- Achieves All-Time Record Quarterly
Revenue of $84.2 million
- Second Quarter Operating Income of
$8.6 million, Represents Second Highest Quarter on Record
Earnings Call Webcast to Discuss 2018 Second
Quarter Financial Results Scheduled to Post to Corporate Website on
Monday, August 13, 2018
Reading International, Inc. (NASDAQ: RDI) today announced record
revenue results for the quarter ended June 30, 2018, while
Operating Income was the second highest recorded for any quarter in
the company’s history. Our Company reported Basic Earnings per
Share (“EPS”) of $0.22 and $0.35, for the quarter and six months
ended June 30, 2018, respectively.
Ellen Cotter, Chair, President and Chief Executive Officer,
said, “The second quarter represented another record period for
Reading as we continued to build on our strong momentum from the
first quarter. Our results were driven by the continued execution
of our three-year plan and we achieved superior operational
execution. Ongoing capital improvements and refurbishments to
elevate the guest experience in our cinema business are having the
desired impact. The strong film product and successful launch of
our first dine-in concept, “Spotlight,” contributed to our results
and increased interest in our enhanced U.S. food and beverage
offerings.”
Consolidated revenue for the second quarter of 2018, increased
by 16%, or $11.8 million, compared to the second quarter of
2017, primarily driven by: (i) the U.S. Cinema’s significant
increase in attendance and total spend per patron, (ii) the opening
of our new state-of-the-art eight screen Reading Cinema on
December 14, 2017 in Newmarket, Australia, and (iii) increases
in average ticket prices (“ATP”) in our U.S., Australian and New
Zealand Cinemas.
The following table summarizes the second quarter and first
half-of-the-year results for 2018 and 2017:
Quarter Ended
Six Months Ended % Change
% Change (Dollars in millions, except EPS)
June
30,
2018
June 30,
2017
Favorable/(Unfavorable)
June 30,
2018
June 30,
2017
Favorable/(Unfavorable) Revenue
$ 84.2 $ 72.4 16 %
$ 160.0 $ 141.9 13 % - US
47.0 34.8 35
%
83.9 71.7 17 % - Australia
29.1 28.0 4 %
58.9 55.2 7 % - New Zealand
8.1 9.6 (16 ) %
17.2 15.0 15 % Segment operating income (1)
$
14.4 $ 12.5 15 %
$ 26.3 $ 22.9 15 % Net
income(2)
$ 5.0 $ 19.0 (74 ) %
$ 8.0 $
22.1 (64 ) % EBITDA (1)
$ 14.4 $ 30.7 (53 ) %
$ 25.4 $ 41.2 (38 ) % Adjusted EBITDA (1)
$
15.5 $ 21.9 (29 ) %
$ 28.1 $ 33.1 (15 ) %
Basic EPS (2)
$ 0.22 $ 0.82 (73 ) %
$
0.35 $ 0.95 (63 ) %
(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: For the quarter ended June 30, 2018, we
achieved revenue of $84.2 million, up $11.8 million from
the prior year. Our operating results benefited from the strong
performance of our US cinema operations.
- Capex
program: During the second quarter of 2018, we invested
$18.0 million in capital improvements to our cinemas,
continuing our investment in the upgrading of select cinemas and
real estate properties.
- Cinema
activities: During the second quarter of 2018, we saw
the benefit in performance as a result of the completed renovations
at four U.S. theaters: Cal Oaks, Manville, Pearlridge, and Ward. We
continue to upgrade our food and beverage (“F&B”) offerings
and, as of June 30, 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 that
have been approved by our Board of Directors and which we
anticipate bringing on line in 2019/2020.
We achieved a record second quarter in our
online ticket sales in all three countries where we operate, led by
“Avengers – Infinity War” and “Deadpool 2” exceeding previous first
quarter records by as much as 144% in the U.S. With the continued
improvements of our websites and apps in the U.S. and improved
online sales infrastructure to better serve high sales volume,
“Avengers – Infinity War” set daily and weekly online record ticket
sales in all countries.
