Reading International, Inc. (NASDAQ: RDI) announced its results for its quarter ended June 30, 2020 and provided a COVID-19 business update. Revenue for the
quarter decreased from $76.0M in Q2 2019 to $3.4M in Q2 2020 and EBITDA decreased from $11.7M to ($17.0M) in the
quarter. The ongoing COVID-19 pandemic negatively impacted both cinema and real estate segment results as theaters have
been closed during the quarter. Additionally, results were negatively impacted by adverse June 30, 2020 foreign currency
exchange rates with the Australian and New Zealand dollars declining against the US dollar versus prior year by 6.9% and
6.8%, respectively.
Ellen M. Cotter, President and Chief Executive Officer of Reading International, Inc., stated: “Our diversified business
plan has served us well in this pandemic...We’re pleased to have advanced our biggest future-value opportunity projects
– 44 Union Square, Courtenay Central, and our industrial land in Manukau – despite the ongoing challenges presented by
COVID-19 and general and administrative reductions."
"We are also encouraged by the demand shown in certain theaters in Australia and New Zealand since they re-opened,
particularly given the strict seating restrictions imposed in Australia and the lack of new movies being released from
the major studios. We anticipate announcing a cinema re-opening date for select U.S. cinemas given the recent
announcement by Warner Bros that Christopher Nolan’s Tenet is scheduled to be released on September 3, 2020 in U.S.
cinema markets governmentally permitted to open.”
Late in the second quarter of 2020, Reading began re-opening all of its cinemas in New Zealand and most cinemas in
Australia. As of August 10, 2020, (i) all its cinemas in New Zealand are operating without social distancing
requirements (other than the cinema at Courtenay Central) and (ii) all cinemas in Australia are opened with social
distancing restrictions in place, except for those in the State of Victoria, which are closed under government order.
Due to a second wave of the coronavirus, as of August 5, 2020, the local government in the State of Victoria required
all cinemas, including seven Reading Cinemas that operate in that state, to close through September 15, 2020.
Global Real Estate Development Activities
The COVID-19 pandemic has also impacted the timing of Reading's real estate development plans. However, during the
pandemic, the company achieved the following milestones during the second quarter that will enhance the long-term value
of its real estate portfolio.Sepulveda Office Building (Culver City, U.S.) – As previously announced, on May 27, 2020, Reading leased on a multi-year basis the entire second floor of its
headquarter building in Culver City, California (approximately 11,000 usable square feet) to WWP (wwpinc.com), a global company with over 35 years of experience providing the cosmetics and personal care industries with a range
of packaging needs. On the date of the lease, possession of the space was turned over to WWP, which is responsible for
building out its space. On a straight-line basis, rent commenced effective May 27, 2020. The “free rent” period expires
effective October 1, 2020.44 Union Square (New York City, U.S.) – Historically known as Tammany Hall, this building with approximately 73,113 square feet of net rentable area
overlooks Manhattan’s Union Square. During the COVID-19 pandemic, New York City shut down non-essential construction and
business, including construction work at Reading's site. However, the construction of the improvements necessary to
obtain a core and shell temporary certificate of occupancy were substantially completed prior to the shutdown. On July
1, 2020, the site re-opened for construction activities, and Reading anticipates that the core and shell temporary
certificate of occupancy will be in place by the end of August 2020, as only the completion of certain fireproofing
remains to be completed.Manukau/Wiri Land Rezoning (Auckland, New Zealand) – Reading continued to progress the infrastructure plans for this 64.0-acre property, which it previously re-zoned from
agricultural to light industrial uses, and to the remaining 6.4-acre property, zoned for heavy industrial use, each
located in the highly sought after industrial market of Manukau/Wiri close to the Auckland Airport. In June 2020, the
Auckland Council granted Reading and the adjoining landowner, subject to certain conditions, certain consents required
to construct certain infrastructure needed to take advantage of the new light industrial zoning. The company continues
to view the industrial property sector as being one of the most resilient in the current economic climate and that its
rezoning and entitlement work completed to date has contributed to the overall value of its land in Manukau/Wiri being
well above its book value.Courtenay Central Redevelopment (Wellington, New Zealand) – Located in the heart of Wellington – New Zealand’s capital city – Reading's Courtenay Central property covers 161,071
square feet of land situated proximate to (i) the Te Papa Tongarewa Museum (attracting over 1.5 million visitors
annually, pre-COVID) and (ii) across the street from the site of the future Wellington Convention and Exhibition Centre
(wcec.co.nz), the capital’s first premium conference and exhibition space, which is due to be completed in 2023. Despite the
COVID-19 pandemic, construction for this major public project has resumed and plans include the creation of a public
concourse linking through to Wakefield Street, which is across the street from Reading's Courtenay Central project.Balance Sheet & Liquidity
During the second quarter of 2020, Reading drew down available operating borrowing capacity under its various credit
facilities with Bank of America, N.A. (“BofA”), National Australia Bank (“NAB”) and Westpac New Zealand Limited
(“Westpac”) to ensure future liquidity in light of the COVID-19 pandemic. As a result, the company's total outstanding
borrowings were $275.9 million at June 30, 2020. At June 30, 2020, its cash and cash equivalents were $40.4 million,
which included approximately $22.9 million in the U.S., $3.8 million in Australia, and $13.7 million in New Zealand.
As a result of the impacts of COVID-19, Reading did not meet certain covenants in its loan agreements with BofA, NAB and
Westpac for the quarter ended June 30, 2020. In order to preserve its liquidity position, the Company entered into
credit agreement amendments with each of these lenders that waives or amends various covenants through and, in several
instances, beyond September 30, 2020. The amendments, among other things, increases the interest and fees payable for
the duration of the facilities. They also include shorter duration measured covenants for several quarters in lieu of
several trailing 12-months measurements.
As a result of the work with its lenders, as of June 30, 2020, Reading has no covenant breaches to which waivers have
not been obtained.
At June 30, 2020, Reading had Total Assets, based on book values, of $687.8 million, which was an increase of $12.8
million compared to $675.0 million at December 31, 2019. This increase was primarily driven by the increase in cash and
cash equivalents, which was countered by the impact of foreign exchange rates in the Australian and New Zealand dollars
that are down YTD by 6.9% and 6.8%, respectively.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 Wednesday, August 12, 2020.