Reading International Inc · NASDAQ:RDI
Reading International — Shareholder Meeting (May 2019)
57 slides from Reading International's shareholder meeting presentation, May 7, 2019
Slide 1: 2019 Annual Stockholders Meeting
2019 ANNUAL STOCKHOLDERS MEETING MAY 7, 2019
Slide 2: Disclaimers
D I S C L A I M E R S Our comments today may contain forward-looking statements and This presentation is intended to summarize the projects on which management may make additional forward-looking statements in we are working and our plan for moving our Company forward. response to your questions. Su
Slide 3: Financial Reconciliations
F I N A N C I A L R E C O N C I L A T I O N S We use EBITDA in the evaluation of our Company’s performance since we believe that EBITDA EBIT and EBITDA also fail to take into account the cost of interest and taxes. Interest is clearly a real provides a useful measure of financial performance and val
Slide 4: Our Mission: Cinema & Real Estate
OUR MISSION CINEMA & REAL ESTATE THROUGH CURATION AND CUSTOMIZATION, OUR MISSION IS TO CREATE ENGAGING EXPERIENCES THAT ENRICH AND GROW OUR COMMUNITIES.
Slide 5: Leading Cinema & Real Estate Company
C I N E M A P O R T F O L I O 60 4 Brands Geographic Footprint Diversified Theaters Reading Cinemas (US, AU & NZ) United States: 27 theaters in 6 states & DC Programming 10th largest US exhibitor 484 screens Consolidated Theatres (Hawaii) US - Leading exhibitor in both in US, AU & NZ Australia: 22 t
Slide 6: Well Positioned to Create Long-Term Stockholder Value
WELL POSITIONED TO CREATE LONG-TERM STOCKHOLDER VALUE • Complementary Cinema & Real Estate portfolios offer compelling strategic and financial benefits. • Cinemas provide steady cash flow to support real estate development focused on driving long-term stockholder value. • Continue to grow that cash
Slide 7: Cinema & Real Estate Synergistic Diversification Underpins Our Strategy
CINEMA & REAL ESTATE SYNERGISTIC DIVERSIFICATION UNDERPINS OUR STRATEGY GLOBAL PROPERTY REVENUES 8% UNITED AUSTRALIA STATES REVENUES REVENUES 52% 37% 92% 11% GLOBAL CINEMA REVENUES NEW ZEALAND REVENUES TWO SYNERGISTIC BUSINESSES OPERATING IN THREE STRONG ECONOMIES Revenues Year 2018. The above chart
Slide 8: Total Stockholder Return – RDI Class A
TOTAL STOCKHOLDER RETURN – RDI CLASS A TSR%
Slide 9: Core Values & Guiding Principles
CORE VALUES & GUIDING PRINCIPLES INSPIRED BY OUR FOUNDER ENTREPRENEURIAL approach to our business EDUCATED analysis underpins our strategies ENGAGING our guests is paramount to our success EXECUTION is a focus of our three-year strategy EXTENDED VIEW means pursuing a long-term value strategy EMPATHE
Slide 10: 2018 Record Operational Year Financial Highlights
2018 RECORD OPERATIONAL YEAR FINANCIAL HIGHLIGHTS 11% 16% REVENUE OPERATING GROWTH INCOME GROWTH
Slide 11: Global Cinema Strategy
SINCE 2016, INVESTED SUBSTANTIALLY IN EXECUTING ON OUR GLOBAL CINEMAS GLOBAL CINEMA • • BUILT 2 NEW CINEMAS MADE SIGNIFICANT INVESTMENT IN STRATEGY EXISTING PORTFOLIO As of December 31, 2018, 39% of all US Screens feature Luxury Recliner Seating 21% of all AU/NZ Screens feature Luxury Recliner S
Slide 12: Global Real Estate Strategy
EXECUTING ON GLOBAL REAL ESTATE Completed expansion of Newmarket Village in STRATEGY Brisbane in Q1 2018, which added 52,668 leaseable SF inclusive of a new 8 screen Reading Cinema and 10,355 SF of third party space Acquired the strategically located Telstra property that directly abuts Redyard
Slide 13: Global Cinema Division
GLOBAL CINEMA DIVISION
