- Earnings Webcast to Discuss 2018 Fourth
Quarter and Full Year Financial Results Posts to Corporate Website
on Wednesday, March 20, 2019
Reading International, Inc. (NASDAQ: RDI) today announced
results for the fourth quarter and full year ended
December 31, 2018. Operating revenue and operating income for
the full year 2018 represented an all-time record for the Company.
And, our fourth quarter revenues and operating income represented
all-time records for any fourth quarter. Our full year results were
positively impacted by a significant increase in attendance and
record theater level cash flows (in functional currency) across all
three operating jurisdictions, driven by both a stronger film slate
and positive results from the upgrades to our existing portfolio
over the last three years and an increase in our Australian/New
Zealand screen count.
On the real estate front, our signature US redevelopment project
– the historic Tammany Hall at 44 Union Square in Manhattan – is
now more than 80% complete and, while no assurances can be given,
we are in exclusive negotiation on leases representing
approximately 90% of the net rentable area of the project. We
anticipate that the project will be ready for the commencement of
tenant improvement work in the second quarter of 2019.
Ellen Cotter, Chair, President and Chief Executive Officer,
said, “Our record revenue and operating income in 2018 demonstrate
the important progress we are delivering on our strategic plan
across our cinema and real estate businesses. We have solid
momentum in our global cinema segment. Our initiatives to deliver
superior guest experiences helped us outperform the strong industry
box office. Our audiences embraced the addition of recliner seating
and TITAN screens to select cinemas across our global circuit. Our
income was further improved by success with our food and beverage
initiatives, innovative pricing and digital strategies. And, we are
pleased with our progress on 44 Union Square. We remain focused on
building upon our strong performance to enhance long term value for
our stockholders.”
The Company reported Basic Earnings per Share (“EPS”) of $0.22
and $0.62 for the fourth quarter and full year ended
December 31, 2018, respectively, compared with $0.32 and $1.35
for the prior year’s periods. However, in 2018 we did not have
certain non-recurring items (specifically, the 2017 recognition of
a gain on the sale of our land holdings in Burwood, Australia, and
the 2017 receipt of certain insurance proceeds to compensate for
earthquake related damages sustained by our Courtenay Central
entertainment themed center (“ETC”) in Wellington, New
Zealand).
Consolidated revenue for the full year of 2018 increased by 11%,
or $29.4 million, to $309.4 million –an all-time record – primarily
driven by (i) increased cinema attendance across all jurisdictions,
particularly in the U.S., (ii) higher box office and F&B
revenue likewise across all jurisdictions, (iii) a stronger film
slate from the major studios compared to 2017, (iv) the full year
operations from our cinema and dining precinct at Newmarket Village
(suburban Brisbane), and (v) the continuous implementation of our
capital improvement plan, offset by (a) the one-time, non-recurring
$1.8 million settlement payment booked with respect to the STOMP
arbitration recognized in 2017 and (b) weaker Australian and New
Zealand Dollars.
Consolidated revenue for the fourth quarter of 2018 increased by
4%, or $3.1 million, to $75.0 million - likewise an all-time
record for any fourth quarter - primarily driven by (i) increases
in attendance, box office and F&B revenue in our U.S.,
Australian, and New Zealand cinemas compared to the fourth quarter
of 2017, (ii) the opening of our new state-of-the-art eight screen
Reading Cinema on December 14, 2017 at Newmarket Village and (iii)
our investments from 2016-2018 in cinema upgrades. These results
were achieved notwithstanding a 6.6% decline in Australian Dollar
and a 3.6% decline in the New Zealand Dollar for the quarter ended
December 31, 2018, compared to the quarter ended
December 31, 2017.
The following table summarizes the fourth quarter and full year
results for 2018 and 2017:
% Change Quarter Ended Year
Ended
Favorable/(Unfavorable)
December 31, December 31,
Q4 2018 vs.
