Reading International(RDI) - 2025 Q2 - Quarterly Report

PART I - Financial Information This section presents the company's unaudited consolidated financial statements, including detailed notes, and management's discussion and analysis of financial condition and results of operations Item 1 – Financial Statements This section presents the unaudited consolidated financial statements, including the balance sheets, statements of income, comprehensive income, and cash flows, along with detailed notes explaining the company's accounting policies, segment performance, liquidity, debt, and other financial details for the quarter and six months ended June 30, 2025 Consolidated Balance Sheets (Unaudited) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time, highlighting changes over the period | Metric | June 30, 2025 (Unaudited) ($ thousands) | December 31, 2024 ($ thousands) | | :-------------------------------- | :-------------------------- | :------------------ | | ASSETS | | | | Total current assets | $21,271 | $57,042 | | Total assets | $438,075 | $471,011 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $130,451 | $161,626 | | Total liabilities | $446,503 | $475,801 | | Total stockholders' equity | $(8,428) | $(4,790) | - Total assets decreased by $32.9 million (7.0%) from $471.0 million at December 31, 2024, to $438.1 million at June 30, 2025. Total liabilities decreased by $29.3 million (6.2%) from $475.8 million to $446.5 million. Total stockholders' equity decreased by $3.6 million (75.9%) from $(4.8) million to $(8.4) million[9] Consolidated Statements of Income (Unaudited) This statement details the company's revenues, expenses, and net income or loss over specific reporting periods, reflecting operational profitability | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $60,378 | $46,809 | $100,547 | $91,861 | | Operating income (loss) | $2,891 | $(7,692) | $(4,001) | $(15,222) | | Net income (loss) | $(2,804) | $(13,001) | $(7,751) | $(26,404) | | Net income (loss) attributable to Reading International, Inc. | $(2,667) | $(12,806) | $(7,423) | $(26,034) | | Basic earnings (loss) per share | $(0.12) | $(0.57) | $(0.33) | $(1.16) | | Diluted earnings (loss) per share | $(0.12) | $(0.57) | $(0.33) | $(1.16) | - Total revenue increased by 29% for the quarter and 9% for the six months ended June 30, 2025, compared to the prior year periods. The company significantly reduced its net loss attributable to Reading International, Inc. by 79% for the quarter and 71% for the six months ended June 30, 2025, compared to the prior year periods[10] Consolidated Statements of Comprehensive Income (Unaudited) This statement presents net income alongside other comprehensive income items, such as foreign currency translation adjustments, to show total non-owner changes in equity | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(2,804) | $(13,001) | $(7,751) | $(26,404) | | Foreign currency translation gain (loss) | $2,741 | $932 | $3,154 | $(1,659) | | Comprehensive income (loss) | $(92) | $(12,115) | $(4,586) | $(28,059) | | Comprehensive income (loss) attributable to noncontrolling interests | $8 | $— | $9 | $(1) | | Comprehensive income (loss) | $37 | $(11,920) | $(4,267) | $(27,688) | - The company reported a significant foreign currency translation gain of $2.7 million for the quarter and $3.2 million for the six months ended June 30, 2025, contributing to a substantial improvement in comprehensive income compared to the prior year periods[12] Consolidated Statements of Cash Flows (Unaudited) This statement summarizes cash inflows and outflows from operating, investing, and financing activities, illustrating liquidity and solvency | Activity | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(6,151) | $(13,157) | | Net cash provided by (used in) investing activities | $37,806 | $7,398 | | Net cash provided by (used in) financing activities | $(34,883) | $1,125 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $(3,127) | $(4,714) | | Cash and cash equivalents and restricted cash at the end of the period | $11,955 | $10,727 | - Cash used in operating activities decreased by $7.0 million, while cash provided by investing activities significantly increased by $30.4 million, primarily due to proceeds from asset sales. Cash used in financing activities increased by $36.0 million due to debt repayments[14][221][222][223] Notes to Consolidated Financial Statements (Unaudited) These notes provide detailed explanations of the accounting policies, significant estimates, and additional financial information supporting the consolidated financial statements NOTE 1 – DESCRIPTION OF BUSINESS AND SEGMENT REPORTING Reading International, Inc. operates primarily in two business segments: cinema exhibition and real estate development, ownership, operation, and rental. The company conducts business in the United States, Australia, and New Zealand - The Company's businesses consist primarily of the development, ownership, and operation of cinemas in the United States, Australia, and New Zealand, and the development, ownership, operation and/or rental of retail, commercial and live venue real estate assets in Australia, New Zealand, and the United States[23] NOTE 2 – LIQUIDITY AND IMPAIRMENT ASSESSMENT The company faces a going concern uncertainty due to $38.2 million in debt due within twelve months and negative working capital of $109.2 million. Management plans to address this through refinancing, loan extensions, and real estate asset monetization, having already demonstrated this capability with $201.5 million in asset sales since 2021. No impairment