Financial Performance - Total revenues for the years ended December 31, 2020, 2021, 2022, and 2023 were $77.9 million, $139.1 million, $203.1 million, and $222.7 million, respectively, compared to $276.8 million for the year ended December 31, 2019[31]. - Total gross revenues for 2023 were $120.0 million in the U.S., $88.1 million in Australia, and $14.6 million in New Zealand, representing an increase from $100.1 million, $87.8 million, and $15.2 million in 2022[100]. - Approximately 58% of the company's 2023 revenue was generated from box office receipts, while food and beverage sales accounted for approximately 34%[50][52]. - The company generated a net profit of $93.3 million from the monetization of five non-core real estate assets in 2021, resulting in net cash of $144.8 million[201]. - The company has monetized approximately $153 million in non-core real estate assets over the past four years to sustain operations and pay down debt[41]. Debt and Liquidity - The Federal Reserve increased the Federal Funds rate from 0.25% to 5.5% between March 2022 and July 2023, resulting in an increased interest expense of $6.6 million in 2022 and $1.6 million in 2023[21]. - The company experienced a decrease in total interest-bearing debt by $26.6 million from $236.9 million to $210.3 million over the last two years[22]. - The company anticipates additional cash will be required to maintain liquidity through 2025 due to deferred rents and interest-bearing debt repayments[28]. - Approximately $174.6 million of the company's current debt will mature over the next twenty-four months, requiring refinancing, which may not be achievable at current interest rates[149]. - The ability to renew or replace loans maturing in 2024 and beyond is critical, especially in the context of rising interest rates[120]. Real Estate and Development - Non-core real estate dispositions from 2021 through the first quarter of 2024 produced $156.1 million in net cash, allowing the company to pay down $75.6 million in debt and invest $33.9 million in capital improvements[27]. - The company has retained the ability to show films in both 35MM and 70MM formats in certain cinemas, catering to specific director preferences[48]. - The company owns approximately 6.5 acres of land in Philadelphia, including the Reading Viaduct, which is being evaluated for potential mixed-use development[81]. - The company has approximately 90,000 square feet of space subject to long-term leases, reported as part of its Cinema Exhibition segment, with a total net book value of $18.3 million[183]. - The company is engaged in several investment and development projects on currently undeveloped parcels of land, with a net book value of $8.8 million for the Courtenay Central property in New Zealand[184]. Market Conditions and Competition - The company continues to face uncertainty regarding U.S. cinema cash flows, which has constrained activities in both cinema and real estate sectors[40]. - The company has experienced increased competition from streaming services and boutique operators, impacting access to top-grossing films[56][59]. - The company competes with larger cinema operators who have better access to films and capital, which may adversely impact revenue and profitability[129]. - Increased competition from in-home entertainment options and other forms of "beyond-the-home" entertainment is impacting customer attendance[125]. - The company faces risks including reduced consumer demand due to inflation, competition from other cinema operators, and the impact of external events such as the Hollywood Strikes on cinema operations[114]. Operational Challenges - The cinema business has high fixed costs, and revenue is directly tied to customer attendance, which remains vulnerable to future pandemics[123]. - The Hollywood strikes in 2023 have disrupted film production, potentially delaying the supply of films and affecting revenue[124]. - The company is vulnerable to changes in government regulations, including those related to labor costs and minimum wage requirements[120]. - Increased operating costs are being driven by rising utility costs, particularly electricity, as well as higher insurance premiums due to recent shooting incidents[134]. - The company faces risks related to natural disasters, as many of its cinemas are located in seismically active areas, which could lead to temporary closures[134]. Strategic Initiatives - The company has implemented strategic increases in ticket and food and beverage prices to balance increased operational costs without deterring revenue generation[23]. - The company is focusing on enhancing cinema experiences through larger screens, improved sound, and online ticket reservations to compete with streaming services[65]. - The company is focusing on expanding food and beverage offerings to align with moviegoers' desires and trends[52]. - The company has upgraded food and beverage menus at 40 theater locations as of December 31, 2023, enhancing customer experience[214]. - The company launched Angelika Anywhere streaming service in the U.S. in December 2020, but is reviewing its long-term viability and may terminate the service in 2024[38]. Governance and Ownership - As of December 31, 2023, Margaret Cotter controls 69% of the outstanding Class B stock, allowing her to unilaterally elect or remove all Board members[164]. - The governance structure allows for limited fiduciary duties from controlling stockholders, which may not align with the best interests of minority stockholders[167]. - The company has implemented a cybersecurity program to address threats, utilizing third-party firms for various cybersecurity functions[172][173]. - The company has not experienced any cybersecurity incidents that materially affected its operations[175]. Economic and Currency Impact - The U.S. dollar's appreciation against the Australian and New Zealand dollars has reduced the value of earnings and cash flow from these regions when reported in USD[101]. - The Australian dollar and New Zealand dollar weakened against the U.S. dollar by 4.3% and 3.3%, respectively, during 2023, impacting the company's international operations[150]. - In 2023, global growth weakened, with trade tensions and geopolitical instability adversely impacting market sentiments and potentially leading to currency devaluation and loss of consumer confidence[154].
Reading International(RDIB) - 2023 Q4 - Annual Report