2018 vs. (Dollars in millions, except EPS)
2018
2017 2018 2017 Q4 2017 2017
Revenue $ 75.0 $ 71.9 $ 309.4 $ 279.9 4 % 11 % - US 40.9 38.9 165.8
144.0 5 % 15 % - Australia 26.8 25.6 111.7 106.2 5 % 5 % - New
Zealand 7.3 7.4 31.9 29.7 (1) % 7 % Segment operating income(1) $
9.9 $ 9.8 $ 45.8 $ 41.1 1 % 11 % Net income(2) $ 5.1 $ 7.4 $ 14.4 $
31.1 nm % (54) % EBITDA(1) $ 11.0 $ 8.3 $ 46.9 $ 57.6 33 % (19) %
Adjusted EBITDA(1) $ 11.7 $ 9.6 $ 50.7 $ 43.0 22 % 18 % Basic
EPS(2) $ 0.22 $ 0.32 $ 0.62 $ 1.35 nm % (52) % “nm” –
not meaningful for further analysis (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.
2018 COMPANY HIGHLIGHTS
We achieved the following record results for 2018:
- 2018 Total Revenue of
$309.4 million (up $ 29.5 million from 2017) – all time
record high;
- 2018 Operating Income of $24.1 million
(up $3.4 million from 2017) – all-time record high;
- Fourth-quarter revenue of $75.0 million
(up $3.1 million from Q4 2017) – record fourth quarter; and
- Fourth-quarter operating income of $5.2
million (up $1.5 million from Q4 2017) – record fourth
quarter.
Our EBITDA of $46.9 million decreased from
$57.6 million compared to 2017. Our 2018 net income of
$14.4 million decreased from $31.1 million in 2017 and
Basic EPS of $0.62 per share decreased from $1.35 per share in
2017. Note the following 2017 non-recurring items: (i) the 2017
recognition of a gain on the sale of our Burwood property, (ii) the
2017 receipt of insurance proceeds to compensate for earthquake
related damages in New Zealand, and (iii) the STOMP Arbitration
settlement payment also received in 2017.
- Cinema Capex
program: During 2018, we invested $24.0 million in
capital improvements to our cinemas by adding luxury recliner
seating to auditoriums, converting screens to our premium branded
TITAN presentation, and upgrading our F&B menus at our cinemas
(including obtaining new liquor licenses).
- Australian
Cinema Additions and Pipeline: In early 2019, we
purchased a well-established four-screen cinema in Tasmania,
bringing our global cinema count to 60 and our global screen count
to 482. In addition, we currently have signed lease agreements for
four new cinemas in Australia representing an additional 25
screens, which we anticipate opening between 2019 and 2021.
- Building new
revenue sources: In 2018, we continued to focus on the
development of our social media presence and self ticketing
capabilities. With continued improvements to our websites and apps
in the U.S. and improved global online sales infrastructure to
better serve high sales volume, we set a fourth quarter record with
online sales consisting of 24% of our global box office revenue,
which is a 14% increase from our last fourth quarter.
- Real estate
activities:
- Purchase of Land
at Cannon Park in Townsville, Australia – On June 13,
2018, we acquired a 163,000 square foot (15,150 square meter)
parcel of land 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 with respect
to that parcel.
- Purchase of
Income Producing Property at Auburn/Redyard, Australia – On
June 29, 2018, we added 20,870 square feet of land, improved
with an 16,830 office building, to our Auburn/Redyard ETC. The
property was acquired at auction for $3.5 million
(AU$4.5 million) and is bordered by our existing ETC on three
sides. The property is leased to Telstra through July 2022. This
will allow us time to plan for the efficient integration of the
property into our ETC. With this acquisition, Auburn/Redyard now
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) – In December 2017, we
completed our Newmarket Village expansion and opened 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
December 31, 2018, approximately 98% of this retail space has been
leased.