charges were recorded for property, plant, equipment, or goodwill for the first six months of 2025, as improved performance is expected to continue - The company has $38.2 million of debt due in twelve months and negative working capital of $109.2 million, leading to a going concern uncertainty[18] - Management's plan to address liquidity includes refinancing, extending loans, and monetizing real estate assets, having sold nine properties for $201.5 million since 2021[20][21] - No impairment charges were recorded for operating assets or goodwill in the first six months of 2025, as higher revenues and operating income compared to 2024 indicate continued improved performance[24][25] NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting, including wholly-owned and majority-controlled subsidiaries. Significant estimates are made for asset recoverability and impairment, derivative valuations, deferred tax assets, breakage and redemption rates, and incremental borrowing rates for leases - Consolidated financial statements include wholly-owned and majority-owned subsidiaries, prepared under U.S. GAAP for interim reporting[26] - Significant estimates are made for asset impairment (including goodwill and intangibles), derivative valuations, deferred tax asset recoverability, gift card/loyalty program breakage, and Incremental Borrowing Rate for lease valuations[28] NOTE 4 – SEGMENT REPORTING The company operates in two reportable segments: cinema exhibition and real estate, with performance evaluated by the Chief Operating Decision-Maker based on segment operating income. Inter-segment transactions are eliminated for consolidated reporting. The cinema segment aggregates all cinemas in the U.S., Australia, and New Zealand, while the real estate segment includes retail, commercial, and live theater assets in the same regions - The company has two reportable segments: cinema exhibition and real estate, with segment operating income as a key performance measure[29][33] - Cinema exhibition revenue increased by 32% for the quarter and 11% for the six months ended June 30, 2025, compared to the prior year, while real estate revenue decreased by 7% and 5% respectively[35][186] | Segment | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Cinema Revenue | $56,782 | $42,941 | $93,186 | $84,213 | | Real Estate Revenue | $4,653 | $5,013 | $9,498 | $9,946 | | Cinema Operating Income (Loss) | $5,453 | $(4,609) | $979 | $(8,775) | | Real Estate Operating Income (Loss) | $1,479 | $946 | $3,074 | $1,837 | NOTE 5 – OPERATIONS IN FOREIGN CURRENCY The company has significant assets and operations in Australia and New Zealand, with financial resources managed globally. Fluctuations in AUD and NZD against the USD impact asset and liability carrying values, with translation adjustments accumulated in Accumulated Other Comprehensive Income. The average AUD and NZD weakened against the USD by 2.7% and 1.9% respectively in Q2 2025 compared to Q2 2024 - Significant assets and operations are in Australia and New Zealand, with financial resources managed globally[42][43] - Foreign currency translation adjustments are accumulated in Accumulated Other Comprehensive Income[42] | Currency | Average Rate (Q2 2025) | Average Rate (Q2 2024) | % Change (Fav/(Unfav)) % | | :---------------- | :--------------------- | :--------------------- | :--------------------- | | Australian Dollar | 0.6412 | 0.6591 | (2.7)% | | New Zealand Dollar | 0.5936 | 0.6054 | (1.9)% | NOTE 6 – EARNINGS PER SHARE Basic and diluted EPS are calculated based on net income attributable to Reading International, Inc. The weighted average number of common shares outstanding increased due to restricted stock unit vesting. Certain awards were excluded from diluted EPS calculations due to the net loss, making them anti-dilutive | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Reading International, Inc. | $(2,667) | $(12,806) | $(7,423) | $(26,034) | | Basic earnings (loss) per share | $(0.12) | $(0.57) | $(0.33) | $(1.16) | | Diluted earnings (loss) per share | $(0.12) | $(0.57) | $(0.33) | $(1.16) | | Weighted average number of common stock – basic (shares) | 22,708,206 | 22,413,617 | 22,586,019 | 22,379,881 | | Awards excluded from diluted EPS (anti-dilutive) (shares) | 3,696,662 | 207,657 | 3,696,662 | 207,657 | - Weighted average basic common stock increased, primarily due to the vesting of restricted stock units. Awards totaling 3,696,662 shares for the period ended June 30, 2025, were excluded from diluted EPS as they were anti-dilutive due to net loss[46][47] Note 7 – Property and Equipment Operating property, net, decreased slightly to $213.3 million at June 30, 2025. The company monetized several real estate holdings to support liquidity, including Cannon Park for $20.7 million (resulting in a $1.8 million net gain) and Wellington properties for $21.5 million (resulting in a $6.6 million net gain) in 2025. The Newberry Yard property remains classified as held for sale | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :---------------------- | :------------ | :---------------- | | Operating property, net | $213,340 | $214,694 | | Total cost | $418,691 | $408,922 | | Accumulated depreciation | $(205,351) | $(194,228) | - The company sold Cannon Park property for $20.7 million, realizing a net gain of $1.8 million, and Wellington properties for $21.5 million, realizing a net gain of $6.6 million, to enhance liquidity[53][54][55][57] - The Newberry Yard property in Williamsport, Pennsylvania, with a book value of $460,000, continues to be held for sale[60] Note 8 – Leases The company acts as