Real estate activities:
- Purchase of Land
at Cannon Park, Australia – On June 13, 2018, we acquired a
163,000 square foot (15,150 square meter) parcel at our Cannon Park
ETC, in connection with the restructuring of our relationship with
the adjacent land owner. Prior to the restructuring, this parcel
was commonly owned by us and the adjoining land owner. In the
restructuring, the adjoining land owner conveyed to us its interest
in the parcel for AU$1. We granted the adjoining land owner certain
access rights.
- Purchase of
Property in Auburn, Australia – On June 29, 2018, we
purchased a property for $3.5 million (AU$ 4.5 million)
in Auburn (Sydney area), Australia. The property which borders our
Redyard ETC in Auburn on three sides to the east, west and south
and consists of an approximately 16,830 square foot building
located on an estimated 20,870 square foot lot, is subject to a
lease to Telstra Corporation through September 2022. This will
allow us time to plan for the efficient integration into our ETC.
Including this acquisition, our Redyard ETC 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.
- Expansion Project
for our Newmarket Shopping Center at an affluent suburb of
Brisbane, Australia – In December 2017 we opened our
eight-screen Reading Cinema with TITAN LUXE, including 10,150
square feet of additional retail space and 124 additional parking
spaces. As of June 30, 2018, approximately 93% of this new retail
space has been leased.
- Belmont (Perth,
Australia) – In the first half of 2018, we continued with
the re-positioning of our ETC in Belmont (a suburb of Perth), which
features new F&B offerings and a Reading Cinema with TITAN
LUXE. During the latter part of the second quarter of 2018, the
Asian inspired Tao Café (with approximately 3,190 square feet)
opened joining our existing restaurants, Dome Café and Tavolo.
- Manukau Land
Rezoning (Auckland, New Zealand) – We own two parcels in
Manukau comprising 64.0 acres zoned for light industrial use and
6.4 acres zoned for heavy industrial use. Now that our zoning
enhancement goal is achieved, we are reviewing our options with
respect to the value realization opportunities and commercial
exploitation of this asset. We see this property as a future value
realization opportunity. This tract is adjacent to the Auckland
Airport which has recently been expanding toward our property. We
are currently working with adjoining landowners to develop an
infrastructure plan for the approximately 355 acres of rezoned land
of which our property is a significant part.
- Minetta Lane (New
York, USA) – In February 2018, we entered into a one-year
license agreement with Audible, Inc. a subsidiary of Amazon, at the
Minetta Lane Theatre. We understand that Audible intends to produce
one to two character plays, from which it will record audio
productions available through Audible.
- Redevelopment of
44 Union Square Property (New York, USA) – At the beginning
of January 2016, we ceased our live theatre business at our Union
Square property in New York, terminated all tenant leases and
prepared the property for redevelopment. Accordingly, this property
is no longer treated as an operating property. We anticipate that
the 73,000 square foot redevelopment project in Union Square will
be ready for the commencement of tenant fit-out in the first
quarter of 2019. Retail and office leasing interest to date has
been strong and we are currently in discussions with a number of
quality tenants. This redevelopment will add approximately 23,000
square footage of rentable space to the current square footage of
the building for an approximate total of 73,322 square feet of
rentable space, inclusive of anticipated BOMA (Building Owners and
Managers Association) adjustments and subject to lease negotiations
and the final tenant mix.
- Cinema 1,2,3
Redevelopment (New York, USA) – In June 2017, we entered
into an exclusive dealing and pre-development agreement with our
adjoining neighbors, 260-264 LLC, to jointly develop the
properties, currently home to Cinemas 1,2,3 and Anassa Taverna.
While this agreement has expired, we both (i) remain open to the
common development of these properties given the synergies and
value creation opportunities of the joint development and (ii) have
been and will continue to evaluate alternative opportunities for
the property.
Corporate Matters
- Our 2018 Annual Stockholders Meeting of
the Company is scheduled to be held on November 7, 2018, and the
record date for stockholders entitled to vote is September 17,
2018.