- The Belmont
Common (Perth, Australia) – For the first nine-months of
2018, we continued with the re-positioning of The Belmont Common in
Belmont (a suburb of Perth), which features new F&B offerings
and a Reading Cinema with TITAN XC. 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. The center is now approximately
96% leased.
- Minetta Lane
Theatre (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, which allows Audible to
produce its one and two person voice shows at our Minetta Lane
Theatre. While no assurances can be given, we are currently
finalizing an amendment extending this agreement with Audible
through 2020, with an additional year option.
- 44 Union Square
Redevelopment (New York, U.S.) – As discussed above, our
signature U.S. redevelopment project – the historic Tammany Hall at
44 Union Square in Manhattan – is now more than 80% complete and,
while no assurances can be given, we are in exclusive negotiation
on leases of approximately 90% of the net rentable area of the
project. We anticipate that the project will be ready for the
commencement of tenant improvement work in the second quarter of
2019.
- Courtenay Central
Redesign/Expansion (Wellington, New Zealand) – Located in
the heart of Wellington – New Zealand’s capital city – this center
is comprised of 161,071 square feet of land situated proximate to
the Te Papa Tongarewa Museum (attracting over 1.5 million visitors
annually), across the street from the site of Wellington’s newly
announced convention center (estimated to open its doors in 2022)
and at a major public transit hub. Damage from the 2016 earthquake
necessitated demolition of our nine-story parking garage at the
site, and unrelated seismic issues have caused us to close portions
of the existing cinema and retail structure while we reevaluate the
center for redevelopment as an entertainment themed urban center
with a major food and grocery component. Wellington continues
to be rated as one of the top cities in the world in which to live,
and we continue to believe that Courtenay Central is located in one
of the most vibrant and growing commercial and entertainment
sections of Wellington.
FOURTH QUARTER AND FULL YEAR 2018 SEGMENT RESULTS
The following table summarizes the fourth quarter and full year
segment operating results for 2018 and 2017:
Quarter Ended Year Ended
December 31,
% ChangeFavorable/
December 31,
% ChangeFavorable/
(Dollars in thousands)
2018 2017 (Unfavorable)
2018 2017 (Unfavorable) Segment revenue
Cinema
United States $ 39,813 $ 37,221 7 % $ 162,250 $ 139,079 17 %
Australia 24,483 23,322 5 % 101,996 96,606 6 % New Zealand
6,772 6,860 (1) % 29,931 27,781 8 % Total
$ 71,068 $ 67,403 5 %
$ 294,177 $ 263,466 12 %
Real
estate
United States $ 1,070 $ 1,517 (29) % $ 3,480 $ 4,740 (27) %
Australia 3,817 3,777 1 % 16,122 15,089 7 % New Zealand
1,143 1,142 - % 4,632 4,158 11 % Total
$ 6,030 $ 6,436 (6) %
$ 24,234 $ 23,987 1 %
Inter-segment elimination (2,108) (1,998) (6) %
(9,026) (7,573) (19) %
Total segment revenue $
74,990 $
71,841 4 % $
309,385 $
279,880 11 % Segment operating income
Cinema
United States $ 2,674 $ 2,417 11 % $ 12,682 $ 7,207 76 % Australia
4,653 4,546 2 % 21,295 21,358 - % New Zealand 1,010
426 137 % 5,343 4,405 21 % Total
$
8,337 $ 7,389 13 % $
39,320 $ 32,970 19 %
Real
estate
United States $ 151 $ 848 (82) % $ (363) $ 1,198 (130) % Australia
932 1,136 -18 % 5,003 5,623 (11) % New Zealand 458
488 6 % 1,797 1,335 35 % Total
$ 1,541
$ 2,472 (38) % $ 6,437
$ 8,156 (21) % Total segment
operating income (1) $ 9,878 $
9,861 - % $ 45,757 $
41,126 11 %
(1) Aggregate segment operating income is a non-GAAP financial
measure. See the discussion of non-GAAP financial measures that
follows.