both lessee and lessor. As a lessee, it has operating leases for cinemas and finance leases for equipment, with remaining terms of 1 to 25 years. Total lease cost for operating leases decreased to $7.1 million for Q2 2025 and $14.1 million for 6M 2025. As a lessor, the company leases real estate properties, generating $2.7 million in total lease income for Q2 2025 and $5.6 million for 6M 2025 | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $7,081 | $7,732 | $14,094 | $15,606 | | Total lease cost (as lessee) | $7,093 | $8,836 | $14,117 | $17,245 | | Total lease income (as lessor) | $2,705 | $2,980 | $5,601 | $5,848 | - Operating lease right-of-use assets were $160.6 million and total operating lease liabilities were $181.6 million as of June 30, 2025[64] - The weighted-average remaining lease term for operating leases is 11 years, with a weighted-average discount rate of 4.89%[64] Note 9 – Goodwill and Intangible Assets Goodwill increased to $24.9 million at June 30, 2025, primarily due to foreign currency translation adjustments. The company tests goodwill and other intangible assets for impairment annually and on an interim basis if indicators arise. No impairment charges were recorded for goodwill or other intangible assets in the first six months of 2025. Net intangible assets other than goodwill were $1.7 million | Segment | Balance at December 31, 2024 ($ thousands) | Foreign currency translation adjustment ($ thousands) | Balance at June 30, 2025 ($ thousands) | | :---------- | :--------------------------- | :------------------------------------ | :----------------------- | | Cinema | $18,488 | $1,156 | $19,644 | | Real Estate | $5,224 | $— | $5,224 | | Total | $23,712 | $1,156 | $24,868 | | Intangible Asset Type | Net Intangible Assets (June 30, 2025) ($ thousands) | Net Intangible Assets (December 31, 2024) ($ thousands) | | :-------------------------- | :------------------------------------ | :---------------------------------------- | | Beneficial Leases | $160 | $168 | | Trade Name | $858 | $922 | | Other Intangible Assets | $726 | $710 | | Total | $1,744 | $1,800 | - Total intangible assets amortization was $32,000 for Q2 2025 and $70,000 for 6M 2025[70] Note 10 – Investments in Unconsolidated Joint Ventures The company holds investments in two unconsolidated joint ventures, Rialto Cinemas and Mt. Gravatt, accounted for under the equity method. Total investments increased to $3.3 million at June 30, 2025. Equity earnings from these ventures significantly increased to $285,000 for Q2 2025 and $308,000 for 6M 2025, compared to the prior year periods | Joint Venture | Interest | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :-------------- | :------- | :------------ | :---------------- | | Rialto Cinemas | 50.0% | $48 | $— | | Mt. Gravatt | 33.3% | $3,258 | $3,138 | | Total investments | | $3,306 | $3,138 | | Joint Venture | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :-------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Rialto Cinemas | $65 | $(9) | $48 | $(77) | | Mt. Gravatt | $220 | $128 | $260 | $171 | | Total equity earnings | $285 | $119 | $308 | $94 | Note 11 – Prepaid and Other Assets Prepaid and other current assets increased to $4.0 million at June 30, 2025, primarily due to an increase in straight-line rent assets. Other non-current assets also increased to $11.7 million, driven by a rise in straight-line rent assets | Asset Type | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :-------------------------------- | :------------ | :---------------- | | Prepaid and other current assets | $3,963 | $2,668 | | Other non-current assets | $11,700 | $8,799 | | Total prepaid and other assets | $15,663 | $11,467 | - The increase in prepaid and other current assets is mainly due to a new straight-line rent asset of $941,000. The increase in other non-current assets is primarily due to an increase in straight-line rent asset from $7.3 million to $9.8 million[72] Note 12 – Income Taxes The company recognized an income tax expense of $0.8 million for the six months ended June 30, 2025, compared to a benefit of $0.4 million in the prior year. This change is primarily due to decreased consolidated losses and an increased valuation allowance on deferred tax assets in the U.S. and New Zealand - Income tax expense of $0.8 million was recognized for the six months ended June 30, 2025, compared to a $0.4 million benefit in the prior year[73] - The change is primarily due to a decrease in consolidated losses and an increase in the reserve for valuation allowance on deferred tax assets in the U.S. and New Zealand[73] Note 13 – Borrowings Total borrowings decreased to $172.2 million at June 30, 2025, from $201.8 million at December 31, 2024. The company has actively managed its debt, repaying the Westpac loan and NAB bridging facility, and extending maturity dates for several loans, including Bank of America, Minetta & Orpheum Theatres, and Union Square Financing, to improve liquidity and manage upcoming maturities | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :-------------------------------- | :------------ | :---------------- | | Total borrowings (net) | $172,184 | $201,826 | | Debt - current portion | $38,229 | $69,193 | | Debt - long-term portion | $106,449 | $105,239 | | Subordinated debt, net | $27,506 | $27,394 | - The company repaid the $10.7 million Westpac loan on January 31, 2025, and the $12.9 million NAB bridging facility on May 21, 2025[20][215] - Maturity dates for Bank of America facility, Minetta & Orpheum Theatres Loan (Santander), and Union Square Financing (Emerald Creek Capital) were