Second Quarter 2025 Earnings Call. Thank you for joining Reading International's Earnings Call to discuss our 2025 second quarter. My name is Andrzej J. Matyczynski, and I am Reading's Executive Vice President of Global Operations. With me are Ellen Cotter, our President and Chief Executive Officer; and Gilbert Avanes, our Executive Vice President, Chief Financial Officer and Treasurer. Before we begin the substance of the call, I will run through the usual caveats. In accordance with the safe harbor provision of the Private Securities Litigation Reform Act of 1995, certain matters that will be addressed in this earnings call may constitute forward-looking statements. Such statements are subject to risks, uncertainties and other factors that may cause our actual performance to be materially different from the performance indicated or implied by such statements. Such risk factors are clearly set out in our SEC filings.
We undertake no obligation to publicly update or revise any forward-looking statements. In addition, we will discuss non-GAAP financial measures on this call. Reconciliations and definitions of non-GAAP financial measures, which are segment operating income, EBITDA and adjusted EBITDA are included in our recently issued 2025 second quarter earnings release released on August 14 on our company's website. We have adjusted, where applicable, the EBITDA items we believe to be external to our business and not reflective of our cost of doing business or results of operations. Such costs could include legal expenses relating to extraordinary litigation and any other items that we can consider to be nonrecurring in accordance with the 2-year SEC requirement for determining whether an item is nonrecurring, infrequent or unusual in nature. We believe that the adjusted EBITDA is an important supplemental measure of our performance.
In today's call, we also use an industry accepted financial measure called Theater Level Cash Flow, TLCF, which is theater level revenue less direct theater level expenses. Average ticket price, ATP, which is calculated by dividing cinema box office revenue by the number of cinema admissions is also used as an accepted industry acronym. We will also use a measure referred to as Food and Beverage Spend Per Patron, F&B SPP, which is a key performance indicator for our cinemas. The F&B SPP is calculated by dividing a cinema's revenues generated by food and beverage sales by the number of admissions at that cinema. Please note that our comments are necessarily summary in nature, and anything we say is qualified by the more detailed disclosure set forth in our Form 10-Q and other filings with the U.S. Securities and Exchange Commission. So with that behind us, I'll turn it over to Ellen, who will review our 2025 second quarter results and discuss our business strategy going forward, followed by Gilbert, who will provide a more detailed financial review. Ellen?
Thanks, Andrzej. Welcome, everyone, to the call today. This past quarter, our teams in Australia, New Zealand, and the United States achieved the best second quarter operating income since Q2 2019, driven by our global cinema and real estate divisions. In line with our strategic goal to reduce debt, we sold our Cannon Park assets in Townsville, Australia for AUD 32 million during the quarter. The proceeds were used to pay off our AUD 20 million NAB bridging facility and reduce our Bank of America debt by AUD 1.5 million. Since June 2020, we have repaid over $102.5 million in debt following the pandemic. The second quarter movie lineup was exceptional, generating hits that appealed to diverse audiences. Notable films included A Minecraft Movie, Lilo & Stitch, Mission: Impossible The Final Reckoning, Thunderbolt, Sinners, the live-action remake of 'How to Train Your Dragon,' and F1 featuring Brad Pitt, which resonated well in our markets, especially in Hawaii.
Our global box office for Q2 2025 helped us achieve these improved results, with total revenues of $60.4 million, up 29% from Q2 2024. Our global operating income increased 138% to $2.9 million from a loss of $7.7 million in Q2 2024. Positive EBITDA at $6.3 million, which includes a gain from the sale of our Cannon Park assets, rose over 276% from a negative $3.6 million in Q2 2024. Global cinema revenue in Q2 2025 reached $56.8 million, up 32% from Q2 2024, representing over 79% of pre-pandemic levels from Q2 2019, alongside the operation of an additional 62 screens in eight theaters. Our global cinema operating income of $5.5 million increased 218% compared to Q2 2024, marking the best performance since Q2 2019. However, global real estate revenues for the second quarter slightly declined to $4.7 million from $5 million in the same period last year. Operating income rose 56% to $1.5 million due to improvements in our U.S.-based live theater business.
