Record First Quarter 2018 Results Announced by Reading International



Earnings Call Webcast to Discuss 2018 First Quarter Financial Results

Scheduled to Post to Corporate Website on

Monday, May 14, 2018 







Culver City, California - (BUSINESS WIRE) May 10, 2018 – Reading International, Inc. (NASDAQ: RDI) today announced record results for the first quarter ended March 31, 2018. The Company reported Basic Earnings per Share (“EPS”) of $0.13 for the quarter ended March 31, 2018, tying the prior year period, which was itself a record first quarter. Revenue represented an all-time quarterly record for the Company, while Operating Income represented an all-time first quarter record. Net Income and EBITDA were both the second highest first quarters on record.





Ellen Cotter, Chair, President and Chief Executive Officer said, “We are pleased with the record results we delivered in the first quarter, which reflect the strong progress we are making on our three-year business strategy and the healthy state of the global cinema industry. This positive momentum in our cinema business has continued through April and we are confident that this segment will continue to benefit from the existing and upcoming summer movies from the major studios. During the first quarter, we also enhanced our real estate portfolio by strategically acquiring an approximately 16,830 square foot building in Australia, which increases our Redyard entertainment center’s uninterrupted frontage on Parramatta Road, one of Sydney’s busiest arterial roads, by 182 feet. We believe that Reading is well-positioned to drive long-term stockholder value as we continue developing our real estate portfolio and executing our global cinema strategy to elevate the guest experience.”



Consolidated revenue for the first quarter of 2018, increased by 9% (or $6.3 million) compared to the first quarter of 2017, primarily driven by: (i) the opening of our new state-of-the-art eight screen Reading Cinema on December 14, 2017 in Newmarket, Australia, (ii) the re-opening of our Courtenay Central Cinema in Wellington New Zealand on March 29, 2017, (iii) increases in average ticket prices (“ATP”) in our U.S. and Australian Cinemas, and (iv) an increase in the Food & Beverage spend per patron (“SPP”) across all markets.

---

 

The following table summarizes the first quarter for 2018 and 2017:







(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









Our online ticket sales achieved a record first quarter in all countries, led by Black Panther and Jumanji: Welcome to the Jungle, exceeding previous first quarter records by as much as 54%.  With the launch of branded ticketing apps in the U.S. and improved online sales infrastructure to better serve high sales volume, Black Panther set daily and weekly online record ticket sales in all countries. To further improve our guests’ online experience, we launched electronic gift card sales, guest enabled online refunds and social sharing on our U.S. branded web sites during the quarter.













---

 















 

---

 



FIRST QUARTER 2018 SEGMENT RESULTS



The following table summarizes the first quarter segment operating results for 2018 and 2017:



“nm” – not meaningful for further analysis







Cinema Exhibition

First Quarter Results:

Cinema segment operating income increased by 13%, or $1.2 million, to $10.3 million for the quarter ended March 31, 2018 compared to March 31, 2017. The primary driver was the re-opening of our Courtenay Central Cinema in Wellington, New Zealand as well as increased operating income in the U.S. due to a higher ATP and a higher SPP across the circuit. For the first quarter:







The top three grossing films for the first quarter 2018 were “Black Panther”, “Jumanji: Welcome to the Jungle”, and “The Greatest Showman” representing approximately 32% of Reading’s worldwide admission revenues for the quarter. The top

---

 

three grossing films in the first quarter of 2017 for Reading’s worldwide cinema circuits were “Beauty and the Beast”, “Logan”, and “Lion”, which represented approximately 21% of Reading’s admission revenues for the first quarter of 2017.



Real Estate



First Quarter Results:

Real estate segment operating income increased by 26%, or $337,000, to $1.6 million for the quarter ended March 31, 2018 compared to March 31, 2017, primarily attributable to increased operating revenue from our Courtenay Central ETC, due to the full quarter of operations in 2018 compared to only a few days in 2017 due to the November 2016 earthquake, as well as the increased income from the expansion of our Newmarket and Auburn ETCs in Australia. This was partially offset by an increase in depreciation due to our occupation of our headquarters building in Culver City and a decline in lease revenue due to a fire at our property in Chicago.



