Reading International, Inc (Class B 2026 Q2 Earnings Call

Thanks for joining the 2026 second quarter earnings call for Reading International, Inc. My name is Gilbert Avanes. I am the company's Chief Financial Officer and Treasurer. Joining me today is Ellen Cotter, our President and CEO. After I run through the normal caveats, I will start by presenting the results from our 2026 second quarter. I will also talk about our balance sheet liquidity and provide a summary of our debt position. Then I will turn the call over to Ellen, who will discuss our business strategy. After that, we will address some specific questions that came in from our stockholders, understanding that we have tried to weave answers to many stockholders' questions into our prepared remarks. Let me start with running through the usual caveats. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking.

Such statements are based on our current expectation and assumptions that are subject to a number of risks and uncertainties. We undertake no obligation to update any forward-looking statements. Actual results could differ materially. Please refer to our Form 10-K and 10-Q, including the risk factors. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our earnings release issued August 14, 2026, which has been released publicly and is available to the public through the investor relations tab on our website at readingrdi.com. With that behind us, I will go over the results from Q2 2026 and the first six months of 2026, which we are pleased to announce were both stronger than prior year period. We set multiple records this quarter, which we will discuss in more depth later in our call.

We believe it is significant that our second quarter cinema segment operation earnings were the best quarter since Q2 2019, and on a total company level, we had the best quarter of operations since Q2 2018. Our Q2 2026 consolidated revenue increased by $6.5 million to $66.9 million quarter-over-quarter. A few factors drove these improvements. The film slate for the quarter in Australia proved to be a stronger lineup compared to Q2 2025, leading to increased attendance and F&B revenues. Increased real estate revenues in U.S. led by improvements in live theater revenues, primarily as a result of improved programming at our Minetta Lane Theatre. The strengthening of the Australian foreign exchange rate against the U.S. dollar.

Historically, around 50% of our revenue has been generated in Australia and New Zealand, and during the second quarter of 2026, that rose slightly, with 53% of our revenue being generated internationally. Due to the Australian dollar strengthening against the U.S. dollar by 11% in the second quarter of 2026, this positively impacted our results. Consolidated revenue for the six months ended June 30, 2026, increased by $11.5 million to $112 million when compared to the same period of 2025. These increases are due to increased attendance in Australia as a result of overall stronger movie slate, including titles such as "Michael," "The Super Mario Galaxy Movie," "The Devil Wears Prada 2," "Project Hail Mary," and "Toy Story 5." Increased revenue in our U.S. and Australia real estate division, and the strengthening of our Australian and New Zealand currency by 11% and 1%, respectively.

At $2.3 million, our Q2 net income attributable to Reading International, Inc. increased by 185% from a loss of $2.7 million in Q2 2025. This was primarily due to improved segments result as a result of strengthened performance of our Australia cinema and our U.S. real estate, offset by a Q2 2025 gain on sale of assets which did not repeat in Q2 2026. Net loss attributable to Reading International, Inc. for the six months ended June 30, 2026, decreased by $1.5 million from a loss of $7.4 million to a loss of $5.9 million when compared to the same period in prior year. These results were primarily due to strengthened cinema and property segment results, a $1.5 million savings in G&A, a $0.5 million savings in interest expense, and a $2.4 million increase in other income.

These improvements for both quarter to date and year to date were assisted by the strengthening of our Australian dollars but are partially offset by increased tax expenses. Our basic earnings per share for Q2 2026 increased by $0.22 to a basic earnings per share of $0.10, compared to a basic loss per share of $0.12 for Q2 2026. The increase is due to the same factors as our increase in our net income. Basic loss per share decreased by $0.07, to a loss of $0.26, compared to a loss of $0.33 for the first six months of 2025. Again, these improved results were due to the same factors as our improvements in our six months ended June 30, 2026 net income.

Our Q2 2026 global operating income of $7.5 million improved by $4.6 million compared to an operating income of $2.9 million in Q2 2026. At $11.3 million, our Q2 2026 adjusted EBITDA income increased by $5 million, or 79%, compared to an EBITDA income of $6.3 million for the same time period last year. For the six months ended June 30, 2026, our adjusted EBITDA increased by $1.2 million to $10.4 million compared to the same prior year period. These results were primarily the result of improved operating performance as opposed to asset sales. Turning now to our financial position. As of June 30, 2026, our total assets were $429.4 million, compared to $434.9 million on December 31, 2025. This decrease was primarily driven by a $4.9 million decrease in cash and cash equivalent from which we funded our ongoing business operations.

