Reading International Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 16, 2023

There are 3 speakers on the call.

Operator

2nd Quarter 2023 Conference Call. Thank you for joining Reading International's Earnings Call to discuss our 2023 Second Quarter Results. My name is Andrzej Matuchinski, and I am Reading's Executive Vice President of Global Operations. With me are Helen Cotter, our President and Chief Executive Officer and Gilbert Avanes, our Executive Vice President, Chief Financial Officer and Treasurer. Before we begin the substance of the call, As usual, I will run through the caveats.

Operator

In accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 19 95. Certain matters that will be addressed in this earnings call may constitute forward looking statements. Such statements are subject to risks, uncertainties and other factors that may cause our actual performance to be materially different from the performance indicated or implied by such statements. Such risk factors are clearly set out in our SEC filings. We undertake no obligation to publicly update or revise any forward looking statements.

Operator

In addition, We will discuss non GAAP financial measures on this call. Reconciliations and definitions of non GAAP financial measures, which our segment operating income, EBITDA and adjusted EBITDA are included in our recently issued 2020 3 2nd quarter earnings release on the company's website. We have adjusted where applicable the EBITDA items We believe to be external to our business and not reflective of our costs of doing business or results of operations. Such costs include legal expenses relating to extraordinary litigation and any other items that we can consider to be non recurring in accordance with the 2 year SEC requirement for determining whether an item is non recurring, infrequent or unusual in nature. We believe adjusted EBITDA is an important supplemental measure of our performance.

Operator

In today's call, We also use an industry accepted financial measure called theater level cash flow, TLCF, which is theater level revenue, less direct theater level expenses. ATP, average ticket price, is also used as an accepted industry acronym. We will also use a measure referred to as F and B Spend Per Patron, SPP, which is a key performance indicator for our cinemas. The F and B SPP is calculated by dividing as cinemas revenues generated by food and beverage sales by the number of admissions at that cinema. Please note that our comments are necessarily summary in nature and anything we say It's qualified by the more detailed disclosure set forth in our Form 10 Q and other filings with the U.

Operator

S. Securities and Exchange Commission. So with that behind us, I'll turn it over to Ellen, who will review our 2023 second quarter results and discuss our business strategy going forward, followed by Gilbert, who will provide a more detailed financial review. Ellen, over to you.

Speaker 1

Thanks, Andre, and thank you everyone for listening to the call today. We were very pleased with our Q2 2020 3 operational results, which continue to move Reading in the right direction. At $65,100,000 our 2nd quarter Global total revenue represented the highest global total revenue since Q4 twenty nineteen and 85% of our Q2 2019 global total revenue. We delivered this result despite a weakening by 6.5% and 4.8 percent of the Australian dollar and New Zealand dollar average exchange rates respectively against the U. S.

Speaker 1

Dollar. The foreign exchange needs to be kept in mind when reviewing our results as almost half of our total revenue is generated in Australia and New Zealand. Our Q2 global operating income of $1,800,000 represented the highest global operating income since Q4 2019 And improved by over 200% compared to Q2 2022. Thanks to a stronger film slate, including the phenomenal Success of Super Mario Brothers, franchises such as Guardians of the Galaxy, Spider Man, Fast and Furious and Transformers and the Disney hit Little Mermaid. Coupled with the strong operational performance from our cinema management teams, Our Global Cinema revenue topped $61,100,000 While our Q2 2023 Global Cinema revenue Increased by 1% compared to the Q2 2022.

Speaker 1

It did represent 84% of 20 nineteen's 2nd Quarter Global Cinema Revenue. I'll note that Q2 last year represented the all time highest cinema revenue ever for Australian circuit. And at that time, the Australian dollar was trading at a level of 6.9% higher than at the end of the most recent quarter. Our real estate business is also getting stronger. Our 2nd quarter benefited from the rental stream from our new tenant at 44 Union Square Petco, which on June 1, 2023 opened its flagship retail location in New York City, a uniquely designed one stop health and wellness destination for pets.