SEGMENT RESULTS
The following table summarizes the second quarter and first
half-of-the-year segment operating results for 2018 and 2017:
Quarter Ended
Six Months Ended %
Change % Change (Dollars in thousands)
June 30,2018 June 30,2017
Favorable/(Unfavorable) June 30,2018
June 30,2017 Favorable/(Unfavorable)
Segment revenue Cinema
United States $ 44,413 $ 33,425 33 % $ 82,400 $ 69,661 18 %
Australia 27,137 25,425 7 % 53,854 50,381 7 % New Zealand
8,633 8,594 - % 16,184
13,962 16 % Total
$
80,183 $ 67,444 19
% $ 152,438 $
134,004 14
% Real
estate United States $ 952 $ 1,457 (35 ) % $ 1,605 $ 2,044
(21 ) % Australia 4,262 3,848 11 % 8,366 7,434 13 % New Zealand
1,171 1,628 (28 ) % 2,371
1,953 21 % Total
$
6,385 $ 6,933 (8 ) %
$ 12,342 $ 11,431 8 %
Inter-segment elimination (2,346 ) (1,963 )
(20 ) % (4,737 ) (3,567 ) (33 ) %
Total
segment revenue $
84,222 $
72,414
16 % $
160,043 $
141,868 13 % Segment
operating income Cinema United States $ 4,698 $
1,591 195 % $ 7,699 $ 4,099 88 % Australia 6,048 5,970 1 % 11,965
11,915 - % New Zealand 1,748 2,227
(22 ) % 3,115 2,865 9
% Total
$ 12,494 $ 9,788
28 % $ 22,779
$ 18,879 21
% Real estate United States $ (66 ) $ 266 (125
) % $ (360 ) $ 297 (221 ) % Australia 1,533 1,549 (1 ) % 2,998
2,957 1 % New Zealand 447 941
(52 ) % 906 796 (14 ) % Total
$ 1,914 $ 2,756
(31 ) % $ 3,544 $
4,050 (12 ) % Total
segment operating income (1) $ 14,408
$ 12,544 15 %
$ 26,323 $ 22,929
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 ExhibitionSecond
Quarter Results:Cinema segment operating income increased by
28%, or $2.7 million, to $12.5 million for the quarter
ended June 30, 2018 compared to June 30, 2017, primarily driven by
increased operating income in the U.S. due to higher average ticket
price (“ATP”), higher spend per patron (“SPP”), and increased
attendance.
- Revenue in the United States increased
by 33%, or $11.0 million, due to a 11% increase in ATP, a 5%
increase in SPP, and a 22% increase in attendance. These changes
are primarily due to improvements resulting from our continuous
capital improvements at several of our theaters, the introduction
of “Spotlight”, as well as strong film product for the
quarter.
- Australia’s cinema revenue increased by
7%, or $1.7 million, primarily due to an 8% increase in ATP,
an 8% increase in SPP, offset by a 1% decrease in attendance.
- While the attendance and SPP of our New
Zealand cinema operations have increased versus the same period in
2017, our New Zealand revenue remained flat over the prior year
quarter primarily because the 2016 quarter included business
interruption insurance related to the Wellington earthquake.
The top three grossing films for the second quarter of 2018 were
“Avengers: Infinity War”, “Deadpool 2”, and “Incredibles 2”
representing approximately 36% of Reading’s worldwide admission
revenues for the quarter. The top three grossing films in the
second quarter of 2017 for Reading’s worldwide cinema circuits were
“Guardians of the Galaxy Vol. 2”, “Wonder Woman”, and “The Fate of
the Furious” , which represented approximately 32% of Reading’s
admission revenues for the second quarter of 2017.
Six-Month Results:Cinema segment operating income
increased 21%, or $3.9 million, to $22.8 million for the
six months ended June 30, 2018 compared to June 30, 2017, primarily
driven by an 88% operating income growth in the U.S. market. In
addition, the re-opening of our Courtenay Central Cinema in
Wellington, New Zealand contributed to the overall operating income
as well as increases in higher ticket price (“ATP”) and higher
spend per patron (“SPP”) across all three countries.