Slide 14: Foundation for Global Cinema Strategy: Solid Theatrical Studio Slate
FOUNDATION FOR GLOBAL CINEMA STRATEGY • SOLID THEATRICAL STUDIO SLATE AVENGERS: ENDGAME MARVEL STUDIOS Though 2019 start was slow, opening weekend of Avengers: Endgame surpassed Box Office BOX OFFICE STRENGTH records with a stunning • 2018 – Another Record Box Office Year $350M in North America and
Slide 15: Specialty Film Continues to Support Angelika Box Office
SPECIALTY FILM CONTINUES TO SUPPORT ANGELIKA BOX OFFICE • STRONG 2019 SLATE LUCY IN THE SKY PAIN & GLORY FOX SEARCHLIGHT SONY PICTURES CLASSICS Specialty film companies will continue to take risks and explore new stories and perspectives that the US CINEMAS - ANGELIKA BRAND RELIES ON DOCUMENTARIES,
Slide 16: Execution Drove Reading's 2018 Strong Industry Performance
THE EXECUTION OF OUR CAPITAL INVESTMENT AND OPERATING STRATEGIES DROVE READING’S 2018 STRONG INDUSTRY PERFORMANCE BOX OFFICE REVENUE UNITED STATES AUSTRALIA NEW ZEALAND * MARKET READING MARKET READING MARKET READING *Q4 2016 NZ Wellington earthquake adversely impacted 2017 results Data from Rentrak
Slide 17: Global Cinema Strategy
GLOBAL CINEMA STRATEGY • Re-invest in existing portfolio • Pursue Company growth through new developments and financially sound acquisitions • Improve Theater Level Cash Flow
Slide 18: Investing in Our Cinema Portfolio
INVESTING IN OUR CINEMA PORTFOLIO United States • 2019 expected to be invested $13.50M • 2020 & 2021 expected to be invested $61.95M Australia • 2019 expected to be invested A$17.69M • 2020 & 2021 expected to be invested A$46.00M New Zealand • 2019 expected to be invested NZ$2.03M • 2020 & 2021 expe
Slide 19: Create Engaging Cinema Experiences
COMFORT & DESIGN SIGNATURE PREMIUM PROGRAMMING TECHNOLOGY CREATE ENGAGING CINEMA EXPERIENCES LOYALTY CRAFTED & PRICING FOOD & BEVERAGE DIGITAL MARKETING
Slide 20: Recliner Seating Continues to Drive Attendance & Ticket Price
RECLINER SEATING CONTINUES TO DRIVE ATTENDANCE & TICKET PRICE PERCENTAGE OF US SCREENS WITH LUXURY RECLINERS TODAY 39% • By end of 2019 42% • By end of 2020 59% • By end of 2021 81% PERCENTAGE OF AU/NZ SCREENS WITH LUXURY RECLINERS TODAY 21% • By end of 2019 27% • By end of 2020 32% • By end of 2021
Slide 21: Premium Presentation Continues to Drive Attendance & Ticket Price
PREMIUM PRESENTATION CONTINUES TO DRIVE ATTENDANCE & TICKET PRICE PERCENTAGE OF US CINEMAS PERCENTAGE OF AU/NZ CINEMAS WITH AT LEAST ONE PREMIUM SCREEN WITH AT LEAST ONE PREMIUM SCREEN TODAY 27% TODAY 41% • By end of 2019 31% • By end of 2019 55% • By end of 2020 42% • By end of 2020 64% • By end of
Slide 22: Crafted Food & Beverage Improves Cash Flow
CRAFTED FOOD & BEVERAGE IMPROVES CASH FLOW EXPAND SALE & SERVICE OF BEER, WINE AND/OR SPIRITS • US Cinemas o Today, 12 cinemas serve liquor (or 46% of all US Cinemas) o By end of 2021, target to add 10 more cinemas to serve liquor • AU/NZ Cinemas o Today, 16 cinemas serve liquor (or 53% of all AU/NZ
Slide 23: US Cinemas Per Cap Continues Improving
2018 Laser focus on Food Quality & Consistency lead to the Angelika Film Center Carmel US CINEMAS PER CAP Mountain hamburger being CONTINUES IMPROVING voted a “Favorite” by Readers of the San Diego Union Tribune US CINEMAS F&B PER CAPITA $4.78 $4.99 $4.49 $4.08 $3.55 $3.69 $3.78 $3.16 $3.28 $3.31 $3
Slide 24: Dine-In Service Drives Revenue
DINE-IN SERVICE DRIVES REVENUE US CINEMAS • Today, only one US Cinema features SPOTLIGHT service (waiters serve elevated food & liquor in intimately sized auditoriums) • Throughout 2019-2021, evaluate other US cinemas/new builds for SPOTLIGHT opportunities AU/NZ CINEMAS • Today, 9 cinemas (or 30% of