Speaker 1

The strong performance of our live theaters in New York City, which Delivered the best theater level cash flow since Q3 2019 when we also had the Royal George open and the continued solid and steady performance of our 72 third party tenant real estate portfolio in Australia. Our Q2 2023 real estate revenue of $4,000,000 represented a 46% increase compared to Q2 last year, An 8% improvement compared to the same period in 2019 and the highest since Q4 2019 when we still had the Auburn Redyard and and Royal Georgia assets in our portfolio. Our Q2 2023 real estate operating income of $1,300,000 Represented an increase of over 1500% compared to the same period in 2022 and 95% of Q2 twenty nineteen's operating income, despite our having sold 5 properties in order to mitigate the pandemic impacts. Delivery of this continued improving operational performance resulting in a $6,700,000 Of adjusted EBITDA came despite headwinds facing our company from inflationary cost pressures, supply chain and labor challenges, and the weakening of the Australian and New Zealand dollars against the U. S.

Speaker 1

Dollar. As of June 30, 2023, we reported cash and cash equivalents of $15,500,000 and had a global debt balance of $213,800,000 which excluded deferred cinema rent obligations that arose due to the pandemic and is also lower than our December 31, 2022 debt balance of $215,600,000 We're mindful of our upcoming 2023 2024 debt maturities, The current high interest rate lending environment and the need to improve our liquidity and strengthen our balance sheet. So in an effort to protect the interest of our stockholders and ensure the long term viability of our company, our Board has decided to put certain additional assets for sale, which I'll touch on in more detail later in the call. With that, let's look more closely at our Global Cinema Business, which has provided the foundational cash flow to support our asset growth over the last few decades. We saw our cinema audiences return to the big screen again when the content was compelling and the marketing was right.

Speaker 1

The global cinema industry witnessed the sensational April 5th release of the Super Mario Brothers movie, which has grossed almost $1,400,000,000 globally and is now the 2nd highest grossing animated film of all time. And the strong box office performance of Guardians of the Galaxy Volume 3, which has grossed over $845,000,000 globally Fast X, which has grossed almost $705,000,000 globally, and Spider Man Across the Spider Verse, which has a global gross of almost 6 $84,000,000 In Q2 2023, our global cinema revenue of $61,100,000 Decreased slightly by 1% from Q2 2022, when our Australian circuit delivered its highest ever quarterly cinema revenue And at a time when the Australian dollar was 6.9% higher than it was at the end of the 2023 quarter. It also represented 84% of our Q2 2019 Global Cinema revenue. Our Q2 2023 Global Cinema operating income improved by 30% to $4,500,000 compared to the Q2 of 2022 and also marks the highest operating income since the Q4 of 2019. During the Q2 of 2023, our operational teams continued to deliver milestone achievements in terms of Average ticket price and F and B SPP.

Speaker 1

With all time second quarter record set for each of these metrics in each country, with the exception of the U. S. F and B SPP, which ranked as the 2nd highest second quarter SPP ever. We anticipate our Q2 to be followed by a strong Q3 led by the blockbuster success of Barbie and Oppenheimer, Both of which opened on July 21st, thereby creating the double feature sensation, Barbenheimer. Both films opened to a massive box office making Barbenheimer opening weekend the 4th biggest box office weekend of all time and the largest since April of 2019.

Speaker 1

Today Oppenheimer has grown $651,000,000 worldwide And Barbie has crossed the $1,000,000,000 threshold in global box office grossing about $1,200,000,000 and has become the highest grossing film in Warner Brothers history at the domestic box office with a domestic box office gross of $537,400,000 Recently, the iconic filmmaker Francis Ford Coppola shared his thoughts on Barbenheimer. He said, The fact that people are filling big theaters to see them and that they are neither sequels nor prequels, no number attached to them, meaning they are true one offs is a victory for cinema. Annie said, my hunch is that we're on the verge of a golden age, wonderful and illuminating cinema seen in large theaters. Clearly, due to the success of Barbenheimer, the 3rd quarter is off to a great start. In July 2023, Our global circuit delivered the highest monthly total cinema revenue ever and the 2nd highest ever global total box office revenue behind July of 2018.

Speaker 1

The upcoming movie slate for the remainder of the year Also gives us confidence that we'll continue to build on this box office momentum. Later this month, audiences will be treated to the release of Gran Turismo, Blue Beetle from DC Comics and the Hilarious Strays. In September, we have a diverse mix of titles that will attract audiences of all ages from Denzel Washington and Equalizer 3, 2 Expendables 4, My Big Fat Greek Wedding 3, The Nun 2 and The Mighty Movie. And for the holiday season, we'll have the release of The Marvels, Wish from Disney Animation, Migration from Illumination, June Part 2, The Ballad of Songbirds and Snakes, Wonka and DC Comics Aquaman and the Lost Kingdom. We're monitoring the developments related to the ongoing WGA and SAG after strikes and are hopeful that both strikes get resolved in the next few months.

