Reading International Inc · NASDAQ:RDI
Reading International — Shareholder Meeting (November 2017)
65 slides from Reading International's shareholder meeting presentation, Nov 13, 2017
Slide 1: 2017 Annual Stockholders Meeting
2 0 1 7 A N N U A L S T O C K H O L D E R S M E E T I N G November 7, 2017
Slide 2: Safe Harbor Statement
Our comments today may contain forward - looking statements and management may make additional forward - looking statements in response to your questions . Such written and oral disclosures are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 . Altho
Slide 3: EBITDA use and limitations
We use EBITDA in the evaluation of our Company’s performance since we believe that EBITDA provides a useful measure of financial performance and value . We believe this principally for the following reasons : We believe that EBITDA is an accepted industry - wide comparative measure of financial perf
Slide 4: Business Review
B U S I N E S S R E V I E W Ellen Cotter, President & CEO This presentation is intended to summarize the projects on which management is currently working and management's plan for mo vin g our Company forward. Many of the projects are in their early stages and will be subject to various Governmenta
Slide 5: NASDAQ RDI & RDIB key facts
NASDAQ RDI & RDIB Market Cap $363.4 million (as of November 3, 2017) Total Assets $ 418 million* Total Debt $ 150 million* Total Revenues $ 265 million** Total EBITDA $ 33 million*** 5 Cinemas – Steady Cash Flow • 58 theaters/469 screens in US, AU & NZ 1 Real Estate in US, AU & NZ – Building Long Te
Slide 6: Creating long-term stockholder value through entertainment and real estate
We create long - term stockholder value through the opportunistic and synergistic development of entertainment and real estate assets . This value creation comes from the complementary nature of our existing entertainment and real estate portfolio and the pursuit of new opportunities meeting our inv
Slide 7: Business segment and geographic revenue allocation
TODAY’S BUSINESS SEGMENT REVENUE ALLOCATION TODAY’S GEOGRAPHIC ALLOCATION OF TOTAL REVENUE (INCLUDING CINEMA AND PROPERTY) 8%* Global Property Revenues 92%* Global Cinema Revenues Diversification through two different (but synergistic) businesses 10% New Zealand** 52% United States** 37% Australia**
Slide 8: Core values and guiding principles
ENTREPRENEURIAL approach to our business EDUCATED analysis underpins our strategies ENGAGING our cinema & center guests is paramount to our success EXECUTION on time & on budget is key to our three year strategy EXTENDED VIEW translates to having a long - term value strategy EMPATHETIC approach to o
Slide 9: Corporate management team
name/title years in industry years with company experience C O R P O R A T E ELLEN COTTER Chair of Board Chief Executive Officer & President 19 19 DEV GHOSE Executive Vice President, Chief Financial Officer, Treasurer & Corporate Secretary 35+ 3 Executive Vice President and Chief Financial Officer a
Slide 10: Total stockholder return since June 2012
READING INTERNATIONAL RUSSELL 2000NASDAQ CAPITAL MARKET COMPOSITE S&P 500 180% Growth 6/21/2012 11/3/2017 TOTAL STOCKHOLDER RETURN – RDI CLASS A SINCE JUNE 21, 2012: CONTINUOUS INCLUSION ON RUSSELL INDEX* TSR% * 10
Slide 11: US Cinemas
US CINEMAS 10 th largest US exhibitor by box office (as of September 30, 2017) Theaters 27 Screens 245* US Cinema Brands Angelika Film Center - Specialty brand inspired by Angelika Film Center in NYC, one of the highest grossing dedicated arthouses in North America City Cinemas – Circuit in New York
Slide 12: Australian and New Zealand Cinemas
AUSTRALIAN CINEMAS 4 th largest exhibitor in Australia by box office* Theaters 20 Screens 157 ** Australian Cinema Brand Reading Cinemas Geographically Diverse – Five Australian States Victoria – 6 Queensland – 4 New South Wales – 6 South Australia – 2 Western Australia – 2 Own land underlying six R
Slide 13: Global Cinema Strategy
GLOBAL CINEMA STRATEGY: INSPIRING EXPERIENCES THAT MAXIMIZE THE TIME GUESTS SPEND WITH US Build long - term value for our stockholders by maximizing the value in our existing cinema portfolio, while we pursue new opportunities. CREATE inspiring CINEMA EXPERIENCES FEATURE STATE - OF - THE - ART PRESE