Slide 25: Innovative Pricing Continues to Drive Attendance
INNOVATIVE PRICING CONTINUES TO DRIVE ATTENDANCE • In AU/NZ, a compelling value-based ticket pricing structure, with a simple, clear marketing plan, continues to be the foundation for circuit distinction and strength o Continue monitoring cinema competition for Value Pricing matching o Value Price i
Slide 26: Digital Marketing Drives Increased Revenues
DIGITAL MARKETING DRIVES INCREASED REVENUES • Online Convenience Fee Revenue • F&B Revenue • Other Revenue • Organic Audience Growth
Slide 27: Online Ticket Sales Improves Total Cinema Revenues
ONLINE TICKET SALES IMPROVES TOTAL CINEMA REVENUES 2018 - INCREASED GLOBAL NET CONVENIENCE FEE REVENUE BY 48% TO $4.45M • Implement Reserved Seating in all US Cinemas by the end of 2019 and in AU/NZ in 2020 • In 2018, improved functionality of US Cinemas App • Launch Reading Cinemas App (IOS & Andri
Slide 28: Digital Marketing Drives Other Revenues
DIGITAL MARKETING DRIVES OTHER REVENUES • Online Gift Card Sales (Email & Mail) o Launch AU/NZ E-Cards in 2019 • Launch some form of F&B online sales by Q1 2020 o Ensure that entire F&B menu available for online purchase by 2021 • With global cinema attendance over 21M and an expanding global digita
Slide 29: Curate Film & Event Programming Tailored to Our Audiences
CURATE FILM & EVENT PROGRAMMING TAILORED TO OUR AUDIENCES • Continue to generate incremental revenues through the curation of signature programming • Alternative Content emphasis o Japanese anime, foreign language films, music movies, cultural events o Exclusively programmed repertory series, couple
Slide 30: Disciplined Approach to New Opportunities – Australia
CONTINUED DISCIPLINED APPROACH TO PURSUING NEW OPPORTUNITIES - AUSTRALIA FOUR NEW READING CINEMAS ARE UNDER CONTRACT IN AUSTRALIA • Burwood Brickworks developed by Frasers – Expected to open late 2019 o Our first AU cinema with recliners in all 6 screens o Melbourne’s first premium TITAN LUXE with D
Slide 31: Global Real Estate Division
GLOBAL REAL ESTATE DIVISION
Slide 32: US Live Theatres
US LIVE THEATRES THREE LEADING OFF BROADWAY THEATRES IN US • Orpheum Theatre – New York City – one stage with 347 seats • Minetta Lane Theatre – New York City - one stage with 399 seats • Royal George Theatre – Chicago – four stages ranging from 60 to 450 seats, plus ancillary retail, office space a
Slide 33: Minetta Lane Theatre
MINETTA LANE THEATRE • Recently, extended license agreement with Audible, an Amazon company, the leading provider of Audiobooks. The new term will provide a home for Audible and steady cash flow for our NEW YORK CITY Company through March 2021 • Audible will continue to produce one and two voice pla
Slide 34: Global Real Estate Strategy
GLOBAL REAL ESTATE STRATEGY • Unlock embedded value in our existing real estate portfolio • Reposition and incrementally build and develop a strong, diversified real estate portfolio • Focus on curation, community and customization in each of our real estate and cinema businesses to create more valu
Slide 35: US Real Estate by the Numbers
US REAL ESTATE BY THE NUMBERS • 73,106 SF of net leasable area (inclusive of anticipated BOMA adjustments) comprised of retail & office – 44 Union Square • 75% interest in a 21,000 SF NYC cinema building and development potential of 80,000 SF, plus potential for additional 16,000 SF of air rights –