Speaker 1

Today, the strikes have, with the exception of certain independent productions, Halted all film production from the studios and major streamers and it prevented any acting talent from promoting any SAG AFTRA certified films. While some movies have been moved off the schedule due to the strikes, as of today, we don't currently anticipate Those moves will have a material impact on our performance, but that could change if more significant movies start to move out of Q4 2023. Though even if the releases are delayed, we believe that this will really only be a timing issue. Despite the Hollywood strikes, the box office success we've enjoyed over the last month or so reinforces our long term confidence in the business and our belief that the major studios and some major streamers will continue to stand behind the exclusive theatrical window. Now let's turn to our U.

Speaker 1

S. Cinema division, which delivered a solid Q2 2023 performance. The U. S. Cinema revenue increased by 12% to $34,000,000 compared to the Q2 of 'twenty two.

Speaker 1

It was the best revenue performance since Q4 of 2019. The U. S. Cinema operating income at $814,000 improved by over 140% to Q2 compared to Q2 2022. Due to the increase in the number of wide release films and an improvement in the overall quality of the Q2 2023 movie slate, We increased our attendance in the U.

Speaker 1

S. By 6% and our overall theater level cash flow was the highest it's been since Q4 of 2019. Our U. S. Circuit achieved a few notable milestones during the Q2.

Speaker 1

At $12.95 our average ticket price was the highest second quarter ever. This level has been set despite the Quarter being the 1st full quarter to feature our successful Half Price Tuesday and Mahalo Day discount days programs in all of our cinemas, except for 1. And it was the 1st full second quarter of our free to join Angelica membership program, which launched in the Q2 of 2022 and now has almost 90,000 members in 9 theaters or 55 screens. At $8.11 our F and B SPP was the 2nd highest second quarter of all time. Again impressive in light of the rollout of our discount days and the Angelica membership program.

Speaker 1

Note also, as of today, we're operating in the U. S. With liquor licenses in 100 percent of our theatres. Our quarterly ancillary revenue generated primarily from theater rentals and online service fees, is the highest we've ever delivered. Our U.

Speaker 1

S. Specialty cinemas continued to show signs of recovery during the quarter. Our Q2 box office at the Angelica in New York City this year increased by 100 65% compared to the Q2 of 2022. The release of Wes Anderson's Asteroid City On June 23, drove audiences back to our specialty cinemas. Over the course of 7 days, Asteroid City set Opening weekend and an opening week box office record at the Angelica in New York, surpassing records that had previously stood for over 5 6 years respectively.

Speaker 1

Another movie that's grossed almost $500,000 in its run at the Angelica in New York Had an opening week of just under $130,000 is the critically acclaimed past lives. Today, the Angelica New York still has the highest grossing engagement in North America. Over the past 18 months, we've reviewed our portfolio to maximize profitability and took steps to close 2 additional cinemas after removing our equipment. With these closures, which make 3 U. S.

Speaker 1

Cinema closures in total, we will improve the overall profitability of our circuit. Now let's turn to our international cinema divisions. Our Australian circuit also delivered an encouraging Q2 2023 performance. Even though its comparison to Q2 2022 is tough because the 2022 quarter Delivered the highest total cinema revenue ever in our Australian circuit's history. Thanks to movies that over performed in Australia like Top Gun Maverick, Jurassic World Dominion, Doctor Strange, Minions and Elvis.

Speaker 1

The Australian cinema revenue at $22,900,000 Decreased by 14% compared to Q2 2022, which again was the best total cinema revenue quarter on record. But on a constant currency basis represented 93.5 percent of the Q2 2019 Australian total cinema revenues and was the 2nd best revenue quarter on record since Q4 2019 after that Q2 2022. The Australian Cinema operating income at $3,000,000 decreased by 38% compared to the Q2 of 2022. Australian Circuit also achieved a few notable milestones during the 2nd quarter. At $14.05 which is an Australian dollars, our Q2 2023 ATP in Australia It was the highest second quarter ever.