Slide 14: 2016 record highs, Global Cinema segment
2016 RECORD HIGHS Strong studio box office, coupled with implementation of Global Cinema Strategy, led Reading’s cinema performance to record highs. Each cinema division (US, AU, NZ) hit records for 2016 in each of these important financial metrics: Box Office Revenue Food & Beverage Revenue Total R
Slide 15: Stronger studio film supports strategy 2017-2019
• 2015 & 2016 record - setting industry box office • Q4 2017 film slate encouraging • 2018 - 2019 film slate looks promising • Audiences/Studios/Directors attracted to Premium Auditorium Experiences STRONGER STUDIO FILM SUPPORTS GLOBAL CINEMA STRATEGY: Q4 2017 - 2019 2019 2018
Slide 16: Specialty film supports Angelika brand
ANGELIKA BRAND RELIES ON SPECIALTY FILM (INDEPENDENT, FOREIGN LA NGUAGE, DOCUMENTARY) 2018 – 2019 – US CINEMAS – SPECIALTY FILM WILL CONTINUE TO SUPPORT ANGELIKA BOX OFFICE Interest in independent films remains strong. Established companies continue to acquire films appealing to our niche Angelika a
Slide 17: Hospitality-styled comfort and service, US cinemas
OFFER HOSPITALITY STYLED COMFORT & SERVICE – US CINEMAS PERCENTAGE OF US CINEMAS FEATURING LUXURY RECLINER SEATING* Today 13% of all US screens (31 screens total) By end of 2017 30% of all US screens (74 screens total) By end of 2018 47% of all US screens (115 screens total) By end of 2019 64% of al
Slide 18: Hospitality-styled comfort and service, AU/NZ cinemas
OFFER HOSPITALITY STYLED COMFORT & SERVICE – AU/NZ CINEMAS Today 14% of all AU/NZ screens (27 screens total) By end of 2017 17% of all AU/NZ screens (34 screens total) By end of 2018 23% of all AU/NZ screens (46 screens total) By end of 2019 28% of all AU/NZ screens (63 screens total) * Statistics d
Slide 19: State-of-the-art presentation drives box office
STATE - OF - THE - ART PRESENTATION DRIVES READING BOX OFFICE % of Cinemas with at least one Premium Screen Today 24% of all cinemas* 15% in US 32% in AU/NZ By end of 2017 29% of all cinemas* 22% in US 34% in AU/NZ By end of 2018 36% of all cinemas* 30% in US 41% in AU/NZ By end of 2019 41% of all c
Slide 20: Craft food and beverage options, US cinemas
Elevated Food & Drink Menu (including Liquor, Beer or Wine) • 33% of all US theaters today US cinemas serving elevated Food & Drink menu and/or Liquor, Beer or Wine menu • By end of 2017 - 44% • By end of 2018 - 52% • By end of 2019 - 56% * Statistics include one managed cinema CRAFT FOOD & BEVERAGE
Slide 21: F&B per capita, US cinemas
CRAFT FOOD & BEVERAGE OPTIONS TO MATCH OUR MARKETS – US CINEMAS F&B Capita – US Cinemas 8.0% Growth 7.7% Growth 6.7% Growth 6.4% Growth Reading US Cinemas Regal Cinemas Cinemark US AMC US Q3 2017 Q2 2017 Q1 2017 2016 Q3 2017 Q2 2017 Q1 2017 2016 Q3 2017 Q2 2017 Q1 2017 2016 Q2 2017 Q1 2017 2016 $4.4
Slide 22: Craft food and beverage options, AU/NZ cinemas
CRAFT FOOD & BEVERAGE OPTIONS TO MATCH OUR MARKETS – AU/ NZ CINEMAS By end of 2017 23 Gold Lounge auditoriums 13 Premium auditoriums By end of 2019 33 Gold Lounge auditoriums 24 Premium auditoriums By end of 2018 23 Gold Lounge auditoriums 20 Premium auditoriums Growth in AU/NZ Cinema F&B Revenue dr
Slide 23: Create uniquely designed venues
CREATE UNIQUELY DESIGNED VENUES Angelika at Carmel Mountain Voted San Diego’s Best Movie Theater Best Entertainment Venue 2016 & 2017 Our emphasis on the creation of engaging physical environments and spaces, which connect guests to our brands and foster longer and repeat visits, is and continues to
Slide 24: Reinvesting in existing cinema portfolio
REINVESTING IN EXISTING CINEMA PORTFOLIO Cal Oaks (in Murrieta, CA) Closed for renovation. Re - opens December 2017. • Luxury recliner seats in all 17 auditoriums • Two TITAN LUXE auditoriums • Full F&B Menu with Craft Beer, Wine & Cocktails • Reserved Seating via website & new Reading App
Slide 25: Renovated Reading Cinemas Cal Oaks rendering
Architectural rendering of renovated Reading Cinemas – Cal Oaks – Re - opens late 2017 REINVESTING IN EXISTING CINEMA PORTFOLIO
Slide 26: First US dine-in concept launching Q1 2018
