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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

(Mark One)

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-8625

C:\Users\matthew.elmshauser\Pictures\Reading International logo.jpg

READING INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Nevada

State or other jurisdiction of incorporation or organization)

95-3885184

(IRS Employer Identification Number)

189 Second Avenue, Suite 2S

New York, New York

(Address of principal executive offices)

 

10003

(Zip Code)

Registrant’s telephone number, including area code: (213) 235-2240

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Class A Nonvoting Common Stock, $0.01 par value

 

RDI

 

NASDAQ

Class B Voting Common Stock, $0.01 par value

RDIB

NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer  þ Smaller Reporting Company þ Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨  No  þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 14, 2023, there were 20,592,834 shares of Class A Nonvoting Common Stock, $0.01 par value per share and 1,680,590 shares of Class B Voting Common Stock, $0.01 par value per share outstanding.

 

1


READING INTERNATIONAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Page

PART I - Financial Information

3

Item 1 – Financial Statements

3

Consolidated Balance Sheets (Unaudited)

3

Consolidated Statements of Income (Unaudited)

4

Consolidated Statements of Comprehensive Income (Unaudited)

5

Consolidated Statements of Cash Flows (Unaudited)

6

Notes to Consolidated Financial Statements (Unaudited)

7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3 – Quantitative and Qualitative Disclosure about Market Risk

43

Item 4 – Controls and Procedures

45

PART II – Other Information

46

Item 1 – Legal Proceedings

46

Item 1A – Risk Factors

46

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3 – Defaults Upon Senior Securities

46

Item 4 – Mine Safety Disclosure

46

Item 5 – Other Information

46

Item 6 – Exhibits

47

SIGNATURES

48

Certifications

 


 

2


PART 1 – FINANCIAL INFORMATION

Item 1 - Financial Statements

READING INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except share information)

March 31,

December 31,

2023

2022

ASSETS

(unaudited)

Current Assets:

Cash and cash equivalents

$

14,628

$

29,947

Restricted cash

5,749

5,032

Receivables

4,858

6,206

Inventories

1,417

1,616

Derivative financial instruments - current portion

293

907

Prepaid and other current assets

5,905

3,804

Total current assets

32,850

47,512

Operating property, net

281,886

286,952

Operating lease right-of-use assets

193,655

200,417

Investment and development property, net

8,694

8,792

Investment in unconsolidated joint ventures

4,707

4,756

Goodwill

25,272

25,504

Intangible assets, net

2,292

2,391

Deferred tax asset, net

420

447

Other assets

10,422

10,284

Total assets

$

560,198

$

587,055

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable and accrued liabilities

$

40,418

$

42,590

Film rent payable

3,944

5,678

Debt - current portion

47,345

37,279

Subordinated debt - current portion

756

747

Taxes payable - current

649

300

Deferred revenue

9,093

10,286

Operating lease liabilities - current portion

24,016

23,971

Other current liabilities

824

813

Total current liabilities

127,045

121,664

Debt - long-term portion

136,473

148,688

Subordinated debt, net

27,005

26,950

Noncurrent tax liabilities

6,797

7,117

Operating lease liabilities - non-current portion

192,787

200,037

Other liabilities

19,119

19,320

Total liabilities

$

509,226

$

523,776

Commitments and contingencies (Note 15)

 

 

Stockholders’ equity:

Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized,

33,437,260 issued and 20,501,150 outstanding at March 31, 2023 and

33,348,295 issued and 20,412,185 outstanding at December 31, 2022

235

235

Class B voting common shares, par value $0.01, 20,000,000 shares authorized and

1,680,590 issued and outstanding at March 31, 2023 and December 31, 2022

17

17

Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued

or outstanding shares at March 31, 2023 and December 31, 2022

Additional paid-in capital

154,095

153,784

Retained earnings/(deficits)

(59,927)

(48,816)

Treasury shares

(40,407)

(40,407)

Accumulated other comprehensive income

(3,250)

(1,957)

Total Reading International, Inc. stockholders’ equity

50,763

62,856

Noncontrolling interests

209

423

Total stockholders’ equity

50,972

63,279

Total liabilities and stockholders’ equity

$

560,198

$

587,055

See accompanying Notes to the Unaudited Consolidated Financial Statements.

 

3


READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; U.S. dollars in thousands, except per share data)

Three Months Ended

March 31,

2023

2022

Revenue

Cinema

$

41,987

$

37,347

Real estate

3,820

2,853

Total revenue

45,807

40,200

Costs and expenses

Cinema

(41,654)

(38,503)

Real estate

(2,215)

(2,157)

Depreciation and amortization

(4,639)

(5,524)

General and administrative

(5,179)

(5,796)

Total costs and expenses

(53,687)

(51,980)

Operating income (loss)

(7,880)

(11,780)

Interest expense, net

(4,117)

(3,205)

Other income (expense)

174

(781)

Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures

(11,823)

(15,766)

Equity earnings of unconsolidated joint ventures

19

(65)

Income (loss) before income taxes

(11,804)

(15,831)

Income tax benefit (expense)

480

378

Net income (loss)

$

(11,324)

$

(15,453)

Less: net income (loss) attributable to noncontrolling interests

(213)

(99)

Net income (loss) attributable to Reading International, Inc.