- Revenue in the United States increased
by 18%, or $12.7 million, primarily driven by increases in
ATP, SPP, and attendance.
- Australia’s cinema revenue increased by
7%, or $3.5 million, primarily due to an 8% increase in ATP, a
7% increase in SPP, offset by a 1% decrease in attendance.
- New Zealand cinema revenue increased by
16%, or $2.2 million, as a result of the 17% increase in
attendance, a 9% increase in SPP, and a 3% increase in ATP.
The top three grossing films for the first half of 2018 were
“Avengers: Infinity War”, “Black Panther”, and “Deadpool 2”
representing approximately 22% of Reading’s worldwide admission
revenues, compared to the top three grossing films a year ago:
“Beauty and the Beast”, “Guardians of the Galaxy Vol. 2”, and
“Wonder Woman”, which represented approximately 19% of our
admission revenues for the same period in 2017.
Real Estate
Second Quarter and Six-Month Results:Real estate segment
operating income decreased by 31%, or $0.8 million, to
$1.9 million for the quarter ended June 30, 2018 compared to
June 30, 2017. For the six months ended June 30, 2018, the real
estate segment operating income decreased by 12%, or
$0.5 million, to $3.5 million, compared to the same
period in 2017. This was primarily attributable to a decrease in
Live Theater revenue compared to prior year which was due to the
settlement payment related to the STOMP arbitration, as well as the
impact of business interruption insurance recorded in the second
quarter of 2017 in New Zealand. The overall decrease was offset by
the increased operating revenue from our Courtenay Central ETC due
to the full year of operations in 2018 compared to only one quarter
of operation in 2017.
CONSOLIDATED AND NON-SEGMENT RESULTS
The second quarter and first half-of-the-year consolidated and
non-segment results for 2018 and 2017 are summarized as
follows:
Quarter Ended
Six Months Ended % Change
% Change (Dollars in thousands)
June
30,2018 June 30,2017
Favorable/(Unfavorable) June 30,2018
June 30,2017 Favorable/(Unfavorable)
Segment operating income $ 14,408
$ 12,544 15 % $
26,323 $ 22,930 15
% Non-segment income and expenses: General and
administrative expense (5,730 ) (4,674 ) (23 ) % (11,886 ) (9,425 )
(26 ) % Interest expense, net (1,790 ) (1,787 ) - % (3,384 ) (3,647
) 7 % Gain on sale of assets -- 9,417 n/a - 9,417 % Gain on
insurance recoveries -- 9,217 n/a - 9,217 % Other 166
181 nm 224 1,152 81 %
Total non-segment income and expenses $ (7,354
) $ 12,354 160 %
$
(15,046 ) $ 6,714 324
%
Income before income taxes 7,054 24,898 (72 )
% 11,277 29,644 62
% Income tax expense
(1,953 ) (5,846 ) 67 % (3,108 ) (7,549
) 59 %
Net income $ 5,101 $
19,052 (73 )
% $ 8,169 $
22,095 (63 ) % Less: net income
attributable to noncontrolling interests 102
20 nm 124 32 nm
Net income
attributable to RDI common stockholders $ 4,999
$ 19,032 (74 ) %
$ 8,045 $ 22,063
(64 ) %
“nm” – not meaningful for further analysis
Second Quarter and First
Half-of-the-Year Net ResultsNet income attributable to
RDI common stockholders decreased by 74%, or $14.0 million, to
$5.0 million for the quarter ended June 30, 2018 compared to
the same period prior year. The decrease in net income attributable
to RDI common stockholders is due to a one-time gain on insurance
recoveries of $9.2 million and a $9.4 million gain on
sale of assets that were recognized for the quarter ended June 30,
2017 offset by increased operating income. Additionally, there was
an increase in non-segment G&A expenses in 2018. Basic EPS for
the quarter ended June 30, 2018 decreased by $0.60 to $0.22 from
the prior-year quarter.
