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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________

FORM 10-Q

(Mark One)

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2023

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 1-8625

C:\Users\matthew.elmshauser\Pictures\Reading International logo.jpg

READING INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Nevada

State or other jurisdiction of incorporation or organization)

95-3885184

(IRS Employer Identification Number)

189 Second Avenue, Suite 2S

New York, New York

(Address of principal executive offices)

 

10003

(Zip Code)

Registrant’s telephone number, including area code: (213) 235-2240

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Class A Nonvoting Common Stock, $0.01 par value

 

RDI

 

The Nasdaq Stock Market LLC

Class B Voting Common Stock, $0.01 par value

RDIB

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer  þ Smaller Reporting Company þ Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨  No  þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 13, 2023, there were 20,592,834 shares of Class A Nonvoting Common Stock, $0.01 par value per share, and 1,680,590 shares of Class B Voting Common Stock, $0.01 par value per share, outstanding.

 

1


READING INTERNATIONAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Page

PART I - Financial Information

3

Item 1 – Financial Statements

3

Consolidated Balance Sheets (Unaudited)

3

Consolidated Statements of Income (Unaudited)

4

Consolidated Statements of Comprehensive Income (Unaudited)

5

Consolidated Statements of Cash Flows (Unaudited)

6

Notes to Consolidated Financial Statements (Unaudited)

7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3 – Quantitative and Qualitative Disclosure about Market Risk

44

Item 4 – Controls and Procedures

46

PART II – Other Information

47

Item 1 – Legal Proceedings

47

Item 1A – Risk Factors

47

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 3 – Defaults Upon Senior Securities

47

Item 4 – Mine Safety Disclosure

47

Item 5 – Other Information

47

Item 6 – Exhibits

48

SIGNATURES

49

Certifications

 


 

2


PART 1 – FINANCIAL INFORMATION

Item 1 - Financial Statements

READING INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except share information)

September 30,

December 31,

2023

2022

ASSETS

(unaudited)

Current Assets:

Cash and cash equivalents

$

11,925

$

29,947

Restricted cash

5,714

5,032

Receivables

5,779

6,206

Inventories

1,488

1,616

Derivative financial instruments - current portion

17

907

Prepaid and other current assets

4,243

3,804

Land and property held for sale

12,362

Total current assets

41,528

47,512

Operating property, net

261,614

286,952

Operating lease right-of-use assets

180,718

200,417

Investment and development property, net

8,336

8,792

Investment in unconsolidated joint ventures

4,488

4,756

Goodwill

24,597

25,504

Intangible assets, net

2,110

2,391

Deferred tax asset, net

489

447

Other assets

8,717

10,284

Total assets

$

532,597

$

587,055

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable and accrued liabilities

$

41,896

$

42,590

Film rent payable

3,462

5,678

Debt - current portion

40,402

37,279

Subordinated debt - current portion

776

747

Taxes payable - current

2,390

300

Deferred revenue

8,616

10,286

Operating lease liabilities - current portion

22,977

23,971

Other current liabilities

6,673

813

Total current liabilities

127,192

121,664

Debt - long-term portion

138,560

148,688

Subordinated debt, net

27,117

26,950

Noncurrent tax liabilities

5,842

7,117

Operating lease liabilities - non-current portion

180,002

200,037

Other liabilities

11,829

19,320

Total liabilities

$

490,542

$

523,776

Commitments and contingencies (Note 15)

 

 

Stockholders’ equity:

Class A non-voting common shares, par value $0.01, 100,000,000 shares authorized,

33,528,994 issued and 20,592,834 outstanding at September 30, 2023 and

33,348,295 issued and 20,412,185 outstanding at December 31, 2022

236

235

Class B voting common shares, par value $0.01, 20,000,000 shares authorized and

1,680,590 issued and outstanding at September 30, 2023 and December 31, 2022

17

17

Nonvoting preferred shares, par value $0.01, 12,000 shares authorized and no issued

or outstanding shares at September 30, 2023 and December 31, 2022

Additional paid-in capital

154,903

153,784

Retained earnings/(deficits)

(67,104)

(48,816)

Treasury shares

(40,407)

(40,407)

Accumulated other comprehensive income

(5,647)

(1,957)

Total Reading International, Inc. stockholders’ equity

41,998

62,856

Noncontrolling interests

57

423

Total stockholders’ equity

42,055

63,279

Total liabilities and stockholders’ equity

$

532,597

$

587,055

See accompanying Notes to the Unaudited Consolidated Financial Statements.

