407 | ) | (40,407 | ) | |||||
| Accumulated other comprehensive income | (1,957 | ) | 4,882 | |||||
| 62,856 | 104,074 | |||||||
| Noncontrolling Interests | 423 | 986 | ||||||
| Total Stockholders’ Equity | $ | 63,279 | $ | 105,060 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 587,055 | $ | 687,702 | ||||
Segment Results
(
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| % Change Favorable/ |
% Change Favorable/ |
|||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | (Unfavorable) | 2022 | 2021 | (Unfavorable) | ||||||||||||||||||
| Segment revenue | ||||||||||||||||||||||||
| Cinema | ||||||||||||||||||||||||
| $ | 24,550 | $ | 26,029 | (6 | )% | $ | 97,082 | $ | 59,887 | 62 | % | |||||||||||||
| 16,095 | 17,697 | (9 | )% | 79,892 | 55,317 | 44 | % | |||||||||||||||||
| 3,199 | 3,506 | (9 | )% | 14,346 | 11,608 | 24 | % | |||||||||||||||||
| Total | $ | 43,844 | $ | 47,232 | (7 | )% | $ | 191,320 | $ | 126,812 | 51 | % | ||||||||||||
| Real estate | ||||||||||||||||||||||||
| $ | 1,249 | $ | 697 | 79 | % | $ | 3,037 | $ | 1,926 | 58 | % | |||||||||||||
| 2,910 | 1,855 | 57 | % | 12,246 | 9,855 | 24 | % | |||||||||||||||||
| 393 | 264 | 49 | % | 1,534 | 982 | 56 | % | |||||||||||||||||
| Total | $ | 4,552 | $ | 2,816 | 62 | % | $ | 16,817 | $ | 12,763 | 32 | % | ||||||||||||
| Inter-segment elimination | (1,190 | ) | (129 | ) | (>100 | )% | (5,023 | ) | (515 | ) | (>100 | )% | ||||||||||||
| Total segment revenue | $ | 47,206 | $ | 49,919 | (5 | )% | $ | 203,114 | $ | 139,060 | 46 | % | ||||||||||||
| Segment operating income (loss) | ||||||||||||||||||||||||
| Cinema | ||||||||||||||||||||||||
| $ | (4,845 | ) | $ | 437 | (>100 | )% | $ | (17,188 | ) | $ | (21,145 | ) | 19 | % | ||||||||||
| (891 | ) | 1,488 | (>100 | )% | 4,945 | 2,054 | >100 | % | ||||||||||||||||
| (79 | ) | 117 | (>100 | )% | 526 | 454 | 16 | % | ||||||||||||||||
| Total | $ | (5,815 | ) | $ | 2,042 | (>100 | )% | $ | (11,717 | ) | $ | (18,637 | ) | 37 | % | |||||||||
| Real estate | ||||||||||||||||||||||||
| $ | (367 | ) | $ | (823 | ) | 55 | % | $ | (3,640 | ) | $ | (5,083 | ) | 28 | % | |||||||||
| 1,112 | (137 | ) | >100 | % | 5,157 | 1,645 | >100 | % | ||||||||||||||||
| (114 | ) | (487 | ) | 77 | % | (1,011 | ) | (1,917 | ) | 47 | % | |||||||||||||
| Total | $ | 631 | $ | (1,447 | ) | >100 | % | $ | 506 | $ | (5,355 | ) | >100 | % | ||||||||||
| Total segment operating income (loss)(1) | $ | (5,184 | ) | $ | 595 | (>100 | )% | $ | (11,211 | ) | $ | (23,992 | ) | 53 | % | |||||||||
(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)
(
| Quarter Ended | Year Ended | |||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net income (loss) | $ | (13,217 | ) | $ | 349 | $ | (36,184 | ) | $ | 31,921 | ||||||
| Adjustments for: | ||||||||||||||||
| Interest expense, net | 4,150 | 3,251 | 14,392 | 13,688 | ||||||||||||
| Income tax (benefit) expense | (673 | ) | (6,436 | ) | 819 | 5,944 | ||||||||||
| Depreciation and amortization | 5,137 | 5,735 | 20,918 | 22,746 | ||||||||||||
| EBITDA | $ | (4,603 | ) | $ | 2,899 | $ | (55 | ) | $ | 74,299 | ||||||
| Adjustments for: | ||||||||||||||||
| Legal expenses relating to the Derivative litigation, the James J. Cotter, Jr. employment arbitration and other Cotter litigation matters | — | (80 | ) | — | (53 | ) | ||||||||||
| Adjusted EBITDA | $ | (4,603 | ) | $ | 2,819 | $ | (55 | ) | $ | 74,246 | ||||||
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: Reading International Inc