READING INTERNATIONAL INC Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Asset Sales: Completed sale of Wellington, New Zealand assets for NZD38 million, eliminating debt and interest expense, with plan to reopen cinema in late 2026/early 2027. Has unconditional contract to sell Cannon Park asset in Australia for AUD32 million, expected to close May 21, 2025, with option to retain cinema and repay debt if not closed.
• Operational Performance: Q1 2025 global revenue down 11% due to票房疲软、影院关闭、外汇影响；operating loss decreased 8.5% due to more efficient operations. EBITDA improved significantly. Second quarter 2025 box office exceeded expectations with strong performances in April and May.
• F&B Initiatives: U.S. circuit Q1 F&B SPP was second highest ever. Australian and New Zealand circuits had F&B milestones driven by factors like online/app F&B sales improvement, liquor sales, movie-themed menus.
• Cinema Divisions: U.S. division closed underperforming cinemas. Australian and New Zealand divisions had respective box office and operating loss situations. Global real estate business had strong U.S. performance and stable occupancy in Australian/New Zealand portfolio.

Segment Performance

• Global Cinema Business: Q1 2025 global cinema revenue was $40.2 million, 11% lower than Q1 2024. Principal reasons included weaker box office due to 2023 Hollywood strikes and underperforming tent poles, closure of 2 underperforming cinemas, and foreign exchange impact. The global cinema operating loss in Q1 2025 was $6.9 million, a 8.5% decrease from Q1 2024. EBITDA was positive $2.9 million in Q1 2025, up over 173% from a negative $4 million in Q1 2024.
• U.S. Cinema Division: Q1 2025 revenue decreased 14% to $18.3 million. Operating loss improved 8% to $3.1 million. Closures of underperforming cinemas occurred. First quarter F&B SPP was $7.97, the second highest ever for a U.S. circuit.
• Australian and New Zealand Cinema Divisions: Australian cinema revenue decreased 9% to $15.7 million, operating loss increased $1 million. New Zealand cinema revenue decreased 8% to $2.4 million, operating loss increased 54%. Notable F&B SPP milestones were achieved in both regions.
• Global Real Estate Business: Global real estate revenue was $4.8 million, 2% lower than Q1 2024. Operating income was $1.6 million, 79% higher. U.S. real estate business had 7% revenue increase and 139% operating income increase. Australian real estate had slightly decreased revenue but 6% operating income increase. New Zealand real estate revenue decreased 33%, but operating loss improved 53%.

Guidance

• Second quarter 2025 box office exceeded expectations with April and May performances better than 2024. 2025 summer and holiday periods have exciting movie slate with diverse and promising titles, expected to be sensational.
• Cinema renovation plans: U.S. has 1 theater with renovation plans, and New Zealand/Australia have cinema upgrade plans, though some renovations have uncertainty due to capital allocation and landlord negotiations.

Risks

• Foreign Exchange Risk: Weakness of Australian and New Zealand dollars against U.S. dollar impacted revenue.
• Asset Sale Risk: Uncertainty of Cannon Park asset sale closing in Australia.
• Renovation Uncertainty: Uncertainty of cinema renovations due to capital allocation and landlord negotiations.
• Debt Risk: Uncertainty regarding debt repayment and refinancing of loans.

Question and Answer

Q: What is your cinema CapEX forecast for 2025? What cinema renovation projects are in progress, and what others are planned to start and completion in 2025?

A: In the U.S. during 2025, 1 theater has plans filed with the city for renovation, converting 10 auditoriums to recliners and adding a [indiscernible] screen. In New Zealand, working on concepts and plans for the upgrade of Reading Cinema at Courtenay Central including conversion to recliners, addition of premium experiences, and lobby and F&B upgrades. 4 other cinemas are targeted for upgrades in late 2025 and early 2026, but no assurance of completion yet.

Q: What are Reading's intermediate term plans to maximize and optimize the value of each of Minetta Lane, post the new Amazon audible lease, and Orpheum theater sites?

A: Reducing debt and rebuilding operational cash flow are priorities. Current plan is to continue relying on cash flow from Minetta and Orpheum. Orpheum is booking profitable shows, Minetta has good arrangement with Audible, and will review future opportunities.

Q: Regarding our debt, the Santander, Minneta, and Orpheum Theater term loan was only rolled forward for another short duration. Do you expect to refinance this loan with Santander or from another source, and how much will further increase in interest rate is expected to result from the refinancing term sheets you have seen?

A: In discussion with Santander to extend existing loan for another year. Terms of extension would include partial paydown, and interest rate is expected to be generally within the same range as today.

Q: What additional proactive steps and when will the company take to attract both sell-side analysts and buy-side investors to the company to obtain lower cost of capital and higher valuation on its shares?

A: Presenting at Sidoti Conference, hosting meetings during the conference, working with existing analysts on non-deal roadshows over next 2 quarters. Pay for coverage organizations show interest, but management believes cost may not be best use of capital.