Earnings Call Webcast to Discuss 2018 First
Quarter Financial Results Scheduled to Post to Corporate Website on
Monday, May 14, 2018
- Achieves All-Time Record Quarterly
Revenue of $75.8 million
- First Quarter Operating Income of $5.6
million, Represents Highest First Quarter on Record
- Basic EPS of $0.13, Tied First Quarter
Record
- First Quarter Net Income of $3.0
million, Second Highest First Quarter on Record
- First Quarter EBITDA of $11.0 million,
Second Highest First Quarter on Record
Reading International, Inc. (NASDAQ: RDI) today announced record
results for the first quarter ended March 31, 2018. The Company
reported Basic Earnings per Share (“EPS”) of $0.13 for the quarter
ended March 31, 2018, tying the prior year period, which was itself
a record first quarter. Revenue represented an all-time quarterly
record for the Company, while Operating Income represented an
all-time first quarter record. Net Income and EBITDA were both the
second highest first quarters on record.
Ellen Cotter, Chair, President and Chief Executive Officer,
said, “We are pleased with the record results we delivered in the
first quarter, which reflect the strong progress we are making on
our three-year business strategy and the healthy state of the
global cinema industry. This positive momentum in our cinema
business has continued through April, and we are confident that
this segment will continue to benefit from the existing and
upcoming summer movies from the major studios. During the first
quarter, we also enhanced our real estate portfolio by
strategically acquiring an approximately 16,830-square-foot
building in Australia, which increases our Redyard entertainment
center’s uninterrupted frontage on Parramatta Road, one of Sydney’s
busiest arterial roads, by 182 feet. We believe that Reading
is well-positioned to drive long-term stockholder value as we
continue developing our real estate portfolio and executing our
global cinema strategy to elevate the guest experience.”
Consolidated revenue for the first quarter of 2018, increased by
9% (or $6.3 million) compared to the first quarter of 2017,
primarily driven by: (i) the opening of our new state-of-the-art
eight screen Reading Cinema on December 14, 2017 in Newmarket,
Australia; (ii) the re-opening of our Courtenay Central Cinema in
Wellington, New Zealand, on March 29, 2017; (iii) increases in
average ticket prices (“ATP”) in our U.S. and Australian Cinemas;
and (iv) an increase in the Food & Beverage spend per patron
(“SPP”) across all markets.
The following table summarizes the first quarter for 2018 and
2017:
Three Months Ended % Change (Dollars in
millions, except EPS)
March 31,2018 March 31,2017
Favorable/(Unfavorable) Revenue
$ 75.8 $ 69.5 9 % -
US
38.6 36.9 5 % - Australia
29.1 27.2 7 % - New
Zealand
8.1 5.4 50 % Segment operating income (1)
$
11.9 $ 10.4 14 % Net income(2)
$ 3.0 $ 3.0 - %
EBITDA (1)
$ 11.0 $ 10.5 5 % Adjusted EBITDA (1)
$ 12.5 $ 11.2 12 % Basic EPS (2)
$ 0.13
$ 0.13 - %
(1)
Aggregate segment operating income,
earnings before interest expense (net of interest income), income
tax expense, depreciation and amortization expense (“EBITDA”) and
adjusted EBITDA are non-GAAP financial measures. See the discussion
of non-GAAP financial measures that follows.
(2)
Reflect amounts attributable to
stockholders of Reading International, Inc., i.e. after deduction
of noncontrolling interests.
COMPANY HIGHLIGHTS
- Operating
Results: We achieved the following results for the
quarter ended March 31, 2018:
1. Revenue of
$75.8 million, up $6.3 million from the prior year; 2. EBITDA of
$11.0 million compared to $10.5 million in 2017; 3. Net income of
$3.0 million compared to $3.0 million in 2017; and 4. Basic EPS of
$0.13 per share compared to $0.13 per share in 2017.
- Capex
program: During the first quarter of 2018, we invested
$23.2 million in capital improvements to our cinemas (which
included the purchase of digital projectors in the U.S. that had
previously been subject to an equipment lease, and the continued
investment in the upgrading of select cinemas) and real estate
properties.