Net income attributable to RDI common stockholders decreased by
64%, or $14.0 million, to $8.0 million for the six months ended
June 30, 2018 compared to the same period prior year. Basic EPS for
the first half of 2018 decreased by $0.60 to $0.35 from the
prior-year period, mainly attributable to the one-time gain on
insurance recoveries and gain on asset sale recognized for the
six-months ended June 30, 2017.
Non-Segment General &
Administrative ExpensesNon-segment general and
administrative expense for the quarter and six months ended June
30, 2018 compared to the same period of the prior year increased by
23%, or $1.1 million, and 26%, or $2.5 million,
respectively. This increase mainly relates to higher legal expenses
incurred on the Derivative Litigation, the Cotter Employment
Arbitration, other Cotter litigation matters (discussed further
below), 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.
LitigationLegal fees
associated with the Cotter Derivative Litigation totaled
$1.2 million and $2.6 million for the three and six
months ended June 30, 2018. On June 18, 2018, the Nevada District
Court dismissed in summary judgment the last of Jim Cotter, Jr’s
derivative claims without trial. Accordingly, the trial scheduled
for July 9, 2018, has been vacated and the matter moved to appeal.
It is anticipated that the dismissal will result in a material
decrease in non-segment legal expenses for the remainder of the
year.
Gain on Sale of
Assets$9.4 million represented our full recognition
of the transaction gain triggered by the additional payment from
the buyer of our Burwood property in Australia, and was recognized
in the second quarter of 2017.
Gain on Insurance
Proceeds$9.2 million represented the gain
recognized in 2017 on the final insurance settlement proceeds
relating to the earthquake damage to our Courtenay Central parking
structure (excluding business interruption insurance payments).
Income Tax ExpenseIncome tax
expense for the quarter and six months ended June 30, 2018
decreased by $3.9 million and $4.4 million, respectively,
compared to the equivalent prior-year period. The change between
2018 and 2017 is primarily related to lower pretax income, the
reduction of U.S. statutory corporate tax rate as the result of the
Tax Act, foreign tax credit, partially offset by higher tax rates
overseas versus the US and non-taxable insurance proceeds received
in 2017.
OTHER FINANCIAL INFORMATION
Balance Sheet and Liquidity
Total assets increased by $12.7 million, to
$435.7 million at June 30, 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, and (ii) the expansion of our Newmarket property in Brisbane,
Australia. These were offset by a reduction in our
foreign-operation asset values due to a decrease in the foreign
exchange rates relative to the U.S. dollar. Available cash
resources generated from operations and proceeds received from
borrowings funded these capital investments.
Cash and cash equivalents at June 30, 2018 were
$12.7 million, including approximately $6.2 million in
the U.S., $3.0 million in Australia, and $3.5 million in
New Zealand. We manage our cash, investments and capital structure
so we are able to meet short-term and long-term obligations for our
business, while maintaining financial flexibility and
liquidity.
As part of our operating cycle, we collect cash from (i) our
cinema business when selling tickets and food and beverage items,
and (ii) rental income typically received in advance; we utilize
these collections, to reduce our long-term borrowings and realize
savings on interest charges. We then settle our operating expenses
generally with a lag within traditional trade terms. This cash
management generates a temporary working capital deficit, which is
positive for the company. We review the maturities of our
borrowings and negotiate for renewals and extensions, as necessary
for liquidity purposes. We believe the cash flow generated from our
operations coupled with our ability to renew and extend our credit
facilities will provide sufficient liquidity in the upcoming
year.