Speaker 1

At AUD7.48, it's Australian dollars, our F and B SPP was the highest second quarter of all time. And our Australian F and B online sales continue to grow, achieving 8 point 7% of total F and B sales in Australia, up from 6.1% in the Q2 of 'twenty 2. Throughout the quarter, we continued to develop our new pipeline of cinemas in Australia. On August 24, 2023, we're thrilled to be opening our beautiful new 8 screen Angelica Film Centre at South City Square in Brisbane. And we'll open Reading Cinemas with Titan Luxe at Busselton in Western Australia before the end of the year.

Speaker 1

We also achieved the signing of a heads of agreement on another deal for a brand new Reading Cinema with Titan Luxe in Noosa in Queensland. Turning to New Zealand, the New Zealand cinema revenue at $4,100,000 Our Q2 2023 revenues decreased by 11% compared to the Q2 of 'twenty 2. At $700,000 our Q2 2023 operating income in New Zealand was relatively flat, increasing by $20,000 compared to the Q2 last year. Our New Zealand circuit also achieved a few notable milestones during the Q2 2023 ATP of $12.37 which is in New Zealand dollars, was the highest second quarter of all time and the 2nd highest quarter ever. At $6.88 which is in New Zealand dollars, our F and B SPP was the highest second quarter of all time and the 2nd highest quarter ever.

Speaker 1

And our New Zealand F and B online sales continued to grow, achieving 7% of Total F and B sales New Zealand, up from 5.8% in the Q2 of 'twenty 2. In an effort to streamline our circuit and retain only cash positive cinemas in May of 'twenty three, We permanently closed the Hutt pop up cinema outside of Wellington in New Zealand. But we also signed a heads of agreement for a new state of the art Reading Cinema in New Zealand. Now let's turn to our global real estate business. Our company's ability to remain viable during the COVID-nineteen pandemic was largely attributed to our resilient, dual and diversified business strategy.

Speaker 1

When our cinema operations faced a decline in cash flows, our real estate operations remained strong. As we navigate a post pandemic world with a real estate business that's growing stronger, our focus will be on delivering long term value for our stockholders through a disciplined approach to improving and developing our real estate investment and operating properties. Our Q2 2023 global real estate revenue increased 29% to $5,200,000 compared to the Q2 of 2022. And our Q2 2023 operating income of $1,300,000 improved from the Q2 of 2022 by more than 1500%. The improved Q2 2023 real estate operating results are due to the new PECO lease at our 44 Union Square property with Trent commenced in the Q4 of 2022.

Speaker 1

Increased attendance at our live theatres as well as licensing revenue during this period generated by the Empire Strikes Back at our Orpheum Theatre and the steady performance of our Australian Real Estate portfolio. As a result, our real estate business achieved the highest quarterly real estate revenue and operating income since the 4th and third quarters of 2019 respectively. In the U. S, our Q2 2023 real estate revenue increased by $1,200,000 for 2 14 percent to $1,800,000 primarily due to the Petco rent and licensing revenue from our live theaters in New York City. Our Australian real estate revenue for the Q2 decreased slightly by $61,000 to $3,000,000 compared to the Q2 last year.

Speaker 1

And in New Zealand, our Q2 2023 real estate revenue remained relatively flat at $392,000 However, when measured in local currency, our Australian real estate revenue for the 2nd quarter Increased by about AUD205,000 and the New Zealand real estate revenue for the Q2 of 2023 increased by Almost NZ25000 dollars And focusing on the New Zealand and Australian real estate portfolio, At June 30, 2023, we had 75 third party tenants in our combined Australian and New Zealand real estate portfolio. We had a total third party occupancy rate of 95%. We successfully executed 4 new leases, 3 new leases and one lease renewal. And the total third party tenant sales from our Australian real estate for the quarter was over AUD28 1,000,000. Turning to our asset monetizations.

Speaker 1

To support our liquidity needs, we made the decision to list the following assets for sale: Our office building in Culver City, California. Following the advice of Newmark, our exclusive listing agent, We listed the building for $20,000,000 To date, Newmark has received almost 50 non disclosure agreements. Our 26 Acre Industrial Site in Williamsport, Pennsylvania. Our broker CBRE Has engaged in sale discussions with multiple parties at this point. And last, our building and property at Maitland, New South Wales in Australia.