Cinema Exhibition
Fourth Quarter Results:
Cinema segment operating income increased by 13%, or
$0.9 million, to $8.3 million for the quarter ended
December 31, 2018 compared to December 31, 2017. This
increase came from the U.S. and was driven by strong attendance
resulting in higher admission and F&B revenues, primarily
resulting from four of our stronger cinemas being opened in 2018
that were closed, or partially closed, in 2017 for renovations.
- Revenue in the United States increased
by 7%, or $2.6 million, due to a 9% increase in Spend per
Patron (“SPP”) and a 4% increase in average ticket prices
(“ATP”);
- Revenue in Australia increased by 5%,
or $1.2 million, primarily due to a 7% increase in attendance and
slight increase in ATP; offset by a 8% decrease in SPP; and
- Revenue in New Zealand remained flat,
due to a 3% increase in attendance and a 3% increase in ATP, offset
by a 4% decrease in SPP.
The top three grossing films for the fourth quarter 2018 were “A
Star is Born,” “Bohemian Rhapsody,” and “Venom” representing
approximately 25% of Reading’s worldwide admission revenues for the
quarter. The top three grossing films in the fourth quarter of 2017
for Reading’s worldwide cinema circuits were “Star Wars: The Last
Jedi,” “Thor: Ragnorok,” and “Justice League,” which represented
approximately 32% of Reading’s admission revenues for the fourth
quarter of 2017.
Full Year Results:
Cinema segment operating income increased by 19%, or
$6.4 million, to $39.3 million for the full year ended
December 31, 2018 compared to December 31, 2017 primarily
driven by increased admissions compared to a weaker film product
and cinema closures for significant renovations in 2017.
- Revenue in the United States increased
17%, or $23.2 million, due to a 9% increase in attendance, an 8%
increase in ATP, and a 5% increase in SPP.
- Revenue in Australia increased by 6%,
or $5.4 million, primarily due to a 3% increase in attendance
and a 4% increase in ATP; and
- Revenue in New Zealand increased by 8%,
or $2.2 million, primarily due to a 11% increase in attendance and
a 2% increase in ATP and SPP;
The top three grossing films for the full year of 2018 were
“Avengers: Infinity War,” “Black Panther” and “Incredibles 2”
representing approximately 13% of our worldwide admission revenues,
compared to the top three grossing films a year ago: “Beauty and
the Beast,” “Star Wars: The Last Jedi,” and “Wonder Woman,” which
represented approximately 11% of our admission revenues for the
same period in 2017.
Real Estate
Fourth Quarter Results:
Real estate segment operating income decreased by 38%, or
$0.9 million, to $1.5 million for the fourth quarter of
2018 compared to the fourth quarter of 2017, primarily attributable
to (i) a $0.3 million increase in operating expenses primarily
related to U.S. segment operations, (ii) an increase of $0.2
million in general and administrative expenses, and (iii) lower
operating income from our Live Theatre properties primarily related
to the non-recurring 2017 STOMP arbitration award settlement.
Full Year Results:
Real estate segment operating income decreased by 21%, or
$1.7 million, to $6.4 million for the full year 2018
compared to the full year 2017, primarily attributable to the
offsetting effects of:
- The non-recurring STOMP arbitration
award settlement of which $1.8 million was recorded as
operating revenues in 2017;
- The non-recurring gain on business
interruption insurance recoveries claim for the Courtenay Central
ETC recognized during 2017; and
- Increases in our depreciation and
amortization increases in 2018 primarily driven by capital
improvements at the Newmarket Village and Auburn/Redyard ETCs.