The table below presents the changes in our total available
resources (cash and borrowings), debt-to-equity ratio, working
capital and other relevant information addressing our liquidity for
the six months ended June 30, 2018 and preceding four years:
As of and for the 6-Months Ended
Year Ended December 31 ($ in thousands)
6/30/2018
2017 2016 2015
2014 Total Resources (cash and
borrowings) Cash and cash equivalents (unrestricted) $ 12,742 $
13,668 $ 19,017 $ 19,702 $ 50,248 Unused borrowing facility 108,983
137,231 117,599 70,134 45,700 Restricted for capital projects(1)
49,803 62,280 62,024 10,263 -- Unrestricted capacity 59,180 74,951
55,575 59,871 45,700 Total resources at period end 121,725 150,899
136,616 89,836 95,948 Total unrestricted resources at period end
71,922 88,619 74,592 79,573 95,948
Debt-to-Equity Ratio
Total contractual facility $ 270,746 $ 271,732 $ 266,134 $ 207,075
$ 201,318 Total debt (gross of deferred financing costs) 161,763
134,501 148,535 130,941 164,036 Current 10,747 8,109 567 15,000
38,104 Non-current 151,016 126,392 147,968 115,941 125,932 Total
book equity 181,168 181,241 146,615 138,951 133,716 Debt-to-equity
ratio 0.89 0.74 1.01 0.94 1.23
Changes in Working Capital
Working capital (deficit) $ (36,191 ) $ (46,971 ) $ 6,655 $ (35,581
) $ (15,119 ) Current ratio 0.46 0.42 1.10 0.51 0.84
Capital Expenditures (including
acquisitions)
$ 41,180 $ 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
June 30, 2018:
As of June 30, 2018 (Dollars in
thousands)
Contractual Capacity Capacity Used
Unused Capacity
Restricted for Capital
Projects
Unrestricted Capacity 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 19,888 37,612 37,612 -- NAB Corporate Term
Loan (AU) (1) 49,203 42,729 6,474 -- 6,474 Westpac Bank Corporate
(general/non-construction) Credit Facility (NZ) (1) 23,706 --
23,706 -- 23,706 Westpac Bank Corporate (construction) Credit
Facility (NZ) (1) 12,191 -- 12,191
12,191 --
Total $ 202,600 $
93,617 $ 108,983 $ 49,803
$ 59,180
(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 June 30, 2018.
The $49.8 million representing borrowings restricted for
capital projects is composed of the $37.6 million and
$12.2 million (NZ$18.0 million) unused capacity for the
Union Square development and construction funding for New Zealand
operations, respectively. Our Minetta and Orpheum Theatres Loan
will become due November 1, 2018. 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:
Quarter Ended
Six Months Ended June 30
June 30 June 30 June 30 (Dollars in
thousands)
2018 2017 2018 2017
Net Income $ 4,999 $ 19,032
$ 8,045 $ 22,063 Add:
Interest expense, net 1,790 1,787 3,384 3,647 Add: Income tax
expense 1,953 5,846 3,108 7,549 Add: Depreciation and amortization
5,626 4,054 10,877 7,987
EBITDA $ 14,368 $
30,719 $
25,414 $
41,246 Adjustments for: Gain on insurance
recoveries -- (9,217 ) -- (9,217 ) Legal expenses relating to the
derivative ligation, the Cotter employment arbitration and other
Cotter litigation matters 1,163 387
2,641 1,032
Adjusted EBITDA $
15,531 $ 21,889 $ 28,055
$ 33,061
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio
webcast on our corporate website on August 13, 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 August 10,
2018 by 5:00 p.m. Eastern Standard 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 theatres 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)
Quarter Ended Six Months
Ended June 30, June 30, June 30, June
30,
2018
2017(1)
2018
2017(1)
Revenue Cinema $ 80,183 $ 67,443 $ 152,438 $ 134,003 Real
estate 4,039 4,970
7,605 7,864 Total revenue
84,222 72,413 160,043
141,867
Costs and expenses Cinema
(60,306 ) (52,139 ) (115,254 ) (103,921 ) Real estate (2,551 )
(2,342 ) (4,935 ) (4,377 ) Depreciation and amortization (5,626 )