Slide 36: Construction of This Iconic NYC Property Nears Completion
CONSTRUCTION OF THIS ICONIC NYC PROPERTY NEARS COMPLETION 2019 COMPLETE BASE BUILDING CONSTRUCTION • Q2 2019 – Assuming lease is signed, we can begin turning over space to Tenant for their fitout • Q2 2019 – Substantial completion of Glass Dome o Steel gridframe substantially completed May 2019 o Gl
Slide 37: Leasing of This Iconic NYC Property Underway
LEASING OF THIS ICONIC NYC PROPERTY UNDERWAY 2019 • Approx. 90% of net leasable area cont’d o Executed Letter of Intent with credit tenant o Currently in lease negotiation • Remaining 7,200 SF on ground floor will be retail 2020- • Expected completion of “rent concession” period 2021 • Replace const
Slide 38: Cinemas 123 'Go It Alone' Strategy
CINEMAS 123 “GO IT ALONE” STRATEGY – 2021 IRREPLACEABLE PROPERTY ACROSS FROM BLOOMINGDALES IN NYC • Complete evaluation of major foundational issues o Subway o Excavation and ability to create below grade floors • Pursue and potentially buy inclusionary air rights to maximize development potential o
Slide 39: Reading Viaduct & Adjacent Properties, Philadelphia
READING VIADUCT & ADJACENT PROPERTIES PHILADELPHIA, PA • Our Reading Viaduct is 3,200 feet in length and at least 70 feet wide. We also own several small parcels (which all have air rights) adjacent to the Viaduct • June 2018 - Center City District completed Phase One of the Philadelphia's new eleva
Slide 40: California Properties
COACHELLA 50% MANAGING MEMBER INTEREST IN 202 ACRES OF UNDEVELOPED LAND • Located immediately south of Interstate 10 and east of Highway 86 in Coachella Valley • Current zoning for 50 acres of high density mixed-use and 150 acres of single family residences • As we maintain the 202 acres, we monitor
Slide 41: AU/NZ Real Estate by the Numbers
AU/NZ REAL ESTATE BY THE NUMBERS 06 Multi-tenanted properties AU/NZ (358,858 SF) 97 Existing third party tenants (331,076 SF) 12 Current vacant third party tenant spaces (29,612 SF) 49 Third party leases, 127,326 SF, coming due in 2019-2021 211,511 SF of vacant land to develop on/adjacent to existin
Slide 42: Long Term Value for Stockholders
THROUGH CURATION, COMMUNITY CONNECTION, CUSTOMIZATION AND COMPREHENSIVE PLANNING, WE WILL BUILD LONG-TERM STOCKHOLDER VALUE BY MAXIMIZING THE EMBEDDED VALUE IN OUR EXISTING PORTFOLIO SPACE PORTFOLIO LONG TERM VALUE FOR STOCKHOLDERS INITIATIVES OPERATIONS
Slide 43: Continue to Improve Newmarket Village
CONTINUE TO IMPROVE NEWMARKET VILLAGE (NMV) 2017- Q1 2019 • Increased NMV capital value by: o Created new entertainment precinct - 8 screen state-of-the-art Reading Cinemas with TITAN LUXE and 10,172 SF F&B precinct o Expanded NMV’s net leasable area by 57% (including Reading Cinema) o Today, 80% of
Slide 44: Redyard: Upgrades and Tenancy
2017- • Since 2017, added six new incremental tenancies and 2018 upgraded the center • Including Telstra property, an incremental 31,549 SF of net leaseable area added since Jan. 2017. 53% incremental increase in third-party net leasable area • Acquired building occupied by ASX listed Telstra for $3
Slide 45: Future Value Opportunities
2020 – FUTURE VALUE OPPORTUNITIES 2021 • Complete Redyard Master Plan, taking into account the opportunity and potential Eastern Pad (129,167 SF), Western Pad (21,528 SF) and integration of the Telstra building
Slide 46: Refining Plans for Cannon Park