26 • Spotlight is the first Dine - In concept in US Cinema circuit • Waiter service before movie begins, full F&B menu • Luxury Recliner Seating • Focus is on Customer Service • Six auditoriums each with under 40 recliner seats FIRST U.S. DINE - IN CONCEPT TO LAUNCH Q1 2018 AT READING CINEMAS, CAL O
Slide 27: Price our tickets with value in mind
PRICE OUR TICKETS WITH VALUE IN MIND VALUE GUIDES OUR TICKET STRUCTURES & PRICING Australia/New Zealand • Innovative Value Pricing model in AU/NZ generated admission growth United States • 2017 - Implemented form of Value Pricing in San Diego and Hawaii
Slide 28: Engage guests with convenient digital channels
ENGAGE GUESTS WITH CONVENIENT DIGITAL CHANNELS • Increase Online Convenience Fee Revenue o 2016 – Generated US$1.9 million globally o TTM 2017 – Online convenience fee revenue – US$2.6 million • Ticketing Apps o Consolidated Theatres ticketing app launched Q3 2017 o Other US branded ticketing apps t
Slide 29: Curate film and event programming
• Generate incremental box office through continued focus on Alternative Content Program (including Repertory Events) • Focus on Japanese anime, cultural events, music movies booked in advance and marketed across our own platforms (no incremental advertising spend) • Repertory Programming coupled wi
Slide 30: Disciplined approach to new cinema opportunities
CONTINUE DISCIPLINED APPROACH TO PURSUING NEW OPPORTUNITIES Today, our Board of Directors has approved five new Reading Cinemas (34 new screens) to be built in AU/NZ. And, we continue to explore new build opportunities in AU/NZ. • Newmarket Village (8 screens, 2 Gold Lounge auditoriums, TITAN LUXE)
Slide 31: Investing in our cinema portfolio
INVESTING IN OUR CINEMA PORTFOLIO US Cinemas 2017 – invested $18M 2018 - 2019* Expected to invested $30M to $31M Australian Cinemas 2017 – invested $8M ** 2018 - 2019* Expected to invested $13M to $15M ** New Zealand Cinemas 2017 – invested $1M ** 2018 - 2019* Expected to invested $7M to $8M ** *201
Slide 32: Reading Property
32 READING PROPERTY READING INTERNATIONAL INC
Slide 33: Global Real Estate Strategy
GLOBAL REAL ESTATE STRATEGY Build long - term value for our stockholders by maximizing the value in our existing property portfolio, while we pursue new real estate opportunities meeting our investment criteria. CREATE SPACES (INTERIOR & EXTERIOR) THAT INSPIRE AND CONNECT COMMUNITIES REPOSITION & RE
Slide 34: Australian real estate portfolio today
• By December 2017, four Australian Entertainment Themed Centers (“ETC”) anchored by Reading Cinemas • Each of the four ETCs in Australia are considered a Value Creation Project • By December 2017, 82 third party tenants in Australia across eight properties • 540,931 leaseable square feet in Austral
Slide 35: Net leasable area in AU portfolio to increase 18.7%
TOTAL NET Leasable Area in AU Real Estate Portfolio WILL INCREASE BY 18.7% Between June 2016 – Q1 2018
Slide 36: Value Creation Project: Newmarket, Brisbane
VALUE CREATION PROJECT: NEWMARKET, BRISBANE, QUEENSLAND In August 2016, the Board of Directors approved further enhancing the value of our Newmarket asset by: • Adding Reading Cinema • Adding approx. 10,000 SF of retail space • Adding mezzanine parking deck • Upgrading Common Areas
Slide 37: Newmarket project updates
• State - of - the - art Reading Cinema with TITAN LUXE & Gold Lounge offer opens December 2017 for Star Wars • New dining precinct features curated mix of quality Brisbane based F&B operators opens December 2017 • Common area upgrades and rebranding completed by end of 2017 • During 2017, completed
Slide 38: Newmarket marketing and growth opportunity
• Integrated Community - based marketing impactful to date • Recent Fitness Festival included free children’s Yoga Classes and wellness workshops • Newmarket Village improvements lead to stronger lease renewals • Future Growth Opportunity – Office Building at 16 - 20 Edmonstone Street
Slide 39: Value Creation Project: Redyard, Auburn, Sydney
Today • Approx. 132,000 SF of gross leasable area • Reading Cinemas is anchor tenant • 75,000 SF of third party leasable space with 84% currently leased • Approx. 730 parking spaces – garage & on - grade VALUE CREATION PROJECT: REDYARD IN AUBURN, SYDNEY, NEW SOUTH WALES Located in a multi - cultural
Slide 40: Redyard upgrades and growth opportunities