- Cinema
activities: During the first quarter of 2018, we
completed the renovation of our Reading Cinemas in Murrieta, CA,
and, on March 30, 2018, we launched “Spotlight”, our new dine-in
concept, in six auditoriums of that cinema. We also continued
renovation of our Reading Cinemas in Manville, New Jersey, and by
April 2018 had installed recliner seats in all auditoriums.
Refurbishment work at our Charlestown and Elizabeth cinemas in
Australia was finished in March and April 2018, respectively. We
continue to upgrade our food and beverage (“F&B”) offerings
and, as of March 31, 2018, we have obtained liquor licenses for 26
of our existing cinemas in the U.S., Australia and New Zealand. Our
cinema pipeline includes three new cinemas in Australia and New
Zealand that have been approved by our Board of Directors and which
we anticipate bringing on line in 2019/2020.Our online ticket sales
achieved a record first quarter in all countries, led by Black
Panther and Jumanji: Welcome to the Jungle, exceeding previous
first quarter records by as much as 54%. With the launch of branded
ticketing apps in the U.S. and improved online sales infrastructure
to better serve high sales volume, Black Panther set daily and
weekly online record ticket sales in all countries. To further
improve our guests’ online experience, we launched electronic gift
card sales, guest enabled online refunds and social sharing on our
U.S. branded web sites during the quarter.
- Real estate
activities:
- Union Square
Redevelopment (New York, U.S.) – We continued to advance the
construction of our 44 Union Square re-development project having
now poured five of the six floors. We are preparing to install the
dome and anticipate that the project will be ready for tenant
fit-out in the fourth quarter of this year. Retail and office
leasing interest is strong and we are in discussions with a variety
of quality tenants, including potential full building users. As of
March 31, 2018, we have invested a total of $37.5 million in the
property’s redevelopment out of a total projected investment of
$74.5 million.
- Strategic Redyard
Acquisition on Parramatta Road (Sydney, Australia) – We
recently purchased a property at 98 Parramatta Road, located
adjacent to our Entertainment Themed Center (“ETC”) in Auburn, for
$3.5 million (AU$4.5 million). The property consists of an
approximately 16,830 square feet office building located on an
estimated 20,870 square foot lot, with approximately 182 feet of
frontage to Parramatta Road. The transaction is subject to a
leaseback to Telstra Corporation through September 2022. The
property borders our Redyard center in Auburn on three boundaries
to the east, west and south. Including this acquisition, our
Redyard center represents approximately 519,992 square feet (48,309
square meters) of land, with approximately 1,620 feet (498 meters)
of uninterrupted frontage to Parramatta Road, a major Sydney
arterial motorway.
- Newmarket Village
Expansion (Brisbane, Australia) – The first full quarter of
operation of our Newmarket Village expansion, which was completed
in December 2017. The expansion included the addition of a new
eight screen Reading Cinema with both a TITAN LUXE and a Gold
Lounge offer and delivered approximately 10,150 square feet of new
F&B retail space along with a further 124 parking spaces. As of
March 31, 2018, approximately 93% of the new retail space had been
leased.
- Belmont (Perth,
Australia) – In the first quarter 2018, we continued with
the repositioning of our ETC in Belmont (a suburb of Perth), which
features new F&B offerings and a Reading Cinema with TITAN
LUXE. By the third quarter of 2018, we anticipate opening our third
new restaurant, the Asian inspired Tao Café (with approximately
3,190 square feet) joining our existing restaurants, Dome Café and
Tavolo.
- Manukau Land
Re-zoning (Auckland, New Zealand) – We are continuing to
work with the adjacent landowners of our properties in Manukau to
develop an infrastructure plan for the approximate 355 acres of
rezoned land of which 70.4 acres is our property.