---

 

CONSOLIDATED AND NON-SEGMENT RESULTS

The first quarter consolidated and non-segment results for 2018 and 2017 are summarized as follows: 





“nm” – not meaningful for further analysis

First Quarter Net Results

Net income attributable to RDI common stockholders increased by 1%, or $18,000, to $3.0 million, principally due to an increase in the Cinema Exhibition segment operating income. This increase was due to the re-opening of our Courtenay Central ETC in Wellington New Zealand, which was closed for the majority of Q1 2017 due to the November 2016 earthquake, along with increased operating income from our U.S. operations. These were offset by increased non-segment G&A expenses as well lower other income due to the one-off gain in 2017 from a foreign exchange gain on short-term funds held in our foreign operations that did not repeat in 2018. EPS for the quarter ended March 31, 2018 remained consistent when compared to the prior-year quarter at $0.13.



Non-Segment General & Administrative Expenses

G&A expense for the quarter ended March 31, 2018 increased by 30% or $1.4 million compared to the prior year period. This increase primarily relates to higher non-recurring legal expenses incurred on the Derivative Litigation, the Cotter Employment Arbitration and other Cotter litigation matters, and higher compensation costs, due to headcount and the timing of annual salary increases as well as the timing of recording increases in variable compensation costs.



Income Tax Expense

Income tax expense for the quarter ended March 31, 2018 decreased by $548,000 compared to equivalent prior-year period.  The change between 2018 and 2017 is mainly related to: (i) lower pretax income, (ii) the reduction of the U.S. statutory corporate tax rate as the result of tax reform, and (iii) a net increase in the foreign tax credit.

OTHER FINANCIAL INFORMATION

Balance Sheet and Liquidity



Total assets increased by $3.5 million, to $426.6 million at March 31, 2018, compared to $423.0 million at December 31, 2017. This was primarily driven by increases in our operating and investment properties relating to capital enhancements in our existing cinemas and capital investments relating to major real estate projects, primarily (i) the redevelopment of our Union Square property in New York, (ii) the expansion of our Newmarket property in Brisbane, Australia, and (iii) the purchase of our previously leased digital projectors in the United States. Available cash resources generated from operations and proceeds received from borrowings funded these capital investments.



Cash and cash equivalents at March 31, 2018 were $8.7 million, including $5.4 million in the U.S., $1.9 million in Australia, and $1.4 million in New Zealand. We manage our cash, investments and capital structure so we are able to meet short-term and long-term obligations for our business, while maintaining financial flexibility and liquidity.



As part of our operating cycle, we utilize cash collected from (i) our cinema business when selling tickets and food and beverage items, and (ii) rental income typically received in advance, to reduce our long-term borrowings and realize savings on interest charges. We then settle our operating expenses generally with a lag within traditional trade terms. This generates a temporary working capital deficit. As discussed previously, we review the maturities of our borrowings and negotiate for

---

 

renewals and extensions, as necessary for liquidity purposes. We believe the cash flow generated from our operations coupled with our ability to renew loans when due will provide sufficient liquidity in the upcoming year.

The table below presents the changes in our total available resources (cash and borrowings), debt-to-equity ratio, working capital and other relevant information addressing our liquidity for the three months ended March 31, 2018 and preceding four years:









(1) This relates to the construction facilities specifically negotiated for: (i) Union Square redevelopment project, obtained in December 2016, and (ii) New Zealand construction projects, obtained in May 2015.



Below is a summary of the available credit facilities as of March 31, 2018: 





(1) The borrowings are denominated in foreign currency.  The contractual capacity and capacity used were translated into U.S. dollars based on the applicable exchange rates as of March 31, 2018.

The $61.4 million representing borrowings restricted for capital projects is composed of the $48.3 million and $13.0 million (NZ$18.0 million) unused capacity for the Union Square development and construction funding for New Zealand operations, respectively. Our Minetta & Orpheum Theatres Loan will become due within one year. Currently, we are negotiating with our lender to renew this borrowing on a long-term basis.



