Reading International Reports Third Quarter 2022 Results
Earnings Call Webcast to Discuss Third Quarter Financial Results
Scheduled to Post to Corporate Website on
President and Chief Executive Officer,
“We further advanced our long-term real estate strategy in
Key Financial Results – Third Quarter 2022
- Achieved global revenue of
$51.2 million , a 61% increase from revenue of$31.8 million for the same period in 2021.
- Operating loss improved by approximately 40% to
$6.7 million , compared to an operating loss of$11.0 million for the same period in 2021.
- Net loss attributable to
Reading International, Inc. improved by 49% to$5.2 million in Q3 2022, compared to a net loss of$10.1 million for the same period in 2021.
- The Australian dollar and
New Zealand dollar average exchange rates weakened against theU.S. dollar by 7.0% and 12.5%, 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 Financial Results - Nine Months of 2022
- Achieved global revenue of
$155.9 million , an 75% increase from$89.1 million for the same period in 2021.
- Operating loss improved by approximately 46% to
$20.1 million , compared to an operating loss of$37.5 million for the same period in 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, not replicated in the first nine months of 2022, we reported a basic loss per share of$1.04 compared to a basic earnings per share of$1.45 for the first nine months of 2021.
- For the same reason as above, net loss attributable to
Reading International, Inc. was$23.0 million for the first nine months of 2022, compared to a net income of$31.6 million for the same period in 2021.
- The Australian dollar and
New Zealand dollar average exchange rates weakened against theU.S. dollar by 6.9% and 9.2%, 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.
Key Cinema Business Highlights
Despite the quarter’s foreign exchange impacts, our Q3 2022 cinema segment revenue of
The operating performance improvement in 2022 compared to 2021 was due to a higher quantity and quality of the film slate and a greater number of operating days for our cinema circuit due to fewer government COVID-related closures and the ability to offer more seats due to relaxation of government COVID-related spacing mandates. Our variable operating costs increased, in line with the changes in the operational landscape, and as a result of increased occupancy expenses related to internal rent that was abated in 2021.
Now that we have reopened for business, we are once again focusing 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
Key Real Estate Business Highlights
Real estate segment revenue for Q3 2022, increased by 28% to
Real estate segment revenue for the nine months ended
These changes between 2021 and 2022 were attributable to rental revenue generated from our
Key Balance Sheet, Cash, and Liquidity Highlights
As of
For more information about our borrowings, please refer to Part I – Financial Information, Item 1 – Notes to Consolidated Financial Statements-- Note 11 – Borrowings.
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
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, among others, the adverse impact of the COVID-19 pandemic and any variant thereof on short-term and/or long-term entertainment, leisure and discretionary spending habits and practices of our patrons and on our results from operations, liquidity, cash flows, financial condition, and access to credit markets, and 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 year ended
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.
Unaudited Consolidated Statements of Operations
(Unaudited;
| Quarter Ended | Nine Months Ended | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | ||||||||||||||||
| Cinema | $ | 48,359 | $ | 28,751 | $ | 147,476 | $ | 79,580 | ||||||||
| Real estate | 2,837 | 3,052 | 8,432 | 9,562 | ||||||||||||
| Total revenue | 51,196 | 31,803 | 155,908 | 89,142 | ||||||||||||
| Costs and expenses | ||||||||||||||||
| Cinema | (45,308 | ) | (29,237 | ) | (134,579 | ) | (82,485 | ) | ||||||||
| Real estate | (2,352 | ) | (2,683 | ) | (6,715 | ) | (7,902 | ) | ||||||||
| Depreciation and amortization | (5,010 | ) | (5,560 | ) | (15,781 | ) | (17,011 | ) | ||||||||