Speaker 1

We've engaged an exclusive listing agent JLL and they're discussing this potential investment with multiple parties. Also as we reported in the Q and in the earnings release, we're also exploring the sale in whole or in part the Cinema 1, 2 and 3 property in New York City or otherwise reducing our interest in the property. I'll finish by noting that as we continue to strengthen our foundation and regain our footing in our cinema divisions, We're confident about the potential of our retained real estate assets. We have a diverse portfolio of properties, including 44 Union Square and 2 live theaters in New York City and our Viadeck properties in Philadelphia, as well as assets in Wellington, New Zealand and our Australian assets, Newmarket Village in Brisbane, Cannon Park in Townsville, and the Belmont Common in Perth. These assets will continue to provide us with substantial opportunities Great long term value for our stockholders through either a redevelopment, financing, or potential sales.

Speaker 1

So that wraps up my business overview for the Q2 of 2023. I'll turn it over to Gilbert.

Speaker 2

Thank you, Alan. Consolidated revenues for the quarter ended June 30, 2023 increased slightly $5,500,000 to $65,100,000 when compared to Q2 2022. This increase was primarily driven by an increase in real estate revenue, which was due to receiving rent from our 44 Union Square tenant that did not occur in the same period of the prior year, partially offset by a decreased attendance in our Australia and New Zealand circuit as a result of record quarterly attendance in Q2 2022. Consolidated revenues for the 6 months ended June 30, 2022, 2023 increased by $6,100,000 to $110,900,000 when compared to the same period in the prior year as a result of the rent revenue received from our 44 Union Square tenant, Petco, and increased attendance in our U. S.

Speaker 2

Circuit. Net loss attributable to Reading International for the quarter ended June 30, 2023 Increased by $300,000 to a net loss of $2,800,000 when compared to the same period in the prior year. Basic loss per share increased $0.01 to a basic loss per share of $0.12 for the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022. These results are due to decrease in other income and increased interest expense, partially offset by better segment results. Net loss attributable To Reading International for the 6 months ended June 30, 2023 decreased by $3,900,000 to a loss of $13,900,000 when compared to the same period in 2022.

Speaker 2

Basic loss per share was CAD0.63 for the 6 months ended June 30, 2023, compared to a basic loss per share of $0.81 for the 6 months ended June 30, 2022. This was due to increased attendance in our U. S. Cinema circuit as more patrons returned to the theaters, the rent revenue received from our 44 Union Square tenant Petco during the 1st 6 months of the year that did not yet occur in 2022. Impairment expenses that were incurred in 2022 that were not incurred in 2023 and decrease in depreciation and amortization due to delay in our capital spending.

Speaker 2

Our total company depreciation and amortization impairment and G and A expenses for the quarter ended June 30, 2023 Decreased by $3,300,000 to $9,800,000 compared to the same quarter in prior year. Depreciation, amortization, impairment and G and A expenses for the 6 months ended June 30, 2023, Decreased by $4,800,000 to $19,600,000 compared to the same period in prior year. These decreases are due to impairment expenses that were incurred in 2022 that did not reoccur in 2023, For the Q2 of 2023, income tax expense decreased by $1,600,000 to an income tax benefit of $100,000 compared to the equivalent prior year period. For the 6 months ended June 30, 2023, Income tax expense decreased by $1,700,000 to income tax benefit of $600,000 compared to the equivalent prior year period. The change between 2023 2022 is primarily due to a decrease in both Reserves for unrecognized tax benefit and reserves for valuation allowance in 2023.

Speaker 2

For the Q2 of 2023, our adjusted EBITDA decreased by $1,000,000 compared to the same prior year period to $6,700,000 This decrease was primarily the result of weakened Cinema Operations performance in our Australian and New Zealand circuit and a $1,500,000 increase in interest expense. For the 6 months ended June 30, 2023, our adjusted EBITDA increased by $3,200,000 to $3,800,000 compared to the same prior year period. This increase is due to improved net income loss as a result of increased real estate rental income due to rent from our Petco tenant, which was not incurred in the same time period in the prior year compared to the 1st 6 months of 2023. Shifting to cash flow. For the 6 months ended June 30, 2023, net cash used in operating activity decreased by 8 point $7,000,000 to a net cash used of $8,800,000 when compared to the same prior year period.