FIRST QUARTER 2018 SEGMENT RESULTS
The following table summarizes the first quarter segment
operating results for 2018 and 2017:
Three Months Ended % Change
(Dollars in thousands)
March 31,2018 March
31,2017 Favorable/(Unfavorable) Segment
revenue
Cinema
United States $ 37,987 $ 36,235 5 % Australia 26,717 24,957 7 % New
Zealand 7,551 5,368 41 % Total
$
72,255 $ 66,560 9
%
Real
estate
United States $ 655 $ 586 12 % Australia 4,104 3,586 14 % New
Zealand 1,199 325 269 % Total
$
5,958 $ 4,497 32 % Inter-segment
elimination (2,391 ) (1,603 ) (49 )%
Total segment
revenue $
75,822 $
69,454 9
% Segment operating income
Cinema
United States $ 3,000 $ 2,507 20 % Australia 5,916 5,945 - % New
Zealand 1,369 641 114 % Total
$
10,285 $ 9,093 13
%
Real
estate
United States $ (293 ) $ 28 nm Australia 1,465 1,408 4 % New
Zealand 459 (142 ) 423 % Total
$
1,631 $ 1,294 26 %
Total segment operating income (1) $
11,916 $ 10,387 15
%
“nm” – not meaningful for further analysis
(1)
Aggregate segment operating income is a
non-GAAP financial measure. See the discussion of non-GAAP
financial measures that follows.
Cinema Exhibition
First Quarter Results:
Cinema segment operating income increased by 13%, or $1.2
million, to $10.3 million for the quarter ended March 31, 2018
compared to March 31, 2017. The primary driver was the re-opening
of our Courtenay Central Cinema in Wellington, New Zealand, as well
as increased operating income in the U.S. due to a higher ATP and a
higher SPP across the circuit. For the first quarter:
- Revenue in the United States increased
by 5%, or $1.8 million, due to a 9% increase in ATP and a 2%
increase in SPP offset by a 2% decrease in attendance.
- Australia’s cinema revenue increased by
7%, or $1.8 million, primarily due to a 5% increase in ATP, a 6%
increase in SPP and a 2% increase due to a more favorable foreign
exchange rate, offset by a 2% decrease in attendance.
- In New Zealand, our cinema revenue
increased by 41%, or $2.2 million, resulting from a 34% increase in
attendance, a 12% increase in SPP and a 4% increase due to a more
favorable foreign exchange rate, offset by a slight decrease in
ATP.
The top three grossing films for the first quarter 2018 were
“Black Panther,” “Jumanji: Welcome to the Jungle” and “The Greatest
Showman,” representing approximately 32% of Reading’s worldwide
admission revenues for the quarter. The top three grossing films in
the first quarter of 2017 for Reading’s worldwide cinema circuits
were “Beauty and the Beast,” “Logan” and “Lion,” which represented
approximately 21% of Reading’s admission revenues for the first
quarter of 2017.
Real Estate
First Quarter Results:
Real estate segment operating income increased by 26%, or
$337,000, to $1.6 million for the quarter ended March 31, 2018
compared to March 31, 2017, primarily attributable to increased
operating revenue from our Courtenay Central ETC, due to the full
quarter of operations in 2018 compared to only a few days in 2017
due to the November 2016 earthquake, as well as the increased
income from the expansion of our Newmarket and Auburn ETCs in
Australia. This was partially offset by an increase in depreciation
due to our occupation of our headquarters building in Culver City
and a decline in lease revenue due to a fire at our property in
Chicago.
CONSOLIDATED AND NON-SEGMENT RESULTS
The first quarter consolidated and non-segment results for 2018
and 2017 are summarized as follows:
Three Months Ended % Change
(Dollars in thousands)
March 31,2018 March
31,2017 Favorable/(Unfavorable) Segment
operating income $ 11,916 $
10,387 15 % Non-segment income and
expenses: General and administrative expense (6,156 ) (4,753 ) (30
)% Interest expense, net (1,594 ) (1,860 ) 14 % Other 58
970 94 %
Total non-segment income and
expenses $ (7,692 ) $ (5,643
) (36 )
% Income before income taxes
4,224 4,744 11
% Income tax expense
(1,155 ) (1,703 ) 32 %
Net income $
3,069 $ 3,041 1 % Less: net
income (loss) attributable to noncontrolling interests 22
12 nm
Net income attributable to RDI common
stockholders $ 3,047 $ 3,029
1 %
“nm” – not meaningful for further analysis
First Quarter Net
Results
Net income attributable to RDI common stockholders increased by
1%, or $18,000, to $3.0 million, principally due to an increase in
the Cinema Exhibition segment operating income. This increase was
due to the re-opening of our Courtenay Central ETC in Wellington
New Zealand, which was closed for the majority of Q1 2017 due to
the November 2016 earthquake, along with increased operating income
from our U.S. operations. These were offset by increased
non-segment G&A expenses as well lower other income due to the
one-off gain in 2017 from a foreign exchange gain on short-term
funds held in our foreign operations that did not repeat in 2018.