| Impairment expense | — | — | (1,549 | ) | — | |||||||||||
| General and administrative | (5,257 | ) | (5,274 | ) | (17,364 | ) | (19,205 | ) | ||||||||
| Total costs and expenses | (57,927 | ) | (42,754 | ) | (175,988 | ) | (126,603 | ) | ||||||||
| Operating income (loss) | (6,731 | ) | (10,951 | ) | (20,080 | ) | (37,461 | ) | ||||||||
| Interest expense, net | (3,693 | ) | (3,068 | ) | (10,242 | ) | (10,437 | ) | ||||||||
| Gain (loss) on sale of assets | (59 | ) | 2,559 | (59 | ) | 92,345 | ||||||||||
| Other income (expense) | 5,455 | 440 | 8,445 | 2,236 | ||||||||||||
| Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures | (5,028 | ) | (11,020 | ) | (21,936 | ) | 46,683 | |||||||||
| Equity earnings of unconsolidated joint ventures | 61 | (75 | ) | 233 | 158 | |||||||||||
| Income (loss) before income taxes | (4,967 | ) | (11,095 | ) | (21,703 | ) | 46,841 | |||||||||
| Income tax benefit (expense) | (332 | ) | 895 | (1,492 | ) | (12,380 | ) | |||||||||
| Net income (loss) | $ | (5,299 | ) | $ | (10,200 | ) | $ | (23,195 | ) | $ | 34,461 | |||||
| Less: net income (loss) attributable to noncontrolling interests | (122 | ) | (105 | ) | (228 | ) | 2,889 | |||||||||
| Net income (loss) attributable to |
$ | (5,177 | ) | $ | (10,095 | ) | $ | (22,967 | ) | $ | 31,572 | |||||
| Basic earnings (loss) per share | $ | (0.23 | ) | $ | (0.46 | ) | $ | (1.04 | ) | $ | 1.45 | |||||
| Diluted earnings (loss) per share | $ | (0.23 | ) | $ | (0.46 | ) | $ | (1.04 | ) | $ | 1.41 | |||||
| Weighted average number of shares outstanding–basic | 22,043,823 | 21,809,402 | 22,011,755 | 21,792,007 | ||||||||||||
| Weighted average number of shares outstanding–diluted | 22,043,823 | 21,809,402 | 22,011,755 | 22,462,657 | ||||||||||||
Consolidated Balance Sheets
(
| 2022 | 2021 | |||||||
| ASSETS | (unaudited) | |||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 39,628 | $ | 83,251 | ||||
| Restricted cash | 6,222 | 5,320 | ||||||
| Receivables | 4,601 | 5,360 | ||||||
| Inventories | 1,355 | 1,408 | ||||||
| Derivative financial instruments - current portion | 1,318 | 96 | ||||||
| Prepaid and other current assets | 5,567 | 4,871 | ||||||
| Total current assets | 58,691 | 100,306 | ||||||
| Operating property, net | 281,910 | 306,657 | ||||||
| Operating lease right-of-use assets | 200,396 | 227,367 | ||||||
| Investment and development property, net | 7,853 | 9,570 | ||||||
| Investment in unconsolidated joint ventures | 4,352 | 4,993 | ||||||
| 24,131 | 26,758 | |||||||
| Intangible assets, net | 2,548 | 3,258 | ||||||
| Deferred tax asset, net | 2,316 | 2,220 | ||||||
| Derivative financial instruments - non-current portion | 21 | 112 | ||||||
| Other assets | 7,500 | 6,461 | ||||||
| Total assets | $ | 589,718 | $ | 687,702 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 38,497 | $ | 39,678 | ||||
| Film rent payable | 2,803 | 7,053 | ||||||
| Debt - current portion | 57,207 | 11,349 | ||||||
| Subordinated debt - current portion | 738 | 711 | ||||||
| Derivative financial instruments - current portion | — | 181 | ||||||
| Taxes payable - current | 2,038 | 10,655 | ||||||
| Deferred revenue | 7,958 | 9,996 | ||||||
| Operating lease liabilities - current portion | 22,950 | 23,737 | ||||||
| Other current liabilities | 6,717 | 3,619 | ||||||
| Total current liabilities | 138,908 | 106,979 | ||||||
| Debt - long-term portion | 132,345 | 195,198 | ||||||
| Subordinated debt, net | 26,894 | 26,728 | ||||||
| Noncurrent tax liabilities | 6,286 | 7,467 | ||||||
| Operating lease liabilities - non-current portion | 200,855 | 223,364 | ||||||
| Other liabilities | 15,196 | 22,906 | ||||||
| Total liabilities | $ | 520,484 | $ | 582,642 | ||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Class A non-voting common shares, par value |
||||||||
| 33,299,344 issued and 20,363,234 outstanding at |
||||||||
| 33,198,500 issued and 20,262,390 outstanding at |
234 | 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 | 153,275 | 151,981 | ||||||
| Retained earnings/(deficits) | (35,598 | ) | (12,632 | ) | ||||
| (40,407 | ) | (40,407 | ) | |||||
| Accumulated other comprehensive income | (8,979 | ) | 4,882 | |||||
| 68,542 | 104,074 | |||||||
| Noncontrolling interests | 693 | 986 | ||||||
