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Reading International (RDI) Q2 2009 results

|Includes: Reading International, Inc. (RDI)

  Reading International (NASDAQ:RDI) reported quarterly results this morning. The full press release may be found below:

http://finance.yahoo.com/news/Reading-International-prnews-831025606.html?x=0&.v=1

Despite strong yoy Australian/NZ currency headwinds, Reading’s total revenues and EBITDA increased by 1.2% and 76% yoy, respectively, reflecting another quarter of strong box office results. In local currency, Reading’s Australia and New Zealand enjoyed strong cinema revenue growth of 33% and 15.5%,respectively. Global box office releases for the remainder of 2009 continue to look appealing.

The segment summary of the quarter were as follows:

 - Cinema segment (90% of Reading’s total revenue) revenue and EBITDA growth of 3.5% and 81.5%, respectively, was strong despite the previously mentioned Australian/NZ currency headwinds masking strong local results. This growth was driven by box office strength, and operational improvements at Reading’s Consolidated Entertainment cinema subsidiary (Hawaii/California) where operating income improved by 70% from prior year.

 - Real Estate segment (10% of Reading’s total revenue) revenue fell 6.6%, while segment EBITDA grew 0.9%% reflecting yoy Australian/NZ currency headwinds on that region’s rental revenue and cash flow streams. Reading’s Indooroopilly, (Brisbane, Australia) office property completed construction near the end of the quarter and as discussed, below, will begin contributing to Reading’s Real Estate operations in the current Q3.

Other items of note :

  • RDI retired $22.9mm of its 9.2% Trust Preferred Securities (sub debt) acquired in a prior quarter, recognizing a sizable net gain of $10.8MM.  Note, while cash interest costs will decline by $2.1MM/yr from this debt retirement, going forward reported interest expense declines will be offset by cash interest costs (that didn’t change) but will now be expensed on properties newly classified as “held for development” that were previously classified as “under development” where under GAAP, interest expense was capitalized.  

  • The contracted purchaser of Reading’s Auburn (Sydney, Australia) shopping center (ETRC) and adjacent developable land elected not to continue making purchase option payments leaving Reading $1.5mm in non refundable deposit money (recognized below operating line).  Recently, there has been significant positive zoning developments in the area which we believe enhances options for the property and contiguous developable land and mitigates the fallout from losing this sale agreement on this decade long holding.  

  • Reading enhanced liquidity again during this past quarter. From prior quarter, June 30 cash balances increased to $22.1MM and debt declined to $224.8MM. Reading also renewed/extended the term of its New Zealand Credit Facility from November 2010 to March 2012. At June 30, Reading has combined $23.1MM of undrawn credit availability on its Australian and New Zealand Credit facilities.

  • From the quarter’s profits and improvement in the Australian/NZ currency during Q2, Reading’s shareholder equity rose 48% sequentially to $93.8MM at June 30, 2009. These currencies have continued to move higher during the current quarter but at a slower pace.

Important subsequent events were as follows:

  • Reading re-listed both classes of its common stock from the AMEX to the NASDAQ exchange, maintaining the RDI symbol and adopting the RDIB symbol for the Class B voting stock. 
  • Reading and its partner finalized a sale and legal settlement with Malulani Investments and affiliates, recouping Reading’s investment and years of legal expenses via an upfront $2.5MM cash payment and a $6.75MM 3-year secured note, along with a ten year "tail interest" in Malulani and its parent company.  Reading’s arrangement with its partner calls for Reading to receive the first part of this $9.25MM until Reading has recouped its initial investment  and all costs advanced by Reading with respect to the litigation.

  • At the end of July, Reading’s new six-story Indooroopilly office building was completely leased out to the City of Brisbane under a three-year lease with options for additional extensions. The construction loan on this building was also paid off from Reading’s cash balances.
We will start to analyze Reading’s 10-Q, which was recently filed at:
 
http://www.sec.gov/Archives/edgar/data/716634/000071663409000030/form10q.htm


LONG Reading International (RDI and RDIB) stock