VALUE CREATION PROJECT: REDYARD IN AUBURN, SYDNEY, NEW SOUTH WALES By the end of Q2 2018, complete Common Area upgrade • Shaded areas, interactive water feature & improved vegetation & finishes • Improved center signage • Improved public amenities Future Growth Opportunities • We obtained a permit t
Slide 41: Value Creation Project: Cannon Park, Townsville 2017
VALUE CREATION PROJECT: CANNON PARK, TOWNSVILLE, QUEENSLAND 2017 Completed certain Pre - Development Work • Expanding cinema o Mid 2017 – Development Application to expand Reading Cinemas approved o Adding Gold Lounge offer – 2 Gold Lounge auditoriums with recliner seating & waiter service o Mid 201
Slide 42: Cannon Park 2018-2019
VALUE CREATION PROJECT: CANNON PARK, TOWNSVILLE, QUEENSLAND 2018 • Explore short term pop - up leases for vacancies as we transition center • Develop plans for welcoming common areas o Common areas to focus on community, connection and climate o Connect two centers making one seamless experience 201
Slide 43: New Zealand real estate portfolio
NEW ZEALAND REAL ESTATE PORTFOLIO One Value Creation Project • Courtenay Central - ETC in Wellington, New Zealand anchored by Reading Cinema Five Operating Properties • Property under five of our Reading Cinemas in NZ (including ETC) One Future Value Realization Opportunity • 70 acres of undeveloped
Slide 44: Courtenay Central: opportunity to re-think project
COURTENAY CENTRAL – OPPORTUNITY TO RE - THINK ENTIRE PROJECT • November 2016 – Kaiokora Earthquake damaged Car Park while it was being seismically strengthened. • January 2017 – Damage results in demolition of Car Park. • Q2 2017 - Courtenay Central center and street level parking lot re - opened fo
Slide 45: Courtenay Central plans and Wellington market
COURTENAY CENTRAL – OPPORTUNITY TO RE - THINK ENTIRE PROJECT WELLINGTON MARKET IMPROVES • Peter Jackson’s Movie Museum expected to open across the street from us • Wellington’s first Convention Center is also expected to open across the street CAR PARK • Car Park will be reconstructed • Estimated to
Slide 46: The Courtyard pop-up concept
• Curated mix of local F&B operators – Street food, craft beer & cocktails in pop up environment • Features Wellington's first ever venue dedicated to improv • Features creative pop up retail & community based entertainment • Minimal investment covered by pop up rental income • Keeps space compellin
Slide 47: Manukau land and Auckland industrial market
• Q4 2016 – Reading, together with Southern Gateway partners, achieve “light industrial zoning” for 64 acres. • Adjacent 6.4 acres on McLaughlins Rd. is currently zoned heavy industrial. • Neighboring landowners include: (i) leading industrial developers in Auckland, (ii) the Airport and (iii) Auckl
Slide 48: US real estate portfolio
US REAL ESTATE PORTFOLIO Union Square Building in New York City Cinemas 1, 2 & 3 Building in New York City 2 Value Creation Projects 24,000 SF Executive Office Building in Culver City, CA 1 Operating Property 202 acre parcel of undeveloped land in City of Coachella, CA zoned for residential and high
Slide 49: 44 Union Square construction progress
Construction well underway • Structural demolition completed • Excavation of basement and foundation expected completion – Q 4 2017 • Concrete superstructure (floors, columns, beams) – Commences Q 4 2017 • Iconic Glass Dome currently being fabricated and stored off site $57.5 million in construction
Slide 50: 44 Union Square retail
Retail (approximately 30,000 SF) • Ground floor, second floor and cellar • NYC high street retail opportunity - Exceptional visibility with full building branding potential & 229’ of wraparound frontage per floor • High quality retail tenants have leases expiring in area • In discussions with high q
Slide 51: 44 Union Square office
Office (approximately 43,000 SF) • Third – Sixth floors • Midtown South NYC submarket – strong for office leasing • Office leasing marketing launched by Newmark Q3 2017 • High quality office tenants visiting site VALUE CREATION PROJECT 44 Union Square – New York City – An irreplaceable NYC property
Slide 52: Marketed on the NASDAQ MarketSite in Times Square
Marketed in the heart of Times Square on the NASDAQ MarketSite Week of November 6, 2017