It’s important to note that our results could have been even better had the Australian and New Zealand dollar average exchange rates not weakened against the U.S. dollar. As historically about 50% of our revenue comes from international markets, this quarter saw 47% generated from Australia and New Zealand. Q2's cinema revenues and operating income surpassed expectations, boosting our confidence in the theatrical experience. Following a strong start in April 2025 with releases like A Minecraft Movie and Sinners, we saw significantly improved revenue and cash flow across our cinema divisions compared to last April. Lilo & Stitch stood out in May, while action films like Mission: Impossible - The Final Reckoning and Final Destination Bloodlines also drove success. June saw How to Train Your Dragon attract audiences with its storytelling, and F1 provided thrilling entertainment. Although we anticipate a slowdown in Q3, we're optimistic for Q4 due to an exciting and diverse release schedule, including Zootopia 2, Five Nights at Freddy's 2, TRON: Ares, Avatar: Fire and Ash, and the anticipated Wicked: For Good.
Looking ahead to 2026, we are thrilled about upcoming films such as Spider-Man: Brand New Day, Toy Story 5, The Devil Wears Prada 2, Minions 3, Mega Minions, Shrek 5, Supergirl, Super Mario Bros. 2, Moana, Ice Age 6, and Jumanji 3. Our strategic initiatives have also focused on enhancing our food and beverage program. Our Australian F&B SPP reached an all-time high of $8.26 in Q2 2025, while New Zealand’s was at NZD 7.14, the highest ever. In the U.S., we achieved $9.13, the best quarter to date, attributed to improved online and app sales and significant enhancements to guest experiences with themed menus and merchandise offerings. We generated nearly $0.5 million from merchandise sales in the U.S. Additionally, we're expanding loyalty programs to drive attendance and have launched improved membership offerings in various regions. In the U.S., our cinema revenues rose 41% to $30.3 million, with operating income climbing 152% to $2.3 million from a loss of $4.4 million.
Highlights include a record average ticket price of $13.44 and the closure of an underperforming theater in San Diego, as well as successful events at the Angelika in New York City that contributed to cash flow improvements. For our cinemas in Australia and New Zealand, we experienced 24% revenue growth, with Australian revenue reaching $22.9 million and operating income rising significantly. Our New Zealand cinema revenue also increased 24%, with a notable rise in operating income. The second quarter saw record ticket prices in both regions. Looking at our global real estate, total revenue decreased by 7%, but operating income saw a 56% increase, marking our best second quarter since Q2 2018. Our Australian real estate revenues decreased, while New Zealand operating income improved significantly. We successfully executed multiple leases, contributing positively to our portfolio. In the U.S., our real estate business, which includes live theaters, saw revenue and operating income improvements, driven by successful shows and strong attendance.
The Minetta Lane Theatre experienced a significant attendance increase, with popular productions generating good cash flow. Our leasing efforts at 44 Union Square are ongoing, with renewed interest being observed in the area. In summary, despite past challenges, the company has focused on preserving theaters and stockholder equity through closures, cost reductions, and real estate asset sales to significantly cut debt. Our teams are also working on strategic initiatives to enhance revenue and operational efficiency. As conditions improve, we believe Reading is well-positioned for stronger growth moving forward. Thank you all for your dedication and efforts.
Thank you, Ellen. For the quarter ended June 30, 2025, consolidated revenue rose by $13.6 million to $60.4 million compared to the second quarter of 2024. For the six months ending June 30, 2025, consolidated revenue increased by $8.7 million to $100.5 million compared to the same period a year earlier. These increases stem from stronger film releases from Hollywood, including successful titles like Minecraft Movie, Sinners, Lilo & Stitch, Mission: Impossible, and Thunderbolts, although there was a slight reduction in real estate revenue due to losses from asset monetization. The net loss attributable to Reading International Inc. for the quarter decreased by $10.1 million to a loss of $2.7 million compared to a loss of $12.8 million in Q2 2024. The basic loss per share in Q2 2025 fell by $0.45 to $0.12 from $0.57 in Q2 2024. These improvements were largely due to better cinema and real estate performance, a $1 million reduction in interest expense, and a $1.8 million gain from the sale of our Cannon Park Property compared to the previous year.