Our overall global operating strategy is to conduct business mostly on a self-funding basis by country (except for funds used to pay an appropriate share of our U.S. corporate overhead). However, we may, from time to time, move funds between jurisdictions where circumstances merit such action as part of our goal to minimize our cost of capital.

Non-GAAP Financial Measures

This earnings release presents aggregate segment operating income, and EBITDA, which are important financial measures for the Company, but are not financial measures defined by U.S. GAAP.

---

 



These measures should be reviewed in conjunction with the relevant U.S. GAAP financial measures and are not presented as alternative measures of EPS, cash flows or net income as determined in accordance with US GAAP. Aggregate segment operating income and EBITDA, as we have calculated them, may not be comparable to similarly titled measures reported by other companies.



Aggregate segment operating income – we evaluate the performance of our business segments based on segment operating income, and management uses aggregate segment operating income as a measure of the performance of operating businesses separate from non-operating factors.  We believe that information about aggregate segment operating income assists investors by allowing them to evaluate changes in the operating results of the Company’s business separate from non-operational factors that affect net income, thus providing separate insight into both operations and the other factors that affect reported results. Refer to “Consolidated and Non-Segment Results” for a reconciliation of segment operating income to net income.



EBITDA – we present EBITDA as a supplemental measure of its performance, which is commonly used in our industry.  We define EBITDA as net income adjusted for interest expense (net of interest income), income tax expense, depreciation and amortization expense, and an adjustment of interest expense, depreciation, and amortization for discontinued operations, if any. EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net earnings (loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with U.S. GAAP).  We have included EBITDA in this Earnings Release, as we believe that it provides management and our investors with additional information necessary to properly measure our performance and liquidity, estimate our value and evaluate our ability to service debt.



Adjusted EBITDA – using the principles we consistently apply to determine our EBITDA, we further adjusted the EBITDA for certain items we believe are appropriate adjustable items, described as follows:







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:



---

 

Conference Call and Webcast

We plan to post our pre-recorded conference call and audio webcast on our corporate website on May 14, 2018, that will feature prepared remarks from Ellen Cotter, President & Chief Executive Officer; Dev Ghose, Executive Vice President & Chief Financial Officer; and Andrzej Matyczynski, Executive Vice President - Global Operations.



A pre-recorded question and answer session will follow our formal remarks. Questions and topics for consideration should be submitted to InvestorRelations@readingrdi.com on May 11, 2018 by 5:00 p.m. Eastern 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 theaters operated by Liberty Theatres in the United States; and signature property developments, including Newmarket Village, Auburn Red Yard and Cannon Park in Australia, Courtenay Central in New Zealand and 44 Union Square in New York City.



Additional information about Reading can be obtained from the Company's website: http://www.readingrdi.com.



Forward-Looking Statements

Our statements in this press release contain a variety of forward-looking statements as defined by the Securities Litigation Reform Act of 1995.  Forward-looking statements reflect only our expectations regarding future events and operating performance and necessarily speak only as of the date the information was prepared.  No guarantees can be given that our expectations will in fact be realized, in whole or in part.  You can recognize these statements by our use of words such as, by way of example, “may,” “will,” “expect,” “believe,” and “anticipate” or other similar terminology.



These forward-looking statements reflect our expectation after having considered a variety of risks and uncertainties.  However, they are necessarily the product of internal discussion and do not necessarily completely reflect the views of individual members of our Board of Directors or of our management team.  Individual Board members and individual members of our management team may have different views as to the risks and uncertainties involved, and may have different views as to future events or our operating performance.



Among the factors that could cause actual results to differ materially from those expressed in or underlying our forward-looking statements are the following:



---

 



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.



For more information, contact:

Dev Ghose, Executive Vice President & Chief Financial Officer

Andrzej Matyczynski, Executive Vice President for Global Operations

Reading International, Inc.  (213) 235-2240





---

 

 

Reading International, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(Unaudited; U.S. dollars in thousands, except per share data)









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)









---