extended to May 2026, June 2026, and November 2026, respectively[20][82][83][86][124] Note 14 – Other Liabilities Other current liabilities remained stable at $6.6 million, while other non-current liabilities increased slightly to $13.9 million at June 30, 2025. The company's unfunded Supplemental Executive Retirement Plan resulted in accrued pension costs of $2.6 million, with interest costs and actuarial losses recognized during the period | Liability Type | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :-------------------------- | :------------ | :---------------- | | Other current liabilities | $6,629 | $6,593 | | Other non-current liabilities | $13,854 | $13,662 | | Total other liabilities | $20,483 | $20,255 | - Accrued pension costs for the unfunded Supplemental Executive Retirement Plan totaled $2.6 million at June 30, 2025[92] - Interest cost for the pension liability was $72,000 and actuarial loss was $103,000 for the six months ended June 30, 2025[93] Note 15 – Accumulated Other Comprehensive Income Accumulated other comprehensive income improved from a deficit of $(7.2) million at January 1, 2025, to $(4.0) million at June 30, 2025. This improvement was primarily driven by a positive foreign currency translation adjustment of $3.2 million, partially offset by net changes related to derivatives and accrued pension service costs | Component | Balance at January 1, 2025 ($ thousands) | Net current-period OCI (loss) ($ thousands) | Balance at June 30, 2025 ($ thousands) | | :-------------------------- | :------------------------- | :-------------------------- | :----------------------- | | Foreign Currency Items | $(5,521) | $3,154 | $(2,367) | | Unrealized Gain (Losses) on Available-for-Sale Investments | $(18) | $(3) | $(21) | | Accrued Pension Service Costs | $(1,497) | $103 | $(1,394) | | Hedge Accounting Reserve | $(137) | $(98) | $(235) | | Total | $(7,173) | $3,156 | $(4,017) | - A significant foreign currency translation gain of $3.154 million contributed positively to AOCI during the six months ended June 30, 2025[94] Note 16 – Commitments and Contingencies The company is involved in various legal proceedings, including putative class action claims under the Video Privacy Protection Act (VPPA) and a New York statute, Wellington construction damage litigation, and Philadelphia Code violation litigation. Management believes the ultimate outcome of these matters will not have a material adverse effect on the company's financial position, and no reserves have been established for the VPPA or NY Statute claims due to belief that liability is not probable. A reasonable possibility of liability for defense costs in Wellington litigation is estimated between $0 and $1 million - The company is a defendant in two putative class action lawsuits under the Video Privacy Protection Act (VPPA) and related state statutes, alleging disclosure of movie viewing habits[98] - Management believes it has valid defenses to the VPPA claims and that liability is not probable, thus no reserve has been established[100] - In Wellington construction damage litigation, there's a reasonable possibility of liability for defense costs, estimated between $0 and $1 million, but no reserve has been accrued as liability is not probable[101][102] Note 17 – Non-controlling Interests Noncontrolling interests primarily consist of Australian Country Cinemas, Shadow View Land and Farming, LLC, and Sutton Hill Properties, LLC. Total noncontrolling interests in consolidated subsidiaries were $(745,000) at June 30, 2025. Net income attributable to noncontrolling interests was $(137,000) for Q2 2025 and $(328,000) for 6M 2025 | Entity | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :------------------------------------ | :------------ | :---------------- | | Australian Country Cinemas, Pty Ltd | $168 | $128 | | Shadow View Land and Farming, LLC | $(2) | $(2) | | Sutton Hill Properties, LLC | $(911) | $(552) | | Noncontrolling interests in consolidated subsidiaries | $(745) | $(426) | | Entity | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Australian Country Cinemas, Pty Ltd | $46 | $3 | $31 | $(9) | | Shadow View Land and Farming, LLC | $— | $— | $— | $— | | Sutton Hill Properties, LLC | $(183) | $(198) | $(359) | $(361) | | Net income (loss) attributable to noncontrolling interests | $(137) | $(195) | $(328) | $(370) | Note 18 – Stock-Based Compensation and Stock Repurchases The 2020 Stock Incentive Plan allows for granting stock options and restricted stock units (RSUs) to employees, directors, and consultants. As of June 30, 2025, 1,278,291 shares were available for issuance. Stock option compensation expense was $265,000 for Q2 2025 and $564,000 for 6M 2025. RSU compensation expense was $264,000 for Q2 2025 and $565,000 for 6M 2025. The stock repurchase program expired on March 10, 2024, and was not renewed - As of June 30, 2025, there were 1,278,291 shares of Class A Common Stock available for issuance under the 2020 Stock Incentive Plan[108] | Metric | Quarter Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | | :-------------------------- | :-------------------------- | :----------------------------- | | Stock option compensation expense | $265 | $564 | | RSU compensation expense | $264 | $565 | | Total unrecognized compensation expense (non-vested RSUs) | | $1,500 | | Weighted average vesting period (non-vested RSUs) | | 0.73 years | - The stock repurchase program expired on March 10, 2024, and has not been renewed[115] Note 19 – Hedge Accounting The company uses interest rate derivative contracts to hedge floating-rate borrowings, holding