For the six months ended June 30, 2025, the net loss attributable to Reading International Inc. decreased by $18.6 million, resulting in a loss of $7.4 million compared to a loss of $26 million in the same period last year. The basic loss per share decreased by $0.83 to $0.33 from $1.16 for the first six months of 2024. These results were mainly due to improved performance in various segments, a $1.6 million reduction in interest expenses, and a $9.5 million increase from asset sales, including the sales of Courtenay Central and the Cannon Park Property in 2025, contrasted with a loss on our Culver City office in 2024. Despite these net loss reductions both for the quarter and year to date, they were partially offset by increased tax expenses and other costs, which rose due to foreign exchange differences in the conversion from Australia and New Zealand to the U.S. Total company depreciation and amortization, impairment, and general and administrative expenses for the quarter ended June 30, 2025, went down by $0.5 million to $8.8 million compared to Q2 2024.
For the six months ended June 30, 2025, these expenses decreased by $1.6 million to $17.3 million compared to the same period last year, primarily due to reductions in depreciation and amortization resulting from the sales of our Courtenay Central and Cannon Park assets earlier this year. On July 4, 2025, the One Big Beautiful Bill Act was enacted in the United States, introducing significant changes to tax laws, including permanent extensions of some provisions from The Tax Cuts and Jobs Act and the reinstatement of favorable business tax measures. These include 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures under Section 174, and revised limits under Section 163(j) for business interest expense deductibility. The legislation has multiple effective dates, with some provisions starting in 2025 and others implemented by 2027. We don't expect this bill to materially affect our consolidated financial statements for the year ending December 31, 2025.
In regards to income tax expense for the three months ended June 30, 2025, this increased by $1.4 million compared to the same period last year. The difference between 2025 and 2024 mainly relates to reduced consolidated losses and an increase in the reserve for valuation allowance this year. Income tax expense for the six months ended June 30, 2025, also rose by $1.1 million from the equivalent prior year period for the same reasons. For the second quarter of 2025, our adjusted EBITDA improved by $9.9 million to an income of $6.3 million from a loss of $3.6 million compared to Q2 2024, while for the six months ended June 30, 2025, our adjusted EBITDA increased by $16.7 million to an income of $9.2 million from the prior year. These results were mainly driven by improved operational performance and gains from asset monetization, as previously mentioned. Regarding cash flows, for the six months ended June 30, 2025, net cash used in operating activities decreased by $7 million to $6.2 million compared to the $13.2 million used during the same period in 2024.
This was mainly due to a $13.5 million reduction in net operating losses, partly offset by a $6.5 million decrease in net payables compared to the same period last year. Cash from investing activities during the six months ended June 30, 2025, rose by $30.4 million to $37.8 million compared to $7.4 million provided in the same period in 2024, attributed to higher proceeds from the sale of our Cannon Park Property and Wellington property compared to the prior year's sale of our Culver City office. Cash used in financing activities for the six months ended June 30, 2025, rose by $36 million to $34.9 million compared to a positive cash flow of $1.1 million in the same period last year, primarily due to the repayment of our Westpac debt and NAB bridge facility this year, as opposed to drawing on the NAB bridge facility in the same period last year. Looking at our financial position, total assets as of June 30, 2025, were $438.1 million compared to $471 million on December 31, 2024.
This drop was largely caused by a $3.3 million fall in cash and cash equivalents, which supported our operating activities, along with a $1.9 million decrease in receivables and a $31.9 million reduction in land and property held for sale stemming from the sales of our Cannon Park and Courtenay Central assets. Our total outstanding borrowings as of June 30, 2025, were $173.4 million compared to $202.7 million as of December 31, 2024. Cash and cash equivalents stood at $9.1 million on June 30, 2025. To alleviate liquidity pressures, we are collaborating with our lenders to amend certain debt facilities, and our Newbury Yard property in Williamsport, Pennsylvania is now classified as held for sale. As previously noted, in Q2 2025, we finalized the monetization of the Cannon Park Property in Queensland, Australia for $32 million. The proceeds were used to eliminate our NAB bridge facility debt, permanently pay down AUD 1.5 million on our Australian corporate loan facility, and reduce our Bank of America debt by $1.5 million.