CONSOLIDATED AND NON-SEGMENT RESULTS
The fourth quarter and full year consolidated and non-segment
results for 2018 and 2017 are summarized as follows:
Quarter Ended Year Ended
December 31,
% ChangeFavorable/
December 31,
% ChangeFavorable/
(Dollars in thousands)
2018 2017 (Unfavorable)
2018 2017 (Unfavorable) Segment operating
income $ 9,878 $ 9,861 - % $ 45,757 $ 41,126 11 % Non-segment
income and expenses: General and administrative expense (4,571)
(6,016) 24 % (21,288) (19,947) (7) % Interest expense, net (1,705)
(884) (93) % (6,837) (6,194) (10) % Casualty gain (loss) - - 100 %
- 9,217 nm % Gain (loss) on sale of assets (41) (57) -- % (41)
9,360 nm % Equity earnings of unconsolidated joint ventures 307 161
91 % 974 815 20 % Other (64) (501) nm % (650)
115 665 % Total non-segment income and expenses $ (6,074) $
(7,297) 17 % $ (27,842) $ (6,634) (320) % Income before income
taxes 3,804 2,564 nm % 17,915 34,492 (48) % Income tax benefit
(expense) 1,198 4,936 nm % (3,420)
(3,380) (1) % Net income $ 5,002 $ 7,500 nm % $ 14,495 $ 31,112
(53) % Net income attributable to noncontrolling interests
(44) (77) nm % (132) (11) 1,100 %
Net
income attributable to RDI common stockholders $
4,958 $ 7,423 nm
% $
14,363 $ 31,101 (54) %
“nm” – not meaningful for further analysis
Fourth Quarter and Full Year Net
Results
Net income attributable to RDI common stockholders for the
quarter ended December 31, 2018 decreased by
$2.5 million, to $5.0 million and EPS decreased by $0.10
to $0.22 from $0.32 from the prior-year quarter. Net income
attributable to RDI common stockholders for the full year decreased
by $16.7 million to $14.4 million and EPS decreased by
$0.73 to $0.62 from the prior-year period $1.35 due principally to
the following one-off real estate transactions during the fourth
quarter in 2017 that were absent in 2018: (i) recognition of $9.4
million gain from the sale of our Burwood Property during the
second quarter of 2017, (ii) receipt of non-recurring insurance
proceeds with respect to losses sustained by us in the Wellington
earthquake, and the (iii) 2017 segment income by the receipt of
non-recurring STOMP settlement proceeds.
Non-Segment General &
Administrative Expenses
G&A expense for the quarter and full year ended
December 31, 2018 compared to the same period of the prior
year decreased by 24% or $1.4 million, and increased 7%, or
$1.3 million, respectively. The fourth quarter decrease in
2018 compared to the fourth quarter 2017, primarily relates to a
reduction in legal fees of $1.1 million; this reduction is related
to costs incurred in relation to the Cotter litigation that did not
go to trial. The $1.3 million increase for the full year is
primarily related to an increase in payroll related expenses
(attributable to reversal in 2017 for prior year incentive
compensation accruals not deemed necessary), offset by a decrease
in legal and professional services.
Gain on Insurance
Recoveries
During 2017, we recognized a non-recurring $9.2 million
gain from the final insurance settlement relating to the earthquake
damage on our Courtenay Central parking structure (excluding
business interruption insurance recoveries), that contributes to
the decrease in consolidated net income.
Income Tax Expense
Income tax benefit decreased by $3.7 million for the
quarter ended December 31, 2018, and income tax expense increased
by $40,000 for the full year ended December 31, 2018 compared
to the equivalent prior-year period. The differences for the year
were primarily due to benefits recognized as the result of the
dissolution of a non-operating overseas subsidiary, partially
offset by higher taxes on increased pre-tax income and the
provisional unfavorable effect of the tax reform bill enacted in
December 2018.
OTHER FINANCIAL INFORMATION
Balance Sheet and Liquidity
Total assets increased by $15.6 million, to
$439.0 million at December 31, 2018, compared to
$423.4 million at December 31, 2017, primarily driven by
increases in our operating and investing properties relating to
capital enhancements in our existing cinemas and capital
expenditures 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.