derivatives with a notional value of $32.9 million (AU$50.0 million) at June 30, 2025. These derivatives are recorded at fair value on the balance sheet, with changes in fair value recorded in Other Comprehensive Income and reclassified to interest expense. The company expects to release $321,000 to earnings over the remaining life of the derivative - The company held interest rate derivative instruments with a notional value of $32.9 million (AU$50.0 million) at June 30, 2025, to hedge floating-rate borrowings[116] | Metric | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :---------------------------------------- | :------------ | :---------------- | | Derivative financial instruments - non-current portion | $235 | $137 | | Total derivatives designated as hedging instruments | $235 | $137 | - The company expects to release $321,000 to earnings over the remaining life of the derivative as of June 30, 2025[117] Note 20 – Fair Value Measurements The company classifies financial liabilities carried at cost and measured at fair value on a non-recurring basis using a three-level hierarchy. Notes payable and subordinated debt are valued using Level 3 inputs, incorporating discounted cash flow models with market discount rates and credit spreads. Cash, cash equivalents, receivables, and accounts payable approximate fair value due to their short maturities | Financial Liability | Carrying Value (June 30, 2025) ($ thousands) | Fair Value (Level 3, June 30, 2025) ($ thousands) | | :------------------ | :----------------------------- | :---------------------------------- | | Notes payable | $145,518 | $146,299 | | Subordinated debt | $27,913 | $27,829 | | Total | $173,431 | $174,128 | - Level 3 borrowings are valued using discounted cash flow models that incorporate market discount rates (treasury rates/SOFR plus credit spreads)[129] - Cash, cash equivalents, receivables, and accounts payable approximate fair value due to their short maturities[123] Note 21 – Subsequent Events Subsequent to June 30, 2025, the company extended the maturity dates of its Bank of America facility to May 18, 2026, and its Santander facility to June 1, 2026. The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, introducing significant tax law changes, but the company does not anticipate a material effect on its 2025 consolidated financial statements - Bank of America facility maturity extended to May 18, 2026, and Santander facility maturity extended to June 1, 2026, both on July 3 and July 18, 2025, respectively[124] - The One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, includes tax law changes like 100% bonus depreciation and immediate expensing of R&D, but is not expected to materially affect 2025 financial statements[125] Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting the recovery of the cinema business, strategic real estate asset monetizations, and key performance indicators. It details segment-specific performance, liquidity management strategies, and critical accounting policies, while also including a cautionary statement regarding forward-looking information Cinema Exhibit Segment The cinema segment showed robust performance in Q2 2025, driven by strong film releases and increased audience demand, despite lingering effects from the 2023 Hollywood strikes and macroeconomic challenges. Key films like 'A Minecraft Movie' and 'Lilo & Stitch' significantly boosted box office revenue. The company continues to upgrade food and beverage offerings and has closed eight underperforming locations since the pandemic to improve operational efficiency - The cinema business experienced robust performance in Q2 2025, with strong audience demand and successful film releases like 'A Minecraft Movie' and 'Lilo & Stitch'[130][131][139][140] - The company has closed eight underperforming cinema locations since the start of the COVID-19 pandemic to improve operational performance[136] - Efforts are underway to enhance food and beverage programs, including securing beer and wine licenses at all U.S. cinemas and liquor licenses at most, with similar initiatives in Australia and New Zealand[137] Real Estate Segment The real estate segment continued its strategy of asset monetization to bolster liquidity, selling Cannon Park properties for $20.7 million and Wellington properties for $21.5 million in 2025, using proceeds to pay down debt. Leasing efforts continue for the 44 Union Square building, and development projects are largely paused due to liquidity requirements, with Newberry Yard remaining held for sale - Cannon Park properties in Australia were sold for $20.7 million, and Wellington properties in New Zealand for $21.5 million, with proceeds used to pay down approximately $32.1 million in debt[144] - Real estate development projects are largely paused due to liquidity requirements, with capital expenditures primarily focused on existing cinema improvements[145] - The Newberry Yard property in Williamsport, Pennsylvania, continues to be held for sale to bolster liquidity[145] Company Overview Reading International is an internationally diversified company focused on cinema exhibition and real estate assets in the U.S., Australia, and New Zealand. Historically, cinema cash flows supported real estate development, but recent challenges necessitated relying on real estate income and asset monetization. The company believes improved film releases will restore cinema cash flow, and continues to hold one asset (Newberry Yard) for sale to meet liquidity needs - The company is an internationally diversified entity with two core business segments: cinema exhibition (58 cinemas) and real estate (development and rental of retail, commercial, and live theatre assets)[146] - Due to COVID-19 and Hollywood strikes, the company shifted from using cinema cash flows for real estate development to relying on real estate income and asset monetization for support[146] - The company anticipates improved film releases will enable cinema cash flows to once again enhance its real estate portfolio, while continuing to monetize assets like Newberry Yard for liquidity[147] Key Performance Indicators Key performance indicators for the cinema segment include Food & Beverage Spend Per Patron (F&B SPP) and Average Ticket Price (ATP) Per Patron, both showing increases across all geographies for Q2 2025. For the real estate segment, Net Operating Income (NOI), Occupancy Factor, and Average Lease Duration are used, with Australia showing positive NOI and high occupancy, and U.S. Live Theatres improving rental and ancillary income | Metric | Geography | Q2 2025 ($) | Q2 2024 ($) | % Change | | :------------------------ | :---------- | :------ | :------ | :------- | | F&B Spend Per Patron | United States | $9.13 | $8.12 | 12.4% | | | Australia | $8.26 | $7.67 | 7.7% | | | New Zealand | $7.14 | $6.60 | 8.2% | | Average Ticket Price | United States | $13.44 | $13.27 | 1.3% | | | Australia | $16.34 | $13.11 | 24.6% | | | New Zealand | $14.70 | $11.35 | 29.5% | | Metric | Geography | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | | :------------------------ | :---------- | :------ | :------ | :------- | | Net Operating Income | United States | $(274.8) | $(322.8) | 14.9% | | | Australia | $718.2 | $736.8 | (2.5)% | | | New Zealand | $(209.4) | $(797.5) | 73.7% | | Occupancy Factor | Australia | 98.8% | 95.3% | 3.5 %age points | | | New Zealand | 100% | 100% | - %age points | | Average Lease Duration | Australia | 3.79 Years | 3.25 Years | 0.54 years | | | New Zealand | 0.58 Years | 1.00 Years | (0.42) years | - U.S. Live Theatre rental and ancillary income improved to $0.6 million for Q2 2025, up from $0.4 million in Q2 2024[155] Cinema Exhibition Segment Overview The company operates 58 cinemas with 469 screens across the U.S., Australia, and New Zealand under various brands. Cinema revenues are primarily from ticket and F&B sales, screen advertising, and online fees. The company is planning a new state-of-the-art cinema in Noosa, Australia, and will renovate the Courtenay Central cinema in Wellington, New Zealand. Upgrades include digital screens, premium formats (IMAX, TITAN XC/LUXE), dine-in services, and expanded liquor licenses - The company operates 58 cinemas with 469 screens globally, with 18 locations in the U.S., 30 in Australia, and 10 in New Zealand[157] - Cinema revenues are primarily derived from ticket sales, food & beverage sales, screen advertising, gift card sales, cinema rentals, and online convenience fees[159] | Upgrade/Service | Location Count | Screen Count | | :-------------------------------- | :------------- | :----------- | | Digital (all cinemas) | 58 | 469 | | IMAX | 1 | 1 | | TITAN XC and TITAN LUXE | 26 | 32 | | Gold Lounge (AU/NZ) | 11 | 29 | | Premium Seating (recliner) | 33 | 198 | | Liquor Licenses | 49 | n/a | Real Estate Segment Overview The real estate segment focuses on developing, owning, and renting retail, commercial, and live theatre assets. Recent asset monetizations, including properties in Wellington, New Zealand, and Cannon Park, Australia, were driven by liquidity needs and capital requirements. Key properties include 44 Union Square (New York), Minetta Lane Theatre, Orpheum Theatre, Newmarket Village ETC (Brisbane), and Belmont Common (Perth). The Reading Viaduct in Philadelphia is also a focus for potential development - The company sold Wellington properties for NZ$38.0 million ($21.5 million USD) and Cannon Park ETC for AU$32.0 million ($20.7 million USD) to address liquidity needs[180][181] - 44 Union Square in Manhattan is in the lease-up phase, with Petco occupying the lower three floors. Minetta Lane Theatre has a license agreement with Audible through March 2026, and Orpheum Theatre hosts various productions[175] - The Reading Viaduct in Philadelphia, a 6.5-acre raised rail bed, is a focus for development, with potential enhancement from the Chinatown Stitch project[184][177] RESULTS OF OPERATIONS Consolidated revenue increased by 29% for Q2 2025 and 9% for 6M 2025, primarily due to stronger cinema performance. Total segment operating income significantly improved, turning from a loss to income for both periods. Net loss attributable to Reading International, Inc. improved by 79% for Q2 and 71% for 6M, driven by improved segment results, decreased interest expense, and gains on asset sales. Income tax expense increased due to decreased consolidated losses and higher valuation allowance reserves | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $60,378 | $46,808 | $100,547 | $91,861 | | Total segment operating income (loss) | $6,932 | $(3,663) | $4,053 | $(6,938) | | Net income (loss) attributable to Reading International, Inc. | $(2,667) | $(12,806) | $(7,423) | $(26,034) | | Basic earnings (loss) per share | $(0.12) | $(0.57) | $(0.33) | $(1.16) | - Consolidated revenue increased by 29% for Q2 2025 and 9% for 6M 2025, primarily driven by increased cinema revenues from a stronger movie slate[187][188] - Net loss attributable to Reading International, Inc. improved by 79% for Q2 2025 and 71% for 6M 2025, mainly due to improved segment performance, lower interest expense, and gains on asset sales[192][193] Cinema Exhibition Segment Results Cinema revenue for Q2 2025 