Slide 53: Cinemas 123 New York City joint development
• This development in the heart of midtown Manhattan is in the early stages of development • Company’s minority partner approved re - development of the property • Adjacent property owners (corner of 60 th & 3 rd ) and Company are conducting a joint feasibility study of the combined properties • Eva
Slide 54: Reading Viaduct, Philadelphia properties
FUTURE VALUE REALIZATION OPPORTUNITY: READING VIADUCT – PHILADELPHIA PROPERTIES • The Reading Viaduct is 3,200 feet in length and averages 70 feet wide. • The City is currently developing a Rail Park on the elevated rail track adjacent to the Reading Viaduct. • To date, these properties have not bee
Slide 55: Coachella, California
FUTURE VALUE REALIZATION OPPORTUNITY: COACHELLA, CALIFORNIA • 50 % managing member interest in approximately 202 acres of undeveloped property acquired in 2012 . • Located immediately south of Interstate 10 and east of Highway 86 in Coachella Valley . According to 2015 CalTrans data, approx . 54 , 0
Slide 56: Corporate governance enhancement
CORPORATE GOVERNANCE ENHANCEMENT Third Quarter 2016 • Adopted improved Amended & Restated Whistleblower Policy & Procedures • Adopted first ever Insider Trading Policy and Supplemental Policy Concerning Trading in Company securities by certain designated persons Fourth Quarter 2016 • Adopted more co
Slide 57: Governance enhancement, stock buyback and investor relations
OTHER CORPORATE GOVERNANCE ENHANCEMENT AND IMPROVED INVESTOR RELATIONS Enhanced Corporate Governance and Alignment with Stockholders • March 2016 – Adopted a charter for our Compensations Committee requiring all members to satisfy NASD “Independent Standards” and overhauled Director and Executive co
Slide 58: Financial Review
F I N A N C I A L R E V I E W presented by Dev Ghose Executive Vice President & Chief Financial Officer Architectural rendering of South City Square, major mixed use development in Brisbane. RDI leasing an 8 screen Reading Cinema, expected to open 2020.
Slide 59: Summary financial data, year ended December 31
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, ($ in thousands, except per share data) 2016 2015 (Restated) Revenues $270,473 $257,865 Operating Income 20,311 23,696 Interest Expense, net 6,868 8,572 Income Taxes 4,020 5,148 Net Income Attributable to Common Shareholders 9,403 23,110 Earnings Per S
Slide 60: Summary financial data, nine months ended September 30
STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, ($ in thousands, except per share data) 2017 2016 Revenues $ 207,954 $ 203,022 Operating Income 16,929 17,392 Interest Expense, net 5,310 5,190 Gain On Sale Of Assets 9,417 393 Gains On Insurance Recoveries 9,217 - Income Taxes 8,291 4,222 Net
Slide 61: Balance sheet summary
($ in thousands) 09/30/2017 12/31/2016 12/31/2015 (Restated) Cash and Cash Equivalents $ 8,896 $ 19,017 $ 19,702 Receivables 36,191 8,772 10,036 Other Current Assets 5,498 44,852 7,183 Total Current Assets 50,585 72,641 36,921 Operating Property, Net 225,631 211,886 210,298 Land Held for Sale - - 37
Slide 62: Reading International debt and EBITDA reconciliation
Reconciliation of EBITDA to Net Loss READING INTERNATIONAL DEBT Source: Form 10Q and Press Release for the quarter ended September 30th, 2017. (1) The borrowings are denominated in foreign currency. The contractual capacity and capacity used were translated into U.S. dol lar s based on the applicabl
Slide 63: 2001-2017 yearly financial trend
2001 – 2017 YEARLY FINANCIAL TREND in US$ Notes: Data presented above have been adjusted to reflect adjustments, if any, to prior years based on the latest K’s and Q’s . Gain on sales of assets for 2015 and 2016 were $11.0M and $0.4M respectively, and have been included for purposes of determining A
Slide 64: In conclusion
We create long - term stockholder value through the opportunistic and synergistic development of entertainment and real estate assets. Our cinema business offers a stable cash flow . . We are re - investing in our existing cinema portfolio by implementing our Global Cinema Strategy . . We are improv
Slide 65: Thank You
T H A N K Y O U
Reading International — Shareholder Meeting (November 2017) on 6ix