Cash and cash equivalents at December 31, 2018 were
$13.1 million, including $7.6 million in the U.S.,
$3.5 million in Australia, and $2.0 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 F&B items, and
(ii) rental income typically received in advance, to first 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. 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
the proceeds on property sales and our ability to renew loans when
due will provide sufficient liquidity in the upcoming year.
OTHER INFORMATION
Our Stock Repurchase Program that expired on March 2, 2019 has
been extended by our Board of Directors through March 2, 2021.
$16.2 million remains available under that extended Program. This
will allow Reading to repurchase its Class A Stock from time to
time in accordance with the requirements of the Securities and
Exchange Commission on the open market, in block trades and in
privately negotiated transactions, depending on market conditions
and other factors.
On March 14, 2019, our Board of Directors approved the Company’s
three-year Strategic Plan to focus across the U.S., Australia and
New Zealand on the upgrading of our existing cinemas to add luxury
recliner seating, TITAN branded auditoriums and enhanced F&B
options, the development in appropriate markets of new cinema
opportunities, and the continued development and/or redevelopment
of our current real estate assets.
After considering the approval of the Strategic Plan, our
Board concluded that the interests of our Company and our
stockholders would be best served by the continued pursuit of our
Strategic Plan as an independent company and that it had no
interest in considering any sale process at this time. Accordingly,
we have advised Patton Vision that our Board does not have any
present interest in engaging in discussions regarding their
unsolicited indication of interest in the sale of our Company.
The table below shows the changes in our working capital
position and other relevant information addressing our liquidity as
of and for the full year ended December 31, 2018 and the
preceding four years:
($ in thousands)
2018 2017 2016(2)
2015(2)
2014(2)
Net Cash from Operating
Activities $ 32,645 $ 23,851 $ 30,188 $ 28,574 $ 28,343
Total Resources (cash and borrowings) Cash and cash
equivalents (unrestricted) $ 13,127 $ 13,668 $ 19,017 $ 19,702 $
50,248 Unused borrowing facility 85,886 137,231 117,599 70,134
45,700 Restricted for capital projects(1) 30,318 62,280 62,024
10,263 — Unrestricted capacity 55,568 74,951 55,575 59,871 45,700
Total resources at 12/31 99,013 150,899 136,616 89,836 95,948 Total
unrestricted resources at 12/31 68,695 88,619 74,592 79,573 95,948
Debt-to-Equity Ratio Total contractual facility $ 252,929 $
271,732 $ 266,134 $ 207,075 $ 201,318 Total debt (gross of deferred
financing costs) 167,043 134,501 148,535 130,941 164,036 Current
30,393 8,109 567 15,000 38,104 Non-current 136,650 126,392 147,968
115,941 125,932 Total book equity 180,547 181,618 146,890 138,951
133,716 Debt-to-equity ratio 0.93 0.74 1.01 0.94 1.23
Changes in
Working Capital Working capital (deficit)(3) $ (55,270) $
(46,971) $ 6,655 $ (35,581) $ (15,119) Current ratio 0.35 0.42 1.10
0.51 0.84
Capital Expenditures (including acquisitions) $
56,827 $ 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.
(2) Certain 2015 balances included the restatement impact as a
result of a change in accounting principle. Certain 2017 and 2016
balances included the restatement impact as a result of a prior
period financial statement correction of immaterial errors (see
Notes to Consolidated Financial Statements--Note 2 – Summary of
Significant Accounting Policies – Accounting Changes of our Form
10-K, Note 2 – Summary of Significant Accounting Policies – Prior
Period Financial Statement Correction of Immaterial Errors). (3)
Typically our working capital (deficit) is negative as we receive
revenue from our cinema business ahead of the time that we have to
pay our associated liabilities. We use the money we receive to pay
down our borrowings in the first instance.