Our total asset base remained largely consistent, within which in February 2026, we classified our Cinemas 123 property as held for sale. As of June 30, 2026, our total outstanding borrowing gross of deferred financing costs were $183.1 million, compared to $185.1 million on December 31, 2025. Our cash and cash equivalent as of June 30, 2026, were $5.7 million, which was slightly increased over the prior quarter. So far in 2026, and over the past year, we have worked with our key real estate lenders to extend maturity dates, modify principal repayment dates, and adjust existing covenants. On February 6, 2026, we executed an amendment to defer principal payment relating to our 44 Union Square loan, which was since paid on March 13, 2026. On February 27, 2026, we executed an amendment to modify the principal repayment schedule of our Bank of America, Bank of Hawaii facility.

On March 31, 2026, we executed an amendment to reduce our NAB loan minimum liquidity requirements for a limited defined period in 2026. On June 12, 2026, we extended the maturity date of our Bank of America facility to December 21, 2026. On August 11, 2026, we extended the maturity date of our Santander loan to October 1, 2026. Now, let me turn it over to Ellen, who will give us an overview of the business in the second quarter of 2026.

Thanks, Gilbert, and welcome everyone to today's call. We were so pleased with our results for the second quarter of 2026. A much stronger movie slate, coupled with a laser focus by our team on strategic priorities, led the company to achieving several post-pandemic milestones. At $66.9 million, Reading's Q2 2026 total revenue was the highest second quarter in the last six years, or since Q1 2019. Our global cinema division delivered an 11% increase over last year and the highest quarterly global cinema revenue since the fourth quarter of 2019. Our Australian cinema circuit generated a 31% increase over the same quarter of the prior year and a 52% increase from the first quarter of 2026. Also, our Australian cinema circuit delivered their highest quarter total revenue ever in both local currency and U.S. dollars, and their highest quarter segment revenue ever.

At $7.5 million, Reading's second quarter operating income improved 159% over the same quarter last year and was the best quarter result since Q2 2018. On a total segment operating income basis, we reported $10.7 million, which increased 55% over the same quarter last year and was the best result in the last eight years or since Q2 2018. If you exclude the sizable asset sales or large gains on sale that occurred in the second quarter of 2021, at $11.3 million, our Q2 2026 EBITDA was the best second quarter result in the last seven years. At $4.9 million, our Q2 2026 global real estate revenues increased by 4%, primarily due to the improved performance of our U.S. live theaters. Note, our global portfolio now reflects the 2025 sale of our assets in Townsville, Australia and Wellington, New Zealand.

While the sale of Cannon Park eliminated future revenues and cost, the sale of Wellington, primarily for this period, removed holding costs. Our U.S. real estate division delivered its highest second quarter revenues ever due to a strong quarter from our live theater division. During the second quarter, our commercial theaters retreated to a diverse and powerful film lineup. Audiences from around the world embraced original movies like Michael, Backrooms, and Obsession. Audiences returned to support some of the industry's strongest film franchises like The Super Mario Galaxy Movie, The Devil Wears Prada 2, and Toy Story 5. Not only do we enjoy a superior film lineup, our execution on key strategic initiatives across the company cinema divisions generated improved operations. We continued expanding our F&B programs across our cinema divisions with a focus on our movie theme menus and merchandise.

We believe our attendance was supported by improvements to our global loyalty programs, which I'll touch on shortly. Across our global cinema circuit, we're continuing to work with our landlords to reduce our overall occupancy costs to reflect the fact that attendance has not returned to pre-pandemic levels. At the same time, our labor and operating expenses, for the most part, have increased across the board. In certain markets like Hawaii, increases in labor have been significant. Looking forward, we're excited about the momentum for the third and fourth quarters of this year.

During the third quarter, our global theaters are still enjoying the spectacular box office from "Spider-Man: Brand New Day" and "The Odyssey." The December lineup looks equally fantastic with three highly anticipated franchise films, "Avengers: Doomsday," "Dune: Part Three," and "Jumanji 4." Along with industry analysts and press, we continue to believe that 2026 is poised to be the best post-pandemic box office year to date. With respect to our balance sheet, I'll reiterate, our board has directed the team to reduce Reading's overall debt position. Executing on this priority, we're actively working on the sale of our Cinema 123 property, which I'll touch on in a few minutes. Despite the anticipated sale of the Cinemas 123, we remain fully committed to our two business, three country strategy, which we believe will continue to serve us well into the future.