 

3


READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

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

Quarter Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Revenue

Cinema

$

62,688

$

48,359

$

165,731

$

147,476

Real estate

3,875

2,837

11,694

8,432

Total revenue

66,563

51,196

177,425

155,908

Costs and expenses

Cinema

(53,278)

(45,308)

(146,297)

(134,579)

Real estate

(2,281)

(2,352)

(6,600)

(6,715)

Depreciation and amortization

(4,580)

(5,010)

(13,908)

(15,781)

Impairment expense

(1,549)

General and administrative

(5,405)

(5,257)

(15,693)

(17,364)

Total costs and expenses

(65,544)

(57,927)

(182,498)

(175,988)

Operating income (loss)

1,019

(6,731)

(5,073)

(20,080)

Interest expense, net

(5,072)

(3,693)

(14,063)

(10,242)

Gain (loss) on sale of assets

(59)

(59)

Other income (expense)

267

5,455

356

8,445

Income (loss) before income tax expense and equity earnings of unconsolidated joint ventures

(3,786)

(5,028)

(18,780)

(21,936)

Equity earnings of unconsolidated joint ventures

217

61

443

233

Income (loss) before income taxes

(3,569)

(4,967)

(18,337)

(21,703)

Income tax benefit (expense)

(896)

(332)

(313)

(1,492)

Net income (loss)

$

(4,465)

$

(5,299)

$

(18,650)

$

(23,195)

Less: net income (loss) attributable to noncontrolling interests

(65)

(122)

(361)

(228)

Net income (loss) attributable to Reading International, Inc.

$

(4,400)

$

(5,177)

$

(18,289)

$

(22,967)

Basic earnings (loss) per share

$

(0.20)

$

(0.23)

$

(0.82)

$

(1.04)

Diluted earnings (loss) per share

$

(0.20)

$

(0.23)

$

(0.82)

$

(1.04)

Weighted average number of shares outstanding–basic

22,273,423

22,043,823

22,208,757

22,011,755

Weighted average number of shares outstanding–diluted

22,273,423

22,043,823

22,208,757

22,011,755

See accompanying Notes to the Unaudited Consolidated Financial Statements. 

 

4


READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; U.S. dollars in thousands)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Net income (loss)

$

(4,465)

$

(5,299)

$

(18,650)

$

(23,195)

Foreign currency translation gain (loss)

(1,686)

(8,279)

(3,038)

(15,268)

Gain (loss) on cash flow hedges

(26)

60

(813)

1,253

Other

52

49

156

154

Comprehensive income (loss)

(6,125)

(13,469)

(22,345)

(37,056)

Less: net income (loss) attributable to noncontrolling interests

(65)

(122)

(361)

(228)

Less: comprehensive income (loss) attributable to noncontrolling interests

(3)

(3)

(5)

(1)

Comprehensive income (loss)

$

(6,057)

(13,344)

$

(21,979)

$

(36,827)

See accompanying Notes to the Unaudited Consolidated Financial Statements


 

5


READING INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; U.S. dollars in thousands)

Nine Months Ended

September 30,

2023

2022

Operating Activities

Net income (loss)

$

(18,650)

$

(23,195)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Equity earnings of unconsolidated joint ventures

(443)

(233)

Distributions of earnings from unconsolidated joint ventures

468

283

(Gain) loss recognized on foreign currency transactions

(5,952)

Loss provision on impairment of asset

1,549

(Gain) Loss on sale of assets

59

Amortization of operating leases