Reading Int'l Announces Q1 2020 Results, COVID Update And Audiocast Schedule

Reading International, Inc. (NASDAQ: RDI) announced its results for its quarter ended March 31, 2020 and provided a COVID-19 business update.

• Revenue for the quarter decreased from $61.5M in Q1 2019 to $49.2M in Q1 2020 and EBITDA decreased from $4.3M to ($1.8M) in the quarter. The emergence of the COVID-19 pandemic negatively impacted both cinema and real estate segment results as theaters initially reduced occupancy and then closed before the end of the quarter. Additionally, revenues were negatively impacted by adverse March 31, 2020 foreign currency exchange rates with the Australian and New Zealand dollars declining against the US dollar over the quarter by 7.7% and 6.8%, respectively.

Cinema Segment

• Declines in Cinema segment revenue were moderately offset by (i) the December 2019 opening of Reading's new state-of-the-art Reading Cinema with TITAN LUXE at the Burwood Brickworks shopping center in a suburb of Melbourne, Australia and (ii) the December 2019 acquisition of the iconic State Cinema in Tasmania, Australia which features 10 screens, a roof top cinema and bar, a large café, and a bookstore.
• Reading's theaters have been closed for most of the current 2nd quarter. Certain geographies where Reading's cinemas operate have experienced lower levels of COVID-19 spread than others. Reading has now re-opened all of its cinemas in New Zealand that were operating prior to the COVID-19 shutdown and the majority of its Australian cinemas. The company expects the remainder of its Australian cinemas will open in the beginning of July. Initially, popular previously released films are being shown to audiences that are experiencing enhanced safety and sanitization protocols that meet or exceed local mandates.
• In the US, a sizable portion of Reading's screens are located in Hawaii, where state and local authorities have to-date mitigated the spread of COVID-19 with strict quarantine measures for visitors to the state. Given that Warner Bros. recently confirmed it still plans to open Christopher Nolan's Tenet on July 31, 2020, Reading anticipates re-opening its U.S. cinemas in July, assuming state and local governments give clearance and subject to applicable operating conditions.
• Reading currently has four new cinemas in the development pipeline in Australia with lease agreements and additional cinema upgrade plans for others in all its operating countries. The COVID-19 pandemic will the delay the anticipated launch dates for some of these projects and capital allocation will be based on the status of the pandemic in various markets, how certain cinemas react to the ramp up of re-opening, and the overall evaluation of the company's liquidity.

Real Estate Segment

• Reading has continued to advance certain real estate projects while staff has been working from home during the pandemic, including leasing up spaces and renewing existing leases at the company's Australian retail centers.
• Lease renewal and new lease activity was strong during most of the first quarter until emergence of the pandemic. On a local currency basis, Australian property division revenues and property level cash flow set a new first quarter record.
• While the pandemic forced the temporary closure of most tenant operations except for essential businesses, due to the Australian government's proactive approach to mitigating the spread of COVID-19, as of May 31, 2020, almost 90% of Reading's 78 third-party tenants in its Australian retail centers had re-commenced operations with government enforced restrictions with occupancy across Reading's retail centers now over 97%.
• On May 27, 2020, Reading executed a multi-year lease to a single tenant, WWP Inc., for the long vacant entire second floor (approximately 11K rentable sq. ft.) of its Culver City, CA headquarters office building. WWP is responsible for building out its space.
• In New Zealand, in June 2020, the Auckland Council has granted Reading (in consortium with its adjoining landowners) certain resource consents required for the consortium to construct infrastructure needed to further enhance development value of Reading's valuable 70.4-acre light & heavy industrial up-zoned property in Manukau near the Auckland Airport.
• Reading's 44 Union Square development property with approximately 73,113 square feet of net rentable area overlooks Manhattan’s Union Square with the city's first dome roof that has won design awards [pictured HERE]. Construction of the improvements necessary to obtain a core and shell temporary certificate of occupancy were substantially completed prior to New York City's COVID-19 shut down of non-essential construction and business. Reading anticipates that the site will re-open to construction and leasing efforts later this month, and that the core and shell temporary certificate of occupancy will be in place before the end of the summer. In its completed core and shell state, where the premises can now be delivered immediately upon the execution of leases, Reading believes 44 Union Square will be very attractive to potential tenants seeking to have greater control over the size and design of their spaces in a post COVID-19 environment.

Balance Sheet & Liquidity

• Approximately two weeks prior to the COVID-19 government mandated shutdowns, Reading completed amendment of various financing arrangements that extended the maturity dates and increased the size of certain US lending facilities. The maturity date of Reading's credit facilities with Bank of America, which supports its U.S. Cinema operation, were extended to March 2023 and Reading increased its Cinema 1, 2, 3 term loan with Valley National Bank to $25.0 million from $20.0 million with a new maturity date of April 2022 and Reading having two 6-month options to extend maturity up to April 2023. Reading's separate New Zealand and Australian debt facilities don't mature until December 2023. Reading has the option to extend its 44 Union Square construction financing through December 2021 before having to refinance it or sell a leased property.
• Prior to quarter end, Reading drew down all the unrestricted borrowing capacity on its various facilities to ensure future liquidity given the pandemic. Reading's March 31, 2020 quarter end cash and equivalents balance jumped to $54.9 million with total outstanding borrowings increasing to $263 million resulting in net borrowings of $208.1 million.
• Reading has received the necessary bank covenant waivers for the March 2020 quarter and already negotiated covenant waivers with National Australia Bank for both the second and third quarters of 2020. Due to the on-going governmental closures and scaled reopening schedule created by the pandemic, the uncertainty of meeting covenants for the prospective 12 months mandates still classifying certain debt maturing in more than 12 months as current liabilities. Reading anticipates (but can not assure) continuing to receive covenant waivers from the relevant lenders as needed.
• On March 10, 2020, Reading's Board of Directors approved the extension of the Stock Repurchase Program and restored the authorization to $26.0 million to purchase Class A shares, expiring March 10, 2022. During the quarter, prior to the closure of the company's theaters, Reading repurchased 75,157 RDI shares. Due to the pandemic and its impact on the company's overall liquidity, for the foreseeable future, Reading says its stock repurchase program will likely take a lower capital allocation priority.

Quarterly Earnings Audiocast

Reading will post a pre-recorded audio webcast featuring prepared remarks and answers to selected questions from its CEO, CFO, and EVP of Global Operations on the corporate website at

http://www.readingrdi.com/about/#earnings-call

on Monday, June 29, 2020.

Questions and topics for consideration for this audiocast should be submitted to

InvestorRelations@readingrdi.com

no later than 5:00 pm ET (2:00 PT) on Friday, June 26, 2020.

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