REFINING PLANS FOR CANNON PARK Value engineered Master Plan scope to reduce costs and enhance efficiency 2018- • Expand Reading Cinemas - add new TITAN LUXE with DOLBY ATMOS, convert Q1 2019 existing TITAN XC auditorium to PREMIUM with recliners, and expand lobby to add lounge area to serve enhanced
Slide 47: Wellington Is a Thriving Capital City
WELLINGTON IS A THRIVING CAPITAL CITY & NEW ZEALAND’S ULTIMATE CREATIVE URBAN DESTINATION • Wellington City Council’s Convention & Exhibition Centre being built across the street from Courtenay o NZ$179M project o Consent Application filed o ~300,000 visitors expected annually o No parking planned i
Slide 48: Courtenay Central Is Our Main Focus Today
COURTENAY CENTRAL IS OUR MAIN FOCUS TODAY • In January 2019, a decision was made to close most of the building due to seismic concerns • Our Company is now laser focused on re- inventing the Courtenay Central space • Our development principles • Seismic Safety • Value Engineering • Creativity, Curat
Slide 49: Breathe New Life Into Our Legacy Courtenay Space
BREATHE NEW LIFE INTO OUR LEGACY COURTENAY SPACE • We’ll re-imagine this space as a dynamic community hub housing the Courtenay Food Hall, other shops and a best-in-class Reading Cinemas. • Reading Cinemas – “Top-to-Bottom” Renovation • Convert all auditoriums to recliner seating • Create 1-2 TITAN
Slide 50: Manukau/Wiri New Zealand
MANUKAU/WIRI NEW ZEALAND 70.4 ACRES OF UNDEVELOPED LAND IN ONE OF NZ’S STRONGEST INDUSTRIAL MARKETS 2018 • November 2018 - Southern Gateway Consortium (“SGC”) lodged Resource Consent application to complete Stage 1 key infrastructure works required by Auckland City Council before development • Compl
Slide 51: Financial Review
FINANCIAL REVIEW PRESENTED BY GILBERT AVANES Interim Chief Financial Officer & Treasurer
Slide 52: Summary Financial Data
SUMMARY FINANCIAL DATA STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, ($ in thousands, except per share data) 2018 2017 Revenues $ 309,385 $ 279,879 Operating Income 24,078 20,706 Interest Expense, net 6,837 6,194 Income Taxes 3,420 3,380 Net Income Attributable to Common Shareholders 14,366 31,101
Slide 53: Summary Balance Sheet
SUMMARY BALANCE SHEET ($ in thousands) 12/31/2018 12/31/2017 12/31/2016 Cash and Cash Equivalents $ 13,127 $ 13,668 $ 19,017 Receivables 8,045 13,050 8,772 Other Current Assets 9,086 6,757 44,852 Total Current Assets 30,258 33,475 72,641 Operating Property, Net 257,667 264,724 211,886 Investment and
Slide 54: Reading International Debt
READING INTERNATIONAL DEBT Debt Summary AS OF DECEMBER 31, 2018 Corporate and/or ($ in thousands) Expiration Year Contractual Capacity Capacity Used Unused Capacity Property Debt Trust Preferred Securities C 2027 $ 27,913 $ 27,913 $ - U.S. Corporate Office P 2027 9,495 9,495 - Union Square Construct
Slide 55: 2001-2018 Yearly Financial Trend
2001-2018 YEARLY FINANCIAL TREND in US$ $350,000 $500,000 2015 to 2018 Growth $450,000 $300,000 Revenue $51.5M or 20% $400,000 Assets $66.8M or 18% $250,000 Debt (adj for Union Square) $8.9M or 7% Adj EBITDA $10.5M or 26% $350,000 Revenue & Adj EBITDA Assets & Debt $200,000 (000's) $300,000 (000's)
Slide 56: Status of Reading International as an Independent Company
S T A T U S O F R E A D I N G I N T E R N A T I O N A L , I N C . A S A N I N D E P E N D E N T C O M P A N Y In March, the Board reviewed and approved our three-year strategy and resolved that it has no current intention to engage in a sales process. The Board believes that Reading’s prospects for
Slide 57: Thank You
THANK YOU
Reading International — Shareholder Meeting (May 2019) on 6ix