increased by $13.8 million (32%) to $56.8 million, and for 6M 2025 by $9.0 million (11%) to $93.2 million, driven by increased attendance and a stronger movie slate. Operating income for the segment improved significantly, turning from a loss of $4.6 million to an income of $5.5 million in Q2 2025, and from a loss of $8.8 million to an income of $1.0 million in 6M 2025. This was due to higher revenues and reduced depreciation, partially offset by increased operating and general and administrative expenses | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Total cinema revenue | $56,782 | $42,941 | $93,186 | $84,213 | | Total cinema operating expense | $(47,940) | $(43,903) | $(85,597) | $(85,775) | | Total Cinema operating income (loss) | $5,453 | $(4,609) | $979 | $(8,775) | - Cinema revenue increased by $13.8 million (32%) for Q2 2025 and $9.0 million (11%) for 6M 2025, primarily due to increased global attendance and a stronger movie slate[199][200] - Cinema segment operating income improved by $10.1 million for Q2 2025 and $9.8 million for 6M 2025, driven by increased revenues and decreased depreciation, despite higher operating and G&A expenses[201][202] Real Estate Segment Results Real estate rent revenue decreased by $0.4 million (7%) for Q2 2025 and $0.4 million (5%) for 6M 2025, primarily due to property sales in Wellington and Cannon Park, partially offset by higher U.S. live theatre income. Real estate segment operating income increased by $0.5 million (56%) for Q2 2025 and $1.2 million (67%) for 6M 2025, driven by improved live theatre performance, decreased operating expenses, and reduced depreciation and G&A expenses | Metric | Quarter Ended June 30, 2025 ($ thousands) | Quarter Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Total real estate revenue | $4,653 | $5,013 | $9,498 | $9,946 | | Total operating expense | $(1,840) | $(2,461) | $(3,795) | $(4,696) | | Total real estate operating income (loss) | $1,479 | $946 | $3,074 | $1,837 | - Real estate rent revenue decreased by $0.4 million for both Q2 and 6M 2025, mainly due to the sales of Wellington and Cannon Park properties, partially offset by increased U.S. live theatre income[207][208] - Real estate segment operating income increased by $0.5 million (56%) for Q2 2025 and $1.2 million (67%) for 6M 2025, driven by improved live theatre performance and reduced expenses[209][210] LIQUIDITY AND CAPITAL RESOURCES The company's financing strategy has shifted from funding capital investments with cinema cash flow to relying on borrowings and asset monetizations due to pandemic impacts and macroeconomic headwinds. Cash used in operating activities decreased by $7.0 million for 6M 2025, while cash provided by investing activities significantly increased by $30.4 million due to property sales. Cash used in financing activities increased by $36.0 million due to debt repayments. The company had $9.1 million in unrestricted cash and $173.4 million in total outstanding borrowings at June 30, 2025, with a negative working capital of $109.2 million - Financing strategy shifted to reliance on borrowings and asset monetizations due to disruptions in cinema cash flow and macroeconomic pressures[213] | Metric | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(6,151) | $(13,157) | | Net cash provided by (used in) investing activities | $37,806 | $7,398 | | Net cash provided by (used in) financing activities | $(34,883) | $1,125 | - At June 30, 2025, the company had $9.1 million in unrestricted cash and cash equivalents, $173.4 million in total outstanding borrowings, and a working capital deficit of $109.2 million[225][224] CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES The company's total contractual obligations and commitments amount to $436.0 million, with significant portions due in 2026. This includes $145.5 million in debt, $235.8 million in operating leases, and $27.9 million in subordinated debt. The company is also involved in legal proceedings, with estimates of probable and estimable losses accrued, and no off-balance sheet arrangements that would materially affect its financial condition | Obligation Type | 2025 ($ thousands) | 2026 ($ thousands) | 2027 ($ thousands) | 2028 ($ thousands) | 2029 ($ thousands) | Thereafter ($ thousands) | Total ($ thousands) | | :------------------------------ | :----- | :------- | :----- | :----- | :----- | :--------- | :------ | | Debt | $30,888 | $114,630 | $— | $— | $— | $— | $145,518 | | Operating leases, including imputed interest | $14,510 | $27,028 | $25,237 | $24,160 | $22,740 | $122,160 | $235,835 | | Subordinated debt | $— | $— | $27,913 | $— | $— | $— | $27,913 | | Total | $58,697 | $152,057 | $55,003 | $24,844 | $23,196 | $122,160 | $435,957 | - The company has no off-balance sheet arrangements or obligations that are reasonably likely to have a material effect on its financial condition[232] CRITICAL ACCOUNTING POLICIES Critical accounting policies involve significant judgments and estimates, particularly regarding the impairment of long-lived assets (excluding goodwill and indefinite-lived intangibles) and the impairment of goodwill and indefinite-lived intangible assets. Long-lived assets are evaluated using undiscounted future cash flows, while goodwill and indefinite-lived intangibles are tested annually by comparing fair value to carrying amount using discounted cash flow models. No impairment losses were recorded for either category in Q2 2025 - Impairment of long-lived assets (excluding goodwill and indefinite-lived intangibles) is evaluated using historical and projected undiscounted cash flows; no impairment