READING INTERNATIONAL INC Q3 FY2024 earnings call

• Key financial metrics improved from previous quarters, with Q3 2024 global operating loss reduced to $246,000 and adjusted EBITDA positive ~$3 million (first positive in last three quarters).
• Australian Cinema Division had best third quarter performance ever, with F&B SPP highest ever. U.S. cinema metrics (box office per screen, F&B SPP) favorable/in line with industry.
• Real estate operating income up 52% y-o-y. Australian third-party tenant portfolio performed strongly. U.S. real estate business had second-highest Q3 revenue in history.
• Plans for new free-to-join rewards program and paid subscription program in cinemas. Target to convert 23 screens to luxury recliners in U.S. over 24 months, and similar in Australia/New Zealand. Working on CapEx upgrades.
• Working with lenders to extend debt maturities and monetizing real estate assets to generate liquidity.

Cinema Segment

• Global cinema revenue in Q3 2024 was $56.4 million, representing a materially higher level than since Q4 2023, though behind Q3 2023 by about 10% and ~85% of pre-pandemic Q3 2019 levels. Driven by films like Deadpool and Wolverine, Despicable Me 4, Twisters, Beetlejuice Beetlejuice, etc.
• U.S. cinema: Revenue decreased by 19% to $27.8 million, operating loss of $900,000. Screen count decreased by 10% with closures of underperforming theaters. Metrics like box office per screen ($80,000), F&B SPP ($8.24) are favorable/in line with industry.
• Australian cinema: Revenue $24.7 million, up 2% y-o-y. Operating income $2.9 million. Australian cinema revenue AUD37 million (best Q3 ever), F&B SPP highest ever.
• New Zealand cinema: Revenue $3.8 million, down 11% y-o-y. Operating income $250,000. F&B SPP $6.62 (highest third quarter ever).

Real Estate Segment

• Global real estate revenue $4.9 million, down 3% y-o-y. Operating income $1.4 million, up 52% y-o-y. Australian real estate operating income AUD1.6 million (best Q3 on record). U.S. real estate revenue second-highest Q3 in company history, supported by rent from 44 Union Square.

• Anticipates stronger results in future due to CapEx upgrades, rollout of rewards programs, and better movie slate from 2025 onwards. Hopes for improvement in box office during 2024 holiday season, 2025 and beyond. Expect reduction in interest rates to continue into 2025.

• Lingering impacts of COVID-19 and Hollywood strikes on cinema business. U.S. cinema screen count reduction affecting revenue. Specialty theaters in U.S. had weaker performance in Q3 2024 vs 2023 due to film slates.
• Market conditions affecting real estate leasing, especially in Union Square, NY, with remaining space facing challenges. Liquidity pressure and need to refinance debt, including Santander loan maturing in 2025.

Q: How many more auditoriums are planned for additions of recliners? When will the re-seating program be completed in 2024 and beyond?

A: In the US, targeting to convert 23 screens to luxury recliners in three theaters over the next 24 months. In Australia and New Zealand, targeting to convert certain screens to luxury recliners over the next two years. Completion subject to landlord negotiations, movie slate, and liquidity.

Q: What's needed for US to achieve results similar to 2023 Q3? Is specialty circuit performance repeatable?

A: Streamlining US circuit (closing underperforming theaters) will boost theater-level cash flow long-term. Specialty circuit performance is driven by film product; e.g., November 2024 Angelica New York box office up over 80% vs prior period.

Q: Has thought been given to selling the US cinema circuit?

A: Anticipate stronger movie slate from 2025 and beyond, and US circuit to return to income-producing levels. Not currently planning to sell, but monitoring market.

Q: Plans for refinancing Santander Minetta and Orpheum theatre loan?

A: Exploring options with different lenders to best suit company and shareholders, optimistic on interest rate trends as Fed cuts rates.

Q: Plans for $5.9 million purchase price for Village East Ground lease?

A: Working on transaction with Sun Hill Capital under Audit and Conflicts Committee direction. Anticipate Conflicts Committee to report on deal during Q4 reporting period.