EPS for the quarter ended March 31, 2018 remained consistent when
compared to the prior-year quarter at $0.13.
Non-Segment General &
Administrative Expenses
G&A expense for the quarter ended March 31, 2018 increased
by 30% or $1.4 million compared to the prior year period. This
increase primarily relates to higher non-recurring legal expenses
incurred on the Derivative Litigation, the Cotter Employment
Arbitration and other Cotter litigation matters, and higher
compensation costs, due to headcount and the timing of annual
salary increases as well as the timing of recording increases in
variable compensation costs.
Income Tax Expense
Income tax expense for the quarter ended March 31, 2018
decreased by $548,000 compared to equivalent prior-year period. The
change between 2018 and 2017 is mainly related to: (i) lower pretax
income, (ii) the reduction of the U.S. statutory corporate tax rate
as the result of tax reform, and (iii) a net increase in the
foreign tax credit.
OTHER FINANCIAL INFORMATION
Balance Sheet and Liquidity
Total assets increased by $3.5 million, to
$426.6 million at March 31, 2018, compared to
$423.0 million at December 31, 2017. This was primarily
driven by increases in our operating and investment properties
relating to capital enhancements in our existing cinemas and
capital investments relating to major real estate projects,
primarily (i) the redevelopment of our Union Square property in New
York; (ii) the expansion of our Newmarket property in Brisbane,
Australia; and (iii) the purchase of our previously leased digital
projectors in the United States. Available cash resources generated
from operations and proceeds received from borrowings funded these
capital investments.
Cash and cash equivalents at March 31, 2018 were $8.7 million,
including $5.4 million in the U.S., $1.9 million in Australia, and
$1.4 million in New Zealand. We manage our cash, investments and
capital structure so we are able to meet short-term and long-term
obligations for our business, while maintaining financial
flexibility and liquidity.
As part of our operating cycle, we utilize cash collected from
(i) our cinema business when selling tickets and food and beverage
items, and (ii) rental income typically received in advance, to
reduce our long-term borrowings and realize savings on interest
charges. We then settle our operating expenses generally with a lag
within traditional trade terms. This generates a temporary working
capital deficit. As discussed previously, we review the maturities
of our borrowings and negotiate for renewals and extensions, as
necessary for liquidity purposes. We believe the cash flow
generated from our operations coupled with our ability to renew
loans when due will provide sufficient liquidity in the upcoming
year.
The table below presents the changes in our total available
resources (cash and borrowings), debt-to-equity ratio, working
capital and other relevant information addressing our liquidity for
the three months ended March 31, 2018 and preceding four years:
As of and for the3-Months
Ended
Year Ended December 31 ($ in thousands)
3/31/2018
2017 2016 2015 2014 Total Resources
(cash and borrowings) Cash and cash equivalents (unrestricted)
$ 8,668 $ 13,668 $ 19,017 $ 19,702 $ 50,248 Unused borrowing
facility 125,326 137,231 117,599 70,134 45,700 Restricted for
capital projects(1) 61,375 62,280 62,024 10,263 -- Unrestricted
capacity 63,951 74,951 55,575 59,871 45,700 Total resources at
period end 133,994 150,899 136,616 89,836 95,948 Total unrestricted
resources at period end 72,619 88,619 74,592 79,573 95,948
Debt-to-Equity Ratio Total contractual facility $ 275,511 $
271,732 $ 266,134 $ 207,075 $ 201,318 Total debt (gross of deferred
financing costs) 150,185 134,501 148,535 130,941 164,036 Current
10,544 8,109 567 15,000 38,104 Non-current 139,641 126,392 147,968
115,941 125,932 Total book equity 183,755 181,241 146,615 138,951
133,716 Debt-to-equity ratio 0.82 0.74 1.01 0.94 1.23
Changes in
Working Capital Working capital (deficit) $ (40,530 ) $ (46,971
) $ 6,655 $ (35,581 ) $ (15,119 ) Current ratio 0.39 0.42 1.10 0.51
0.84
Capital Expenditures (including acquisitions) $ 23,231
$ 76,708 $ 49,166 $ 53,119 $ 14,914
(1)
This relates to the construction
facilities specifically negotiated for: (i) Union Square
redevelopment project, obtained in December 2016, and (ii) New
Zealand construction projects, obtained in May 2015.