losses were recorded in Q2 2025[233][234] - Impairment of goodwill and indefinite-lived intangible assets is tested annually using discounted cash flow models, with significant assumptions on cost of debt and equity; no impairment losses were recorded in Q2 2025[235][236] CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This section highlights that the report contains forward-looking statements, which are based on current beliefs and expectations and are subject to inherent uncertainties, risks, and changes in circumstances. It lists numerous important factors that could cause actual results to differ materially, including reduced consumer demand, impacts of Hollywood strikes, competition, macroeconomic conditions, real estate development risks, and international operational risks. The company undertakes no obligation to update these statements - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of the company's control[238] - Key risk factors include reduced consumer demand, impacts of Hollywood strikes, changes in consumer behavior, increased operating expenses, competition, and the ability to obtain loan extensions[238] - The company does not undertake any obligation to publicly update or revise forward-looking statements, except as required by applicable law[242] Item 3 – Quantitative and Qualitative Disclosure about Market Risk The company is exposed to market risks from currency exchange rate fluctuations and interest rate changes. Significant portions of revenue and obligations are in AUD and NZD, which can vary against the USD. While natural hedges exist, intercompany debt and fund repatriation can be impacted. The company uses interest rate derivative contracts to manage floating-rate debt, and a 1% change in short-term interest rates would result in an approximate $415,000 change in quarterly interest expense - The company is exposed to currency risk due to substantial portions of revenue and obligations denominated in Australian and New Zealand dollars[245] - At June 30, 2025, approximately 36.5% of assets were in AUD and 5.9% in NZD. The average AUD and NZD weakened against the U.S. dollar by 2.7% and 1.9% respectively in Q2 2025[248][250] - To manage interest rate risk from long-term floating-rate borrowings, the company uses interest rate derivative contracts. A 1% change in short-term interest rates would result in an approximate $415,000 increase or decrease in quarterly interest expense[254][256] Item 4 – Controls and Procedures The company's disclosure controls and procedures were deemed not effective as of June 30, 2025, due to a material weakness in internal controls over financial reporting related to an erroneous reversal and treatment of a liability. This material weakness led to restatements for prior periods. No other material changes in internal control over financial reporting occurred during Q2 2025 - Disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal controls over financial reporting[258] - The material weakness relates to the erroneous reversal and treatment of a liability, which resulted in restatements for June 30, 2024, and September 30, 2024 periods[258] - No other material changes in internal control over financial reporting occurred during the second quarter ended June 30, 2025[260] PART II – Other Information This section provides additional disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits Item 1 – Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 16 – Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q, which details ongoing litigation matters and the company's accounting policies for such claims - Legal proceedings information is incorporated by reference from Note 16 – Commitments and Contingencies[263] Item 1A – Risk Factors There have been no material changes to the risk factors previously disclosed in Item 1A of the company's 2024 Form 10-K. Investors are encouraged to review the risks and uncertainties outlined in the 2024 Form 10-K and subsequent Quarterly Reports - No material changes to risk factors have occurred since the 2024 Form 10-K filing[264] - Investors are advised to review risk factors in the 2024 Form 10-K and subsequent Quarterly Reports[264] Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds occurred[265] Item 3 – Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[266] Item 4 – Mine Safety Disclosure This item is not applicable to the company - Mine Safety Disclosure is not applicable[267] Item 5 – Other Information During the quarter ended June 30, 2025, no director or officer of the company adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[268] Item 6 – Exhibits This section lists all exhibits filed with the Form 10-Q, including various waiver and amendment agreements related to credit facilities, certifications from executive officers, and interactive data files in iXBRL format - Exhibits include waiver and amendment agreements for credit facilities with Bank of America, Emerald Creek Capital, and National Australia Bank[270] - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed[270] - The financial statements are provided in iXBRL (Inline Extensible Business Reporting Language) format as Exhibit 101[270] SIGNATURES The report is duly signed on behalf of Reading International, Inc. by Ellen M. Cotter, President and Chief Executive Officer, and Gilbert Avanes, Executive Vice President, Chief Financial Officer and Treasurer, on August 14, 2025 - The report was signed by Ellen M. Cotter, President and Chief Executive Officer, and Gilbert Avanes, Executive Vice President, Chief Financial Officer and Treasurer, on August 14, 2025[275]