Reading International, Inc. Q3 FY2025 earnings call

Key Points

• Operating teams improved overall profitability. In U.S., closed a 14-screen cinema in San Diego, reducing U.S. screen count by 7.3%.
• In operational areas like F&B and alternative content programming, delivered record results. For example, global cinema F&B SPP and alternative content box office were at record levels.
• Worked with landlords to reduce occupancy costs as attendance hasn't returned to pre-pandemic levels and operating expenses have increased.
• U.S. Real Estate division had best third quarter operating income since Q3 2014 due to strong live theater assets in New York City.
• Significant debt reduction: Reduced global debt balance from $202.7 million on Dec 31, 2024, to $172.6 million on Sep 30, 2025, a 15% decrease. Interest expense for 9 months ended Sep 30, 2025, reduced by $2.6 million or 17% compared to same period 2024.

Cinema Business

• Global cinema revenues in Q3 2025 were $48.6 million, a 14% decrease from Q3 2024. Global cinema operating income was $1.8 million, a 21% decrease.
• U.S. cinemas: Revenue decreased 10% to $25.1 million; operating loss improved to $100,000 from $1 million in Q3 2024. Average ticket price was $13.13, second highest third quarter ever. Gross box office for alternative content programming was highest third quarter ever.
• Australian cinemas: Revenue decreased 17% to $20.5 million; operating income decreased 38% to $1.8 million. Q3 2025 ATP was highest third quarter ever.
• New Zealand cinemas: Revenue decreased 23% to $2.9 million; operating income decreased 96% to $10,000. Q3 2025 ATP was highest third quarter ever.

Real Estate Business

• Global real estate total revenues in Q3 2025 were $4.6 million, a 7% decrease; total income was flat at $1.4 million.
• U.S. real estate: Quarter-to-date revenue increased 35%, operating income was $253,000, a 433% increase. Live theater segment performed well, e.g., Minetta Lane Theatre attendance increased over 450% and theater-level cash flow increased over 140%.

Forward-Looking Statements

• Anticipates 2026 will have a robust film slate including major franchise releases like Spider-Man: Brand New Day, Toy Story 5, etc., and expects art house and specialty film to perform similarly to 2025.
• In U.S. cinemas, plans to complete renovation of Bakersfield cinema with recliners and premium screens by end of Jan 2026, and refurbish existing recliner seats by end of 2026. By end of 2026, 68% of U.S. screens will have recliners and 44% will have premium screens.
• In New Zealand, will redesign Reading Cinemas at Courtenay Central with recliners, premium screens, and F&B upgrades, completion in 2027. In Australia, will add TITAN LUXE and premium screen to a key cinema in 2026. By end of 2026, 36% of Australian screens will have recliners and 59% of international theaters will have premium screens.

Risks

• Uncertainty in movie slate quantity and grossing potential.
• Exchange rate fluctuations, especially impact on international revenues.
• Potential changes in real estate rental market affecting rental income.
• Increase in operating costs for cinemas despite efforts to reduce occupancy costs.
• Risk of city condemnation of Reading Viaduct in Pennsylvania, which could affect the asset's value and use.

Q: There was a mention in the 10-Q about the Noosa Australian cinema development project still planned for 2027 or has it been deferred indefinitely? What is the current budget and expected ROI for this project?

A: We're still expecting the Reading Cinema in Noosa to be built out, but completion and opening won't happen until around 2028. We usually target at least a high-teen double-digit return for third-party cinema lease deals, and the current deal for the Noosa Cinema is consistent with those targets.

Q: We've been asked several questions about our plans for the refinancing of our Bank of America, Emerald and Valley National loans. Can you please elaborate?

A: We plan to refinance this debt in 2026 and are considering a variety of alternatives and structures. We are encouraged by the improving real estate financing environment, including anticipated reduction in interest rates and improving commercial rental market in Manhattan. A significant factor in refinancing Emerald debt would be the lease status of our 44 Union Square, with anticipation of resolving the current nonexclusive LOI by the end of the year.

Q: Given Reading has no present New Zealand debt and the excess proceeds from the Wellington Courtenay sale were upstream to pay down costly U.S. debt, can you share what your likely use of the Napier sale proceeds will be?

A: If the Napier transaction closes, we'll likely use the proceeds to support the renovation of our Reading Cinema Courtenay Central in Wellington, New Zealand or for general corporate use in New Zealand.

Q: We also received a number of questions about the Sutton Hill Associates acquisition that involves RDI assuming $13.65 million in third-party notes at 4.75% interest maturing September 30, 2035, who will be the holder of these third-party notes? What assets will secure the guarantee and guarantee these notes?

A: The third-party notes are payable to a third party. The reasons for the third party's willingness to do the deal are speculative. The third-party notes would be guaranteed by Reading International, Inc., but would otherwise be unsecured. This will wind up and close out of our master lease transaction entered into with Sutton Hill Capital, LLC in 2000.