Below is a summary of the available credit facilities as of
December 31, 2018:
As of December 31, 2018
(Dollars in thousands)
ContractualCapacity
CapacityUsed
UnusedCapacity
Restrictedfor
CapitalProjects
UnrestrictedCapacity Bank of America Credit Facility
(USA) $ 55,000 $ 25,000 $ 30,000 $ — $ 30,000 Bank of America Line
of Credit (USA) 5,000 — 5,000 — 5,000 Union Square Construction
Financing (USA) 57,500 27,182 30,318 30,318 — NAB Corporate Term
Loan (AU) (1) 46,856 37,696 9,160 — 9,160 Westpac Corporate Credit
Facility (NZ) (1) 21,475 10,067 11,408
— 11,408
$ 185,831 $ 99,945
$ 85,886 $ 30,318 $
55,568 (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 December 31, 2018.
The $30.3 million representing borrowings restricted for
capital projects is composed of the $30.3 million unused
capacity for the Union Square development.
Our overall global operating strategy is to conduct business
mostly on a self-funding basis (except for funds used to pay an
appropriate share of our U.S. corporate overhead). However, we may
decide to 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:
- Gain on insurance recoveries – this
refers to the excess of insurance proceeds over our damaged
property’s book value and related demolition costs. We excluded the
portion allocated to the recoupment of lost business income. We
have considered this to be an appropriate adjustment for purposes
of determining Adjusted EBITDA in accordance with the 2-year SEC
requirement for determining an item as non-recurring, infrequent or
unusual in nature.
- 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, these costs should also be treated as
non-recurring in nature and accordingly, an adjustable item for
purposes of determining our Adjusted EBITDA.
We have not made adjustments for any gains relating to property
sales, including our realized gain on the Burwood property, 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.
The reconciliation of EBITDA to net income is presented
below:
Quarter
Ended Year Ended December 31, December 31,
(Dollars in thousands)
2018 2017 2018
2017 Net income $ 4,961 $
7,490 $ 14,366 $ 31,101
Adjustments for: Interest expense, net 1,705 884 6,837 6,194 Income
tax (benefit) expense (1,198) (4,936) 3,420 3,380 Depreciation and
amortization 5,570 4,818 22,275 16,942
EBITDA $ 11,038 $ 8,256 $
46,898 $ 57,617 Adjustments for: Casualty
(gain) loss — — — (9,217) (Gain) Loss on Sale of Assets (41) — (41)
(9,360) Legal expenses relating to the Derivative litigation, the
James J. Cotter, Jr. employment arbitration and other Cotter
litigation matters 746 1,333 3,892
3,958
Adjusted EBITDA $ 11,743 $
9,589 $ 50,749 $ 42,998
Conference Call and Webcast
We plan to post our pre-recorded conference call and audio
webcast on our corporate website on March 20, 2019, that will
feature prepared remarks from Ellen Cotter, President & Chief
Executive Officer; Gilbert Avanes, Interim 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 March 19,
2019 by 5:00 pm EDT. The audio webcast can be accessed by visiting
http://www.readingrdi.com/Presentations.
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/Redyard 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 expectation 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 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 as 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,
2018.
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 shares and per share data)
Quarter Ended Full Year Ended December
31, December 31, 2018 2017(1)
2018 2017(1) Revenue Cinema $ 71,068 $ 67,402
$ 294,177 $ 263,464 Real estate 3,922 4,440
15,208 16,415
Total revenue 74,990
71,842 309,385 279,879
Costs and expenses Cinema (55,608) (53,935) (225,791)
(207,447) Real estate (2,496) (2,179) (9,904) (9,437) Depreciation
and amortization (5,570) (4,818) (22,275) (16,942) General and
administrative (6,087) (7,216) (27,337)
(25,347)
Total costs and expenses (69,761)
(68,148) (285,307)
(259,173) Operating income 5,229 3,694
24,078 20,706 Interest expense, net (1,705) (884)
(6,837) (6,194) Gain on sale of assets (41) — (41) 9,360 Gain on
insurance recoveries — — — 9,217 Other income (expense) 17
(349) (256) 588
Income before income tax
expense and equity earnings of unconsolidated joint ventures
3,500 2,461 16,944 33,677 Equity
earnings of unconsolidated joint ventures 307 161
974 815
Income before income taxes
3,807 2,622 17,918 34,492 Income tax
benefit (expense) 1,198 4,936 (3,420)
(3,380)
Net income $ 5,005 $
7,558 $ 14,498 $ 31,112 Less:
Net income attributable to noncontrolling interests 44
77 132 11
Net income attributable to
Reading International, Inc. common shareholders $
4,961 $ 7,481 $ 14,366 $
31,101 Basic earnings per share attributable to Reading
International, Inc. shareholders $ 0.22 $
0.32 $ 0.62 $ 1.35 Diluted
earnings per share attributable to Reading International, Inc.