| Total stockholders’ equity | 69,235 | 105,060 | ||||||
| Total liabilities and stockholders’ equity | $ | 589,719 | $ | 687,702 | ||||
Segment Results
(Unaudited;
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
| % Change Favorable/ |
% Change Favorable/ |
||||||||||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | (Unfavorable) | 2022 | 2021 | (Unfavorable) | |||||||||||||||||
| Segment revenue | |||||||||||||||||||||||
| Cinema | |||||||||||||||||||||||
| $ | 24,676 | $ | 16,963 | 45 | % | $ | 72,532 | $ | 33,858 | >100 | % | ||||||||||||
| 20,014 | 9,356 | >100 | % | 63,797 | 37,620 | 70 | % | ||||||||||||||||
| 3,670 | 2,431 | 51 | % | 11,147 | 8,102 | 38 | % | ||||||||||||||||
| Total | $ | 48,360 | $ | 28,750 | 68 | % | $ | 147,476 | $ | 79,580 | 85 | % | |||||||||||
| Real estate | |||||||||||||||||||||||
| $ | 527 | $ | 556 | (5 | ) | % | $ | 1,788 | $ | 1,229 | 45 | % | |||||||||||
| 3,154 | 2,391 | 32 | % | 9,336 | 8,000 | 17 | % | ||||||||||||||||
| 390 | 230 | 70 | % | 1,141 | 718 | 59 | % | ||||||||||||||||
| Total | $ | 4,071 | $ | 3,177 | 28 | % | $ | 12,265 | $ | 9,947 | 23 | % | |||||||||||
| Inter-segment elimination | (1,232 | ) | (125 | ) | (>100) | % | (3,833 | ) | (386 | ) | (>100) | % | |||||||||||
| Total segment revenue | $ | 51,199 | $ | 31,802 | 61 | % | $ | 155,908 | $ | 89,141 | 75 | % | |||||||||||
| Segment operating income (loss) | |||||||||||||||||||||||
| Cinema | |||||||||||||||||||||||
| $ | (3,988 | ) | $ | (3,274 | ) | (22 | ) | % | $ | (12,342 | ) | $ | (21,582 | ) | 43 | % | |||||||
| 1,577 | (1,682 | ) | >100 | % | 5,836 | 566 | >100 | % | |||||||||||||||
| 274 | (100 | ) | >100 | % | 605 | 337 | 80 | % | |||||||||||||||
| Total | $ | (2,137 | ) | $ | (5,056 | ) | 58 | % | $ | (5,901 | ) | $ | (20,679 | ) | 71 | % | |||||||
| Real estate | |||||||||||||||||||||||
| $ | (1,159 | ) | $ | (1,439 | ) | 19 | % | $ | (3,273 | ) | $ | (4,260 | ) | 23 | % | ||||||||
| 1,351 | 464 | >100 | % | 4,046 | 1,782 | >100 | % | ||||||||||||||||
| (336 | ) | (509 | ) | 34 | % | (897 | ) | (1,430 | ) | 37 | % | ||||||||||||
| Total | $ | (144 | ) | $ | (1,484 | ) | 90 | % | $ | (124 | ) | $ | (3,908 | ) | 97 | % | |||||||
| Total segment operating income (loss) (1) | $ | (2,281 | ) | $ | (6,540 | ) | 65 | % | $ | (6,025 | ) | $ | (24,587 | ) | 75 | % | |||||||
(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) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net Income (loss) attributable to |
$ | (5,177 | ) | $ | (10,095 | ) | $ | (22,967 | ) | $ | 31,572 | ||||
| Add: Interest expense, net | 3,693 | 3,068 | 10,242 | 10,437 | |||||||||||
| Add: Income tax expense (benefit) | 332 | (895 | ) | 1,492 | 12,380 | ||||||||||
| Add: Depreciation and amortization | 5,010 | 5,560 | 15,781 | 17,011 | |||||||||||
| EBITDA | $ | 3,858 | $ | (2,362 | ) | $ | 4,548 | $ | 71,400 | ||||||
| Adjustments for: | |||||||||||||||
| Legal expenses relating to the Derivative litigation, the James J. Cotter Jr. employment arbitration and other Cotter litigation matters | — | (2 | ) | — | 28 | ||||||||||
| Adjusted EBITDA | $ | 3,858 | $ | (2,364 | ) | $ | 4,548 | $ | 71,428 | ||||||
Reconciliation of Total Segment Operating Income (Loss) to Income (Loss) before Income Taxes
(Unaudited;
| Quarter Ended | Nine Months Ended | |||||||||||||||
| (Dollars in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Segment operating income (loss) | $ | (2,283 | ) | $ | (6,542 | ) | $ | (6,026 | ) | $ | (24,587 | ) | ||||
| Unallocated corporate expense | ||||||||||||||||
| Depreciation and amortization expense | (258 | ) | (300 | ) | (804 | ) | (917 | ) | ||||||||
| General and administrative expense | (4,191 | ) | (4,109 | ) | (13,250 | ) | (11,957 | ) | ||||||||
| Interest expense, net | (3,694 | ) | (3,068 | ) | (10,242 | ) | (10,437 | ) | ||||||||
| Equity earnings of unconsolidated joint ventures | 61 | (75 | ) | 233 | 158 | |||||||||||
| Gain (loss) on sale of assets | (59 | ) | 2,559 | (59 | ) | 92,345 | ||||||||||
| Other income (expense) | 5,455 | 440 | 8,445 | 2,236 | ||||||||||||
| Income (loss) before income tax expense | $ | (4,969 | ) | $ | (11,095 | ) | $ | (21,703 | ) | $ | 46,841 | |||||
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