Below is a summary of the available credit facilities as of
March 31, 2018:
As of March 31, 2018
(Dollars in thousands)
ContractualCapacity
CapacityUsed
UnusedCapacity
Restricted forCapital
Projects
UnrestrictedCapacity
Bank of America Credit Facility (USA) $ 55,000 $ 31,000 $ 24,000 $
-- $ 24,000 Bank of America Line of Credit (USA) 5,000 -- 5,000 --
5,000 Union Square Construction Financing (USA) 57,500 9,155 48,345
48,345 -- NAB Corporate Term Loan (AU) (1) 51,139 41,525 9,614 --
9,614 Westpac Bank Corporate (general/non-construction) Credit
Facility (NZ) (1) 25,337 -- 25,337 -- 25,337 Westpac Bank Corporate
(construction) Credit Facility (NZ) (1) 13,030 --
13,030 13,030 --
Total $
207,006 $ 81,680 $ 125,326
$ 61,375 $ 63,951
(1)
The borrowings are denominated in foreign
currency. The contractual capacity and capacity used were
translated into U.S. dollars based on the applicable exchange rates
as of March 31, 2018.
The $61.4 million representing borrowings restricted for
capital projects is composed of the $48.3 million and
$13.0 million (NZ$18.0 million) unused capacity for the
Union Square development and construction funding for New Zealand
operations, respectively. Our Minetta & Orpheum Theatres Loan
will become due within one year. Currently, we are negotiating with
our lender to renew this borrowing on a long-term basis.
Our overall global operating strategy is to conduct business
mostly on a self-funding basis by country (except for funds used to
pay an appropriate share of our U.S. corporate overhead). However,
we may, from time to time, move funds between jurisdictions where
circumstances merit such action as part of our goal to minimize our
cost of capital.
Non-GAAP Financial Measures
This earnings release presents aggregate segment operating
income, and EBITDA, which are important financial measures for the
Company, but are not financial measures defined by U.S. GAAP.
These measures should be reviewed in conjunction with the
relevant U.S. GAAP financial measures and are not presented as
alternative measures of EPS, cash flows or net income as determined
in accordance with US GAAP. Aggregate segment operating income and
EBITDA, as we have calculated them, may not be comparable to
similarly titled measures reported by other companies.
Aggregate segment operating income –
we evaluate the performance of our business segments based on
segment operating income, and management uses aggregate segment
operating income as a measure of the performance of operating
businesses separate from non-operating factors. We believe that
information about aggregate segment operating income assists
investors by allowing them to evaluate changes in the operating
results of the Company’s business separate from non-operational
factors that affect net income, thus providing separate insight
into both operations and the other factors that affect reported
results. Refer to “Consolidated and Non-Segment Results” for a
reconciliation of segment operating income to net income.
EBITDA – we present EBITDA as a
supplemental measure of its performance, which is commonly used in
our industry. We define EBITDA as net income adjusted for interest
expense (net of interest income), income tax expense, depreciation
and amortization expense, and an adjustment of interest expense,
depreciation, and amortization for discontinued operations, if any.