shareholders $ 0.21 $ 0.32 $
0.62 $ 1.34 Weighted average number of
shares outstanding–basic 22,991,277 23,041,190 22,991,277
23,041,190
Weighted average number of shares
outstanding–diluted 23,208,991 23,247,969
23,208,991 23,247,969 (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)
December 31, 2018 2017
ASSETS Current Assets: Cash and cash equivalents $
13,127 $ 13,668 Receivables 8,045 13,050 Inventories 1,419 1,432
Prepaid and other current assets 7,667 5,325
Total
Current Assets 30,258 33,475 Operating properties, net
257,667
264,724 Investment and development properties, net
86,804
61,254 Investment in unconsolidated joint ventures 5,121 5,304
Goodwill 19,445 20,276 Intangible assets, net 7,369 8,542 Deferred
tax assets, net 26,235 24,746 Other assets 6,129
5,082
Total Assets $ 439,028 $
423,403 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: Accounts payable and accrued
liabilities $ 26,154 $ 34,359 Film rent payable 8,661 13,511 Debt –
current portion 30,393 8,109 Derivative financial instruments -
current portion 41 — Taxes payable 1,710 2,938 Deferred current
revenue 9,264 9,850 Other current liabilities 9,305
11,679
Total Current Liabilities 85,528 80,446 Debt –
long-term portion 106,286 94,862 Subordinated debt 26,061 27,554
Noncurrent tax liabilities 11,530 12,274 Other liabilities
28,931 26,649
Total Liabilities $ 258,481 $ 241,785
Commitments and Contingencies Stockholders’ Equity:
Class A non-voting common shares, par
value $0.01, 100,000,000 shares authorized, 33,112,337 issued and
21,194,748 outstanding at December 31, 2018 and 33,019,565 issued
and 21,251,291 outstanding at December 31, 2017
$ 232 $ 231
Class B voting common shares, par value
$0.01, 20,000,000 shares authorized and 1,680,590 issued and
outstanding at December 31, 2018 and 2017
17 17
Nonvoting preferred shares, par value
$0.01, 12,000 shares authorized and no issued or outstanding shares
at December 31, 2018 and 2017
— — Additional paid-in capital 147,452 145,898 Retained earnings
47,616 33,056 Treasury shares, at cost (25,222) (22,906)
Accumulated other comprehensive income 6,115 20,991
Total Reading International, Inc. ("RDI") Stockholders’
Equity 176,210 177,287 Noncontrolling Interests 4,337
4,331
Total Stockholders’ Equity $ 180,547 $ 181,618
Total Liabilities and Stockholders’ Equity $
439,028 $ 423,403 (1) Certain
prior period amounts have been reclassified to conform to the
current period presentation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190318005312/en/
Gilbert Avanes, Interim Chief Financial OfficerAndrzej
Matyczynski, Executive Vice President for Global OperationsReading
International, Inc. (213) 235-2240
Reading (NASDAQ:RDI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Reading (NASDAQ:RDI)
Historical Stock Chart
From Jul 2023 to Jul 2024