Speaker 2

This was driven by an improved cinema operating performance compared to the prior year period recognition of rental income from our tenant at 44 Union to our property, which did not occur in the same period of prior year and an increase in net operating assets and liabilities. Cash used in investing activities for the 6 months ended June 30, 2023 was 3,400,000 a decrease of $300,000 compared to the same period of the prior year. Cash used in financing activities For the 6 months ended June 30, 2023, decreased by $3,500,000 to $2,700,000 due to borrowing on an existing facility. Turning now to our financial position. Our total assets on June 30, 2023 were $552,200,000 compared to $587,100,000 on December 31, 2022.

Speaker 2

This decrease was driven by a $14,400,000 decrease in cash and cash equivalents for which we funded our ongoing business operations. As of June 30, 2023, our total outstanding borrowings were $213,800,000 compared to $215,600,000 on December 31, 2022. Our cash and cash equivalent as of June 30, 2023 We're $15,500,000 which includes approximately $8,900,000 in U. S, dollars 6,000,000 in Australia, dollars 10,600,000 in New Zealand. Further to address liquidity pressure on our business, we are working with our lenders to restructure certain debt facilities And we have selected certain real estate assets for the potential monetization and have listed them for sale.

Speaker 2

In Q1 2023, we modified our Bank of America loan, extending the maturity date of the facility to September 4, 2024 and in May 2023, our required monthly repayment of $725,000 commenced. And our cinemas 1, 2, 3 term loan extended on June 28, 2023 from July 3, 2023 to October 3, 2023 to allow additional time to complete a refinancing with that lender. In August 2023, we modified our revolving corporate market loan facility with NAB with certain covenants and extended this facility maturity date to July 31, 2025 to continue to maintain the debt as non current. We have begun active process to monetize certain assets as we monitor the cinema market conditions. As we continue to focus on preserving our liquidity, no shares were purchased during the quarter ended June 30, 2023, and our stock repurchase program has and will likely continue to take a lower capital allocation priority for the foreseeable future.

Speaker 2

With that, I will now turn it over to Andre.

Operator

Thanks, Gilbert. Firstly, I'd like to thank our stockholders for forwarding questions to our Investor Relations e mail. In addition to addressing many of your questions in the prepared remarks from Ellen and Gilbert, we've selected a few additional questions to offer Some additional insights from management. The first question, you say your viaduct and adjacent parcels will be a focus in 2023. Recently, Reading's ownership of these properties has been the subject of media attention in Philadelphia.

Operator

What are Reading plans for these fully properties at or near the viaduct and rail park? Ellen?

Speaker 1

As you know, our company owns the Reading Viaduct, which is an elevated rail track in Philadelphia, which some city and neighborhood leaders Would like to convert into an extension of the small existing rail park adjacent to our property. Over the last few years, we've had discussions with various leaders about how we can work together with the City of Philadelphia and the communities surrounding the Reading Viaduct to achieve a positive for Philadelphia and for our stockholders. Our consistent position has been that any outcome must protect the stockholders of Reading and ensure that we're receiving fair value for our assets. Right now, those discussions are ongoing. Relatedly, we understand that when it returns from its summer recess, the City Council will consider a proposed ordinance that would authorize the and the administration to acquire in whole or in part our interest in the Viaduct for fair market value.

Operator

Thanks, Alan. The next question regarding our rent obligations. Is deferred rent are deferred rent obligations down to only CHF2 1,000,000? I seem to think a far higher amount was mentioned only a quarter or 2 ago. What is the timing for cash payoff of these amounts?

Operator

Gilbert, can you handle that?

Speaker 2

On June 30, 2023, balance sheet contained accrual rent liability for approximately $9,500,000 which includes amounts owed under deferred deal executed by us during the pandemic, but also includes accruals for amounts that are either being currently negotiated or are under dispute with certain landlords. However, despite these negotiation and disputes, accounting rules require us to accrue for the full rent amount pursuant to the original Included within the $9,500,000 and separately reported in our 10 Q in the financial footnotes, The $2,000,000 figure reflects any accrual third party rent expense arising out of signed pandemic deferral deals that are owed more than 12 months from the date of our balance sheet. Those particular obligations which Deferring due dates could extend out up to 48 months from today.