EBITDA is a non-GAAP financial measure commonly used in our
industry and should not be construed as an alternative to net
earnings (loss) as an indicator of operating performance or as an
alternative to cash flow provided by operating activities as a
measure of liquidity (as determined in accordance with U.S. GAAP).
We have included EBITDA in this Earnings Release, as we believe
that it provides management and our investors with additional
information necessary to properly measure our performance and
liquidity, estimate our value and evaluate our ability to service
debt.
Adjusted EBITDA – using the
principles we consistently apply to determine our EBITDA, we
further adjusted the EBITDA for certain items we believe are
appropriate adjustable items, described as follows:
- Legal expenses relating to the
Derivative litigation, the James J. Cotter, Jr. employment
arbitration and other Cotter litigation matters – while we
started to incur expenses in relation to these legal matters in
2015, we believe that the majority of these costs were thrust upon
the Company as it became necessary to defend the Company’s position
in the Derivative litigation and related matters, to resolve Mr.
Cotter, Jr.’s claims relating to his termination, and to protect
our Company’s interests, and that of our shareholders in light of
Mr. Cotter, Jr.’s efforts to effect a change of control of our
Company. For this reason, we believe these costs should also be
treated as non-recurring in nature and accordingly, an adjustable
item for purposes of determining our Adjusted EBITDA.
In cases of property sales, we have not made
adjustments for any gains, in line with our overall business
strategy that at any time, we may decide to dispose of any property
when we believe that an asset has reached the highest value that we
could reasonably achieve without investing substantial additional
sums for land use planning, construction and marketing.
Reconciliation of EBITDA to net income is presented below:
Three Months Ended March 31 March
31 (Dollars in thousands)
2018 2017 Net Income
$ 3,047 $ 3,029 Add: Interest expense, net 1,594 1,860 Add:
Income tax expense 1,155 1,703 Add: Depreciation and amortization
5,250 3,934
EBITDA $ 11,046 $
10,526 Legal expenses relating to the derivative ligation,
the Cotter employment arbitration and other Cotter litigation
matters 1,448 645
Adjusted EBITDA $
12,494 $ 11,171
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio
webcast on our corporate website on May 14, 2018, that will
feature prepared remarks from Ellen Cotter, President & Chief
Executive Officer; Dev Ghose, Executive Vice President & Chief
Financial Officer; and Andrzej Matyczynski, Executive Vice
President - Global Operations.
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 May 11, 2018
by 5:00 p.m. Eastern Daylight Time. The audio webcast can be
accessed by visiting
http://www.readingrdi.com/about/#earnings-call.
About Reading International,
Inc.
Reading International Inc. (NASDAQ: RDI) is a leading
entertainment and real estate company, engaging in the development,
ownership and operation of multiplex cinemas and retail and
commercial real estate in the United States, Australia, and New
Zealand.
The family of Reading brands includes cinema brands Reading
Cinemas, Angelika Film Centers, Consolidated Theatres, and City
Cinemas; live theaters operated by Liberty Theatres in the United
States; and signature property developments, including Newmarket
Village, Auburn Red Yard and Cannon Park in Australia, Courtenay
Central in New Zealand and 44 Union Square in New York City.
Additional information about Reading can be obtained from the
Company's website: http://www.readingrdi.com.
Forward-Looking
Statements
Our statements in this press release contain a variety of
forward-looking statements as defined by the Securities Litigation
Reform Act of 1995. Forward-looking statements reflect only our
expectations regarding future events and operating performance and
necessarily speak only as of the date the information was prepared.
No guarantees can be given that our expectations will in fact be
realized, in whole or in part. You can recognize these statements
by our use of words such as, by way of example, “may,” “will,”
“expect,” “believe,” and “anticipate” or other similar
terminology.
These forward-looking statements reflect our expectation after
having considered a variety of risks and uncertainties. However,
they are necessarily the product of internal discussion and do not
necessarily completely reflect the views of individual members of
our Board of Directors or of our management team. Individual Board
members and individual members of our management team may have
different views as to the risks and uncertainties involved, and may
have different views as to future events or our operating
performance.