$

(11,111)

$

(15,354)

Basic earnings (loss) per share

$

(0.50)

$

(0.70)

Diluted earnings (loss) per share

$

(0.50)

$

(0.70)

Weighted average number of shares outstanding–basic

22,114,927

21,955,985

Weighted average number of shares outstanding–diluted

22,897,990

22,500,658

See accompanying Notes to the Unaudited Consolidated Financial Statements. 

 

4


READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; U.S. dollars in thousands)

Three Months Ended

March 31,

2023

2022

Net income (loss)

$

(11,324)

$

(15,453)

Foreign currency translation gain (loss)

(763)

2,677

Gain (loss) on cash flow hedges

(582)

800

Other

52

47

Comprehensive income (loss)

(12,617)

(11,929)

Less: net income (loss) attributable to noncontrolling interests

(213)

(99)

Less: comprehensive income (loss) attributable to noncontrolling interests

(1)

1

Comprehensive income (loss)

$

(12,403)

$

(11,831)

See accompanying Notes to the Unaudited Consolidated Financial Statements


 

5


READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)

Three Months Ended

March 31,

2023

2022

Operating Activities

Net income (loss)

$

(11,324)

$

(15,453)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Equity earnings of unconsolidated joint ventures

(19)

65

(Gain) loss recognized on foreign currency transactions

793

Amortization of operating leases

5,523

5,846

Amortization of finance leases

8

12

Change in operating lease liabilities

(5,910)

(5,839)

Change in net deferred tax assets

11

67

Depreciation and amortization

4,639

5,524

Other amortization

400

396

Stock based compensation expense

443

416

Net changes in operating assets and liabilities:

Receivables

1,333

2,024

Prepaid and other assets

(2,142)

(2,093)

Payments for accrued pension

(171)

(171)

Accounts payable and accrued expenses

(1,656)

(397)

Film rent payable

(1,717)

(3,894)

Taxes payable

351

(230)

Deferred revenue and other liabilities

(1,321)

(1,128)

Net cash provided by (used in) operating activities

(11,552)

(14,062)

Investing Activities

Purchases of and additions to operating and investment properties

(1,527)

(1,741)

Contributions to unconsolidated joint ventures

(34)

Net cash provided by (used in) investing activities

(1,527)

(1,775)

Financing Activities

Repayment of borrowings

(1,116)

(1,540)

Repayment of finance lease principal

(8)

(12)

Capitalized borrowing costs

(154)

(Cash paid) proceeds from the settlement of employee share transactions

(131)

(32)

Noncontrolling interest distributions

(22)

Net cash provided by (used in) financing activities

(1,409)

(1,606)

Effect of exchange rate on cash and restricted cash

(114)

687

Net increase (decrease) in cash and cash equivalents and restricted cash

(14,602)

(16,756)

Cash and cash equivalents and restricted cash at the beginning of the period

34,979

88,571

Cash and cash equivalents and restricted cash at the end of the period

$

20,377

$

71,815

Cash and cash equivalents and restricted cash consists of:

Cash and cash equivalents

$

14,628

$

67,263

Restricted cash

5,749

4,552

$

20,377

$

71,815

Supplemental Disclosures

Interest paid

$

4,374

$

2,732

Income taxes (refunded) paid

57

399

Non-Cash Transactions

Additions to operating and investing properties through accrued expenses

3,127

2,970

See accompanying Notes to the Unaudited Consolidated Financial Statements. 

 

6


READING INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

Note 1 – Description of Business and Segment Reporting

Our Company

Reading International, Inc., a Nevada corporation (“RDI” and collectively with our consolidated subsidiaries and corporate predecessors, the “Company,” “Reading,” and “we,” “us,” or “our”) was incorporated in 1999. Our businesses, owned and operated through our various subsidiaries, consist primarily of:

the development, ownership, and operation of cinemas in the United States, Australia, and New Zealand; and,

the development, ownership, operation and/or rental of retail, commercial and live venue real estate assets in Australia, New Zealand, and the United States.

Business Segments

Reported below are the operating segments of our Company for which separate financial information is available and evaluated regularly by the Chief Executive Officer, the chief operating decision-maker of our Company. As part of our real estate activities, we hold undeveloped land in urban and suburban centers in the United States and New Zealand.

The table below summarizes the results of operations for each of our business segments for the quarter ended March 31, 2023, and 2022, respectively. Operating expense includes costs associated with the day-to-day operations of the cinemas and the management of rental properties, including our live theatre assets.

Three Months Ended

March 31,

(Dollars in thousands)

2023

2022

Revenue:

Cinema exhibition

$

41,987

$

37,347

Real estate

5,065