Operator

Thank you, Gilbert. Turning to some of our renovations. When will Dallas Angelica, Rouse Hill and the Palms start their renovations. And will they need to close completely or how many auditoriums will be down at a time? About how much is budgeted for cash costs on these renovations.

Operator

Ellen, we'll leave that for you.

Speaker 1

All right. Starting with the Angelica Dallas. We're starting our renovation during the Q4 of 'twenty three and we'll Convert certain auditoriums to recliner seating, elevate the food and beverage offer, renovate the lobby and create a bookstore. At this time, we anticipate that partial closures through the renovation period will occur and will never close completely. And we anticipate completing the renovation by the Q1 of 'twenty four.

Speaker 1

In Australia, we anticipate starting the renovation for Reading cinemas in Rouse Hill during the Q4 of 'twenty three, and the scope will include adding another reclining auditorium, F and B and lobby upgrades. And like the Angelica in Dallas, the renovations will occur when the theater is substantially opened. In New Zealand, We're still reviewing the timing for the renovation of the Reading Cinemas at the Palms. And with respect to reporting on the Budgeted cash costs, we can't report on those precise budgets for the particular locations as the information is confidential with our landlords.

Operator

Thank you, Ellen. Regarding the costly 10.75 Percent Bank of America US Cinema Term Loan, Is Reading's plan to retire this loan via its updated principal pay down schedule or refinance some remaining balance into new Longer Term U. S. Cinema Financing. Also given that the current variable rate on this loan, do you feel refinancing will be at similar, Higher or Lower Interest Rate Spreads.

Operator

Gilbert?

Speaker 2

We are closely monitoring Our policy makers assess the economy, inflation and the appropriate monetary policy. As you know, certain Bank began announcing rate increases in March 2022. To date, these increases have totaled 525 basis points. As we are operating in a high interest rate environment, we expect refinancing in the near future will likely be at a similar or higher interest rate spread. We are intending to retire this loan following the updated principal pay down schedule.

Speaker 2

However, to protect the interest of our shareholders and to ensure long term viability of our company. We will continue to work with our banking partner and explore different financing options.

Operator

Thanks, Gilbert. Our last question regarding Investor Relations. Investors appreciated the Babenheimer press release. Hopefully, it is a continuing trend for updating shareholders. Our shares remain extremely undervalued and haven't participated in the recent run up of other cinema stocks.

Operator

Is the company going to do more roadshows? Is there a way to get sell side coverage? We need to reach more investors with the company's story. I'll handle that one. Now that we see ourselves more firmly on the post COVID path to recovery, we are committed to communicate more frequently with our shareholders and to keep them informed of the progress we are making.

Operator

In addition to conferences like Gabelli, at which we attended and presented in early June of this year, We are working on several additional initiatives, namely, if achievable, at least 2 non deal roadshows before the end of the year, as well as an additional MicroCap Conference also before year's end. We are also continuing to investigate several different options to provide more analyst coverage for our stock, a process that has been ongoing for some time, but has not yet borne fruit. With those remarks, that marks the conclusion of the call. As usual, we appreciate you listening to the call today. Thank you for your attention, and we wish everyone good health and safety.

Powered by Quartr

Key Takeaways

  • Q2 2023 global total revenue of $65.1 M, the highest since Q4 2019 and 85% of Q2 2019, with operating income of $1.8 M, up over 200% year-over-year.
  • Cinema segment revenue reached $61.1 M (84% of Q2 2019) with record second-quarter average ticket price and F&B spend per patron across most markets, bolstered by blockbusters like Super Mario Brothers and Barbenheimer.
  • Real estate revenue jumped 46% YoY to $4.0 M and operating income surged over 1500% to $1.3 M, driven by the new Petco lease at 44 Union Square and strong live theater cash flow.
  • Adjusted EBITDA was $6.7 M despite headwinds from currency weakening, inflationary costs, and labor challenges; cash on hand was $15.5 M against $213.8 M of debt as of June 30, 2023.
  • To bolster liquidity and address upcoming debt maturities, the board has listed several real estate assets for sale (e.g., Culver City office, PA industrial site, Maitland property in Australia) and is exploring refinancing options.
A.I. generated. May contain errors.
Earnings Conference Call
Reading International Q2 2023
00:00 / 00:00