Among the factors that could cause actual results to differ
materially from those expressed in or underlying our
forward-looking statements are the following:
- with respect to our cinema operations:
- the number and attractiveness to movie
goers of the films released in future periods;
- the amount of money spent by film
distributors to promote their motion pictures;
- the licensing fees and terms required
by film distributors from motion picture exhibitors in order to
exhibit their films;
- the comparative attractiveness of
motion pictures as a source of entertainment and willingness and/or
ability of consumers (i) to spend their dollars on entertainment
and (ii) to spend their entertainment dollars on movies in an
outside the home environment;
- the extent to which we encounter
competition from other cinema exhibitors, from other sources of
outside-the-home entertainment, and from inside-the-home
entertainment options, such as “home theaters” and competitive film
product distribution technology such as, by way of example, cable,
satellite broadcast and DVD rentals and sales, and online
streaming;
- the cost and impact of improvements to
our cinemas, such as improved seating, enhanced food and beverage
offerings and other improvements;
- service disruption during theater
improvements; and
- the extent to and the efficiency with
which we are able to integrate acquisitions of cinema circuits with
our existing operations.
- with respect to our real estate
development and operation activities:
- the rental rates and capitalization
rates applicable to the markets in which we operate and the quality
of properties that we own;
- the extent to which we can obtain on a
timely basis the various land use approvals and entitlements needed
to develop our properties;
- the risks and uncertainties associated
with real estate development;
- the availability and cost of labor and
materials;
- the ability to obtain all permits to
construct improvements;
- the ability to finance
improvements;
- the disruptions from construction;
- the possibility of construction delays,
work stoppage and material shortage;
- competition for development sites and
tenants;
- environmental remediation issues;
- the extent to which our cinemas can
continue to serve as an anchor tenant that will, in turn, be
influenced by the same factors as will influence generally the
results of our cinema operations;
- the ability to negotiate and execute
joint venture opportunities and relationships; and
- certain of our activities are in
geologically active areas, creating a risk of damage and/or
disruption of real estate and/or cinema businesses from
earthquakes.
- with respect to our operations
generally as an international company involved in both the
development and operation of cinemas and the development and
operation of real estate; and previously engaged for many years in
the railroad business in the United States:
- our ability to renew, extend or
renegotiate our loans that mature in 2018;
- our ongoing access to borrowed funds
and capital and the interest that must be paid on that debt and the
returns that must be paid on such capital;
- expenses, management and Board
distraction and other effects of the litigation efforts mounted by
James Cotter, Jr. against the Company, including his efforts to
cause a sale of voting control of the Company;
- the relative values of the currency
used in the countries in which we operate;
- changes in government regulation,
including by way of example, the costs resulting from the
implementation of the requirements of Sarbanes-Oxley;
- our labor relations and costs of labor
(including future government requirements with respect to pension
liabilities, disability insurance and health coverage, and
vacations and leave);
- our exposure from time to time to legal
claims and to uninsurable risks such as those related to our
historic railroad operations, including potential environmental
claims and health-related claims relating to alleged exposure to
asbestos or other substances now or in the future recognized as
being possible causes of cancer or other health related
problems;
- our exposure to cyber-security risks,
including misappropriation of customer information or other
breaches of information security;
- changes in future effective tax rates
and the results of currently ongoing and future potential audits by
taxing authorities having jurisdiction over our various companies;
and
- changes in applicable accounting
policies and practices.
The above list is not necessarily exhaustive, as business is by
definition unpredictable and risky, and subject to influence by
numerous factors outside of our control. Such factors can be,
changes in government regulation or policy, competition, interest
rates, supply, technological innovation, changes in consumer taste
and fancy, weather, and the extent to which consumers in our
markets have the economic wherewithal to spend money on
beyond-the-home entertainment.
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.
In addition to the forward-looking factors set forth above, we
encourage you to review Item 1A. “Risk Factors,” from our Company’s
Annual Report on SEC Form 10-K for the Year Ended December 31,
2017.
Finally, 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.
Additionally, certain of the presentations included in this
press release may contain “pro forma” information or “non-U.S. GAAP
financial measures.” In such case, a reconciliation of this
information to our U.S. GAAP financial statements will be made
available in connection with such statements.
