Reading International(RDIB) - 2021 Q1 - Quarterly Report

PART I - Financial Information Financial Statements Unaudited Q1 2021 financials reflect pandemic-driven revenue declines offset by a net profit from significant real estate asset sales Consolidated Balance Sheets Total assets and liabilities decreased, while stockholders' equity increased due to debt reduction and asset sale gains Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $668,030 | $690,169 | | Cash and cash equivalents | $40,920 | $26,826 | | Operating property, net | $317,153 | $353,125 | | Total Liabilities | $572,280 | $608,996 | | Debt - current portion | $1,606 | $41,459 | | Debt - long-term portion | $211,836 | $213,779 | | Total Stockholders' Equity | $95,750 | $81,173 | Consolidated Statements of Income A sharp revenue decline led to an operating loss, but a large gain on asset sales resulted in significant net income Q1 2021 vs Q1 2020 Income Statement (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Total Revenue | $21,307 | $49,228 | | Cinema Revenue | $18,115 | $46,310 | | Operating Loss | ($13,977) | ($7,039) | | Gain on sale of assets | $46,545 | $0 | | Net Income (Loss) | $22,068 | ($5,955) | | Diluted EPS | $0.86 | ($0.27) | Consolidated Statements of Cash Flows Operating cash flow remained negative, but asset sales provided a large cash inflow used for debt repayment Q1 2021 vs Q1 2020 Cash Flow Summary (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,774) | ($8,672) | | Net cash provided by (used in) investing activities | $63,906 | ($9,804) | | Net cash provided by (used in) financing activities | ($45,713) | $60,905 | | Net increase in cash | $14,094 | $42,758 | Notes to Consolidated Financial Statements Notes detail the pandemic's impact, asset monetization strategy to ensure liquidity, and debt reduction efforts - The company's two primary business segments are cinema exhibition and real estate, with the cinema segment reporting an operating loss of $8.3 million and the real estate segment an operating loss of $1.4 million for Q1 2021[16][18] - Due to the COVID-19 pandemic's impact on liquidity, management has monetized non-core real estate assets, which is deemed probable to alleviate substantial doubt about the company's ability to continue as a going concern[36][39][40] - The company repaid its $40.6 million Union Square construction financing on March 26, 2021, and subsequently refinanced the property with a new $55.0 million loan facility on May 7, 2021[33][87][151] Q1 2021 Real Estate Sales (in thousands) | Property | Sale Price | Net Book Value | Gain on Sale (Net) | | :--- | :--- | :--- | :--- | | Manukau, NZ | $56,058 | $13,483 | $41,062 | | Coachella, CA | $11,000 | $4,351 | $6,348 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the pandemic's severe impact on cinema operations, mitigated by strategic real estate sales that generated liquidity - The company's 'two business/three country' strategy (cinemas and real estate in the U.S., Australia, and New Zealand) helped mitigate the adverse impacts of COVID-19[155] - To generate liquidity, the company sold non-income producing land in Manukau, NZ for $56.1 million and Coachella, CA for $11.0 million in Q1 2021, and is pursuing further sales[157] - As of March 31, 2021, cash and cash equivalents were $40.9 million, up from $26.8 million at year-end 2020, while total outstanding borrowings decreased to $243.0 million from $285.0 million[246] Q1 2021 vs Q1 2020 Consolidated Results (in thousands) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $21,307 | $49,228 | (57)% | | Gain on sale of assets | $46,545 | $0 | N/A | | Net Income (Loss) Attributable to RDI | $18,965 | ($5,875) | >100% | Results of Operations Consolidated revenue fell 57% due to cinema closures, but a gain on asset sales drove net income despite operating losses - U.S. cinema revenue saw the steepest decline, falling 84% to $3.8 million due to an 88% decrease in attendance as most cinemas remained closed[229][232] - Australian and New Zealand cinema revenues decreased by 38% and 35% respectively, impacted by a lack of major film releases and social distancing measures[233][234] Segment Operating Income (Loss) (in thousands) | Segment | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Cinema Exhibition | ($8,275) | ($2,654) | | Real Estate | ($1,368) | $187 | Liquidity and Capital Resources Liquidity was bolstered by $65.2 million in net proceeds from asset sales, used to repay debt and increase cash reserves - In Q1 2021, the company monetized non-income producing land, generating net proceeds of $65.2 million, which resulted in after-tax proceeds of $37.4 million[245] - Cash from investing activities was $63.9 million, primarily from asset sales, which was used for financing activities including $42.6 million in loan repayments[260][261] Liquidity Metrics (in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $40,920 | $26,826 | | Total debt (gross) | $242,972 | $284,959 | | Working capital (deficit) | ($12,995) | ($64,140) | Quantitative and Qualitative Disclosure about Market Risk The company's primary market risks involve foreign currency fluctuations and changes in variable interest rates - As of March 31, 2021, approximately 49% of the company's assets were denominated in Australian and New Zealand dollars, exposing the company to foreign currency translation risk[293] - The company is exposed to interest rate risk on its variable-rate debt; a hypothetical 1% change in short-term interest rates would change quarterly interest expense by about $460,000[299] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report, March 31, 2021[302] - No changes in internal control over financial reporting occurred during the first quarter of 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[303] PART II – Other Information Legal Proceedings No material changes to litigation are reported, with details incorporated by reference from the financial statement notes - Information on legal proceedings is incorporated by reference from Note 14 – Commitments and Contingencies[306] Risk Factors A new risk factor concerning corporate social responsibility and reputation has been identified - A new risk factor was identified concerning risks related to corporate social responsibility and reputation, which could adversely affect the business if damaged[307] Exhibits This section lists filed exhibits, including credit agreement variations, officer certifications, and iXBRL data files - Key exhibits filed include a variation to the Westpac New Zealand credit agreement, Sarbanes-Oxley Section 302 and 906 certifications, and financial statements in iXBRL format[313]