(4,054 ) (10,877 ) (7,987 ) General and administrative
(7,165 ) (6,118 ) (14,761 )
(12,291 ) Total costs and expenses
(75,648 ) (64,653 ) (145,827 ) (128,576
)
Operating income 8,574 7,760 14,216 13,291 Interest
expense, net (1,790 ) (1,787 ) (3,384 ) (3,647 ) Gain on sale of
assets -- 9,417 -- 9,417 Gain on insurance recoveries -- 9,217 --
9,217 Other (expense) income (61 ) 27
(143 ) 848
Income before
income tax expense and equity earnings of unconsolidated joint
ventures 6,723 24,634 10,689 29,126 Equity earnings of
unconsolidated joint ventures 331
264 588 518
Income before income taxes 7,054 24,898 11,277 29,644 Income
tax expense (1,953 ) (5,846 )
(3,108 ) (7,549 )
Net income $ 5,101 $ 19,052
$ 8,169 $ 22,095 Less: net income attributable to noncontrolling
interests 102 20
124 32
Net income attributable to
Reading International, Inc. common shareholders $
4,999 $ 19,032 $ 8,045 $ 22,063
Basic earnings per share attributable to Reading International,
Inc. shareholders $ 0.22 $ 0.82
$ 0.35 $ 0.95
Diluted earnings per share
attributable to Reading International, Inc. shareholders
$ 0.22 $ 0.81 $ 0.35 $ 0.94
Weighted average number of shares outstanding–basic
22,933,589 23,148,995 22,979,436 23,168,703 Weighted average number
of shares outstanding–diluted 23,147,373
23,396,143 23,193,220
23,415,851 1 Certain prior period amounts have
been reclassified to conform to the current period presentation.
Reading International, Inc. and
SubsidiariesConsolidated Balance Sheets(Unaudited; U.S.
dollars in thousands, except share information)
June 30, December 31,
2018 2017 ASSETS
(unaudited) Current Assets: Cash and cash equivalents
$ 12,742 $ 13,668 Receivables 8,371 13,050 Inventory 1,418 1,432
Prepaid and other current assets 7,916
5,325
Total current assets 30,447 33,475
Operating property, net 265,586 264,724 Investment and development
property, net 74,042 61,254 Investment in unconsolidated joint
ventures 5,112 5,304 Goodwill 19,686 20,276 Intangible assets, net
7,805 8,542 Deferred tax asset, net 25,776 24,908 Other assets
7,258 4,543
Total
assets $ 435,712 $ 423,026
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable and accrued liabilities $ 24,051
$ 34,359 Film rent payable 10,774 13,511 Debt – current portion
10,747 8,109 Taxes payable – current 4,383 2,938 Deferred current
revenue 7,341 9,850 Other current liabilities
9,342 11,679
Total current liabilities
66,638 80,446 Debt – long-term portion 119,946 94,862 Subordinated
debt, net 27,574 27,554 Noncurrent tax liabilities 12,040 12,274
Other liabilities 28,346 26,649
Total liabilities 254,544
241,785
Commitments and contingencies
Stockholders’ equity: Class A non-voting common stock, par
value $0.01, 100,000,000 shares authorized, 33,101,614 issued and
21,309,702 outstanding at June 30, 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 June 30,
20 18 and December 31, 2017 17 17 Nonvoting preferred stock, par
value $0.01, 12,000 shares authorized and no issued or outstanding
shares at June 30, 2018 and December 31, 2017 -- -- Additional
paid-in capital 146,567 145,898 Retained earnings 40,918 32,679
Treasury shares (23,303 ) (22,906 ) Accumulated other comprehensive
income 12,332 20,991
Total Reading International, Inc. stockholders’ equity
176,763 176,910 Noncontrolling interests 4,405
4,331
Total stockholders’ equity
181,168 181,241
Total
liabilities and stockholders’ equity $ 435,712
$ 423,026
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005845/en/
Reading International, Inc.Dev Ghose, Executive Vice President
& Chief Financial OfficerAndrzej Matyczynski, Executive Vice
President for Global Operations213-235-2240
Reading (NASDAQ:RDI)
Historical Stock Chart
From Sep 2024 to Oct 2024
Reading (NASDAQ:RDI)
Historical Stock Chart
From Oct 2023 to Oct 2024