Reading International, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(Unaudited; U.S. dollars in thousands,
except per share data)
Three Months Ended March 31, March
31, 2018
2017(1)
Revenue Cinema $ 72,255 $ 66,560 Real estate
3,567 2,894 Total revenue
75,822 69,454
Costs and expenses
Cinema (54,948 ) (51,782 ) Real estate (2,384 ) (2,036 )
Depreciation and amortization (5,250 ) (3,934 ) General and
administrative (7,597 ) (6,174 ) Total
costs and expenses (70,179 ) (63,926 )
Operating income 5,643 5,528 Interest expense, net (1,594 )
(1,860 ) Other income (expense) (82 )
821
Income before income tax expense and equity earnings
of unconsolidated joint ventures 3,967 4,489 Equity earnings of
unconsolidated joint ventures 257
255
Income before income taxes 4,224 4,744
Income tax expense (1,155 ) (1,703 )
Net income $ 3,069 $ 3,041 Less: net income (loss)
attributable to noncontrolling interests 22
12
Net income attributable to Reading
International, Inc. common shareholders $ 3,047
$ 3,029
Basic earnings per share attributable to
Reading International, Inc. shareholders $ 0.13
$ 0.13
Diluted earnings per share attributable to
Reading International, Inc. shareholders $ 0.13
$ 0.13 Weighted average number of shares
outstanding–basic 22,967,237 23,168,351 Weighted average number of
shares outstanding–diluted 23,132,989
23,465,176
(1)
Certain prior period amounts have been
reclassified to conform to the current period presentation.
Reading International, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited; U.S. dollars in thousands,
except share information)
March 31, December 31,
2018 2017 ASSETS
(unaudited) Current Assets: Cash and cash equivalents
$ 8,668 $ 13,668 Receivables 8,922 13,050 Inventory 1,342 1,432
Prepaid and other current assets 6,713
5,325
Total current assets 25,645 33,475
Operating property, net 269,578 264,724 Investment and development
property, net 66,944 61,254 Investment in unconsolidated joint
ventures 5,283 5,304 Goodwill 20,383 20,276 Intangible assets, net
8,227 8,542 Deferred tax asset, net 24,834 24,908 Other assets
5,661 4,543
Total
assets $ 426,555 $ 423,026
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable and accrued liabilities $ 27,101
$ 34,359 Film rent payable 7,708 13,511 Debt – current portion
10,544 8,109 Taxes payable – current 3,031 2,938 Deferred current
revenue 8,276 9,850 Other current liabilities 9,515
11,679
Total current liabilities
66,175 80,446 Debt – long-term portion 108,322 94,862 Subordinated
debt, net 27,564 27,554 Noncurrent tax liabilities 12,186 12,274
Other liabilities 28,553 26,649
Total liabilities 242,800
241,785
Commitments and contingencies
Stockholders’ equity:
Class A non-voting common stock, par value
$0.01, 100,000,000 shares authorized, 33,082,295 issued and
21,295,031 outstanding at March 31, 2018, and 33,019,565 issued and
21,251,291 outstanding at December 31, 2017
232 231
Class B voting common stock, par value
$0.01, 20,000,000 shares authorized and 1,680,590 issued and
outstanding at March 31, 2018 and December 31, 2017
17 17
Nonvoting preferred stock, par value
$0.01, 12,000 shares authorized and no issued or outstanding shares
at March 31, 2018 and December 31, 2017
-- -- Additional paid-in capital 146,236 145,898 Retained earnings
35,920 32,679 Treasury shares (23,223 ) (22,906 ) Accumulated other
comprehensive income 20,241
20,991
Total Reading International, Inc. stockholders’
equity 179,423 176,910 Noncontrolling interests
4,332 4,331
Total stockholders’
equity 183,755 181,241
Total liabilities and stockholders’ equity $
426,555 $ 423,026
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180510006425/en/
Reading International, Inc.Dev Ghose, Executive Vice President
& Chief Financial OfficerAndrzej Matyczynski, Executive Vice
President for Global Operations(213) 235-2240
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