Similar to other monetized assets, we retained a lease over the cinema and recorded a $1.8 million gain from the sale. Recently, we have made headway with our lenders on various financial arrangements. On May 2, 2025, we extended our Emerald Creek Capital loan's maturity date to November 6, 2026, with an option to extend to May 6, 2027, and repaid $500,000 of the loan balance that same month. On May 21, 2025, we sold our Cannon Park property asset and paid off AUD 20 million of the NAB bridge facility, as mentioned earlier. On July 3, 2025, we extended the maturity date of our Bank of America loan to May 18, 2026, adjusting the principal repayment schedule. Then, on July 18, 2025, we extended the maturity date of our Santander loan to June 1, 2026, and paid down $100,000 on that loan at the time of signing. Now, I will turn it over to Andrzej.
Thanks, Gilbert. First, I'd like to thank our stockholders for forwarding questions to our Investor Relations email. As usual, in addition to addressing many of your questions in the prepared remarks from Ellen and Gilbert, we've selected a few additional questions to offer some more insights from management. The first question, which Ellen will address, why was Rotorua land and improvements removed from held for sale in late 2024? In what way did you change your views about the property's long-term prospects? Ellen?
We initially classified Rotorua as an asset held for sale as we believed it could be sold at a reasonable price and could assist in our overall debt reduction strategy. However, this asset, which is located in the regional area of New Zealand and at the time we listed the asset for sale, which was a challenging period for New Zealand commercial real estate, it failed to attract the attention that we thought would merit a sale of the asset. So we officially took it off the market. Today, the asset continues to generate reasonable cash flow for us. So we continue to believe in the merit of the property as part of our overall cinema circuit in New Zealand.
Thanks, Ellen. The next question, what is NAB's appetite for longer-dated facilities given the lower leverage and increased Australian cash flow from cinema segment rebound? Gilbert?
We are currently working with NAB on a longer-term extension. We've been banking with NAB since 2011. And as an institution, we believe we have a good working relationship with them. They are familiar with our industry and our specific assets and businesses. While we can provide no assurance that the long-term extension will be completed, we're working towards having something in place within the next few months.
Thank you, Gilbert. Regarding the property sale, what are the landlord's commitments for the seismic upgrades and their current status compared to those commitments? This pertains to the Courtenay asset in New Zealand. Has the new owner begun the seismic work? When is it anticipated to be ready for Reading's leasehold improvements? What are Reading's projected costs for these leasehold improvements related to the cinema's reopening? What specific upgrades will be made, and how long will it take to complete these improvements once the cinema is confirmed to be seismically safe? Ellen?
The Primeproperty Group in New Zealand and Wellington is the new owner of the Courtenay Central Building. They're advancing their plans to seismically upgrade the former Courtenay Central building. They're currently working with registered engineers to finalize the seismic design with an anticipated upgrade to be completed sometime in 2026. The cinema renovation is going to be a significant transformation for us. We're upgrading to recliner seating. We're creating premium screen experiences and performing a lobby and F&B upgrades. We'll start the fit-out process immediately following the completion of Prime's upgrade work. And while we don't disclose specific budget figures, the investment in the new or in the renovated Reading Cinema at Courtenay Central will be several million dollars in line with our best-in-class standards. The target for reopening is late '26 or early '27. However, as we don't control the development process and the works, we can't give any assurances that we'll actually meet the schedule.
Thanks, Ellen, for that answer. And as usual, we'll finalize the conference call with one final question, which I will field regarding, will there be an Investor Relations Day as promised earlier in the year? While we do not currently have an Investor Relations Day scheduled. However, management is actively evaluating all future Investor Relations opportunities, which include non-deal roadshows, virtual or otherwise, more conference participation as well as a potential Investor Relations meeting. As our COVID recovery and that of our industry continues and the shape of our adapted company becomes more apparent, all the above venues will provide an excellent opportunity to share the future potential growth prospects with both new and existing stakeholders. So that marks the conclusion of this, our second conference call for 2025, a year which continues to see a gradual resurgence of the breadth and depth of the cinematic experience, which we aspire to translate into enhanced value for all our stockholders. We appreciate you listening to the call today. Thank you for your attention and support. We wish everyone good health and safety, and we'll see you at our movie venues.