Thank you for joining Reading International's earnings call to discuss our 2025 third quarter results. My name is Andrzej Matyczynski, and I'm 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 third quarter earnings release released on November 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 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 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 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 the 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 exposure 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 third quarter results and discuss our business strategy going forward, followed by Gilbert, who will provide a more detailed financial review. Ellen?
Thank you, Andrzej, and welcome to everyone on the call today. As we anticipated, and in line with global cinema industry trends, the overall box office was below last year's third quarter, despite certain titles performing strongly in Q3 2025. Our global total revenue of $52.2 million fell by 13% compared to Q3 2024, primarily due to this year's slate of movies not matching last year's standout titles, which included record-breaking releases like Deadpool & Wolverine, Despicable Me 4, Beetlejuice Beetlejuice, and It Ends with Us. Despite this quarter's revenue results, we made progress on several strategic initiatives, reflected in our key income metrics for Q3 2025. Throughout our global operations, including cinema and real estate, we effectively managed our expenses, resulting in a global operating loss of $329,000, which improved by 4%. Our positive EBITDA reached $3.6 million, a 26% increase from Q3 2024, marking five consecutive quarters of positive EBITDA.
Our net loss of $4.2 million decreased by 41%, representing the strongest third quarter result since Q3 2019. Throughout the quarter and the year, our operating teams focused on enhancing our overall profitability. In the U.S., we closed a 14-screen cinema in San Diego in Q2 2025, eliminating a cash loss and resulting in a 7.3% decrease in our U.S. screen count. We have limited influence over the quantity and revenue potential of the movies we show; however, in areas where we have more control, such as food and beverage and alternative content programming, we achieved record results. Globally, we are collaborating with our landlords to reduce overall occupancy costs, acknowledging that attendance has not returned to pre-pandemic levels while our operating expenses have generally risen. Our U.S. Real Estate division delivered its best third-quarter operating income since Q3 2014, largely due to the improved performance of our live theater assets in New York City.
We have succeeded in reducing our global debt from $202.7 million to $172.6 million, a decrease of about 15% since December 31, 2024. Our interest expense also dropped by $2.6 million or 17% compared to the previous year, following an overall debt reduction of $112.3 million since December 2020. Historically, around 50% of our revenues have come from Australia and New Zealand, and in Q3 2025, 49% of our revenues were generated internationally. Our quarterly revenue was adversely affected by the devaluation of the Australian and New Zealand dollars against the U.S. dollar, which fell by 2.3% and 3.1% respectively compared to Q3 2024. Despite a challenging quarter, we remain positive about the cinema business, as evidenced by global presales for Wicked: For Good nearing $850,000, one of the highest numbers we've seen in years. Following Wicked: For Good, we have several promising releases such as Zootopia 2, Five Nights at Freddy's, Avatar: Fire and Ash, SpongeBob SquarePants movie, and Anaconda.
We expect titles appealing to older audiences like Marty Supreme, Song Sung Blue, and The Housemaid will add compelling options this holiday season. Looking ahead to 2026, we are excited about our film slate, which features major franchise releases such as Spider-Man: Brand New Day, Toy Story 5, The Devil Wears Prada 2, Minions 3, Mega Minions, Shrek 5, Supergirl, The Super Mario Bros. Movie 2, Moana, Ice Age 6, and Jumanji 3. Many industry experts predict that 2026 could be a blockbuster year at the box office. With five consecutive quarters of positive EBITDA, our best net loss performance for a third quarter since Q3 2019, and a solid balance sheet supported by a strong real estate and cinema portfolio, we believe the company is well-positioned for a stronger 2026 and beyond after facing a challenging last five years. Some may question if we remain committed to our dual-business, multi-country strategy following the monetization of various assets, and the answer is yes.
While we've strategically sold several real estate assets to meet liquidity needs due to the pandemic and the unprecedented combination of writers and actors' strikes disrupting movie supply, we believe these actions were necessary and beneficial. We've targeted assets that were often negative cash flow or did not substantially contribute to our finances after debt service. Our California headquarters building was sold to reduce administrative costs, and we've successfully managed to work remotely for the past two years. In the U.S., we've reduced our cinema count by six theaters, all of which have been negative cash flow since the pandemic. We still maintain a solid core of cinemas and real estate assets, successfully navigating these turbulent times without any government assistance, legal remedies, or stockholder dilution. Now let's examine our Q3 2025 global cinema business compared to Q3 2024.
Our global cinema revenues decreased by 14% to $48.6 million, and our operating income decreased by 21% to $1.8 million. As mentioned, the overall weaker performance was expected and aligned with industry trends. This year's movie lineup did not match last year’s successful slate, particularly with the strong performance of Deadpool & Wolverine in all three countries. Unfavorable foreign exchange movements and the reduction of 7.3% in our U.S. screen count due to the closure of an underperforming cinema also impacted our results. However, looking at year-to-date results through September 30, 2025, we saw a slight increase in global cinema revenues and a 142% rise in operating income, reflecting stronger performance due to Q2 2025 and our strategic focus. Let me highlight some key strategic initiatives that supported our results throughout 2025. First, our food and beverage program is a significant focus area.
In Australia, our Q3 2025 food and beverage spend per person reached AUD 8.05, the highest third quarter ever. In New Zealand, it was NZD 6.75, also a record. In the U.S., it reached $8.74, the highest third quarter ever and second highest quarter ever when fully operational, excluding pandemic closures. Our U.S. F&B spend per person exceeds the results of other major publicly traded exhibitors. These strong sales were boosted by online and app food and beverage sales and the ongoing popularity of our movie-themed menus, such as the Spicy-Saurus Flatbread in the U.S. and the Jurassic Combo in Australia. Additionally, in the U.S., we generated over $350,000 in revenue from movie-themed merchandise, with items like our Superman Totem popcorn container being particularly popular. We are also enhancing guest experiences through loyalty programs and launching new reward programs in the coming months.
Our revamped Reading Rewards program in Australia and New Zealand has seen growth, with over 363,000 members representing an 8% increase since last quarter. Since launching our paid memberships in late Q4 2024, we've signed up over 17,400 paid memberships, marking a 16% increase since last quarter. In December 2025, we are launching a new free-to-join rewards and premium membership program in Hawaii and select U.S. Reading cinemas. Our existing Angelika membership program currently has 171,000 members across eight locations in the U.S., with plans to launch a premium monthly membership early next year. A crucial initiative for our global executive team has been working with cinema landlords to adjust occupancy costs in line with the changing economic environment. In our negotiations, we emphasize that while attendance has not returned to pre-pandemic levels, most of our operational costs have risen, and we have limits on raising ticket and food and beverage prices.
Now, looking at U.S. cinema results for Q3 2025, revenues decreased by 10% to $25.1 million compared to Q3 2024, while our operating loss improved by 92%, down to $100,000 from $1 million. Notable milestones include an average ticket price of $13.13, the second highest third quarter ever, which is particularly impressive given the success of our discount Tuesdays, branded Mahalo Holidays in Hawaii and Half-Price Tuesdays on the U.S. Mainland. Our gross box office from alternative content and signature series programming achieved the highest third quarter box office to date, benefiting from the popularity of the 2-day KPop Demon Hunters Sing-Along event from Netflix, which resonated well with audiences. Regarding the status of specialty titles in 2026, early indications show that the box office for the Angelika New York has surpassed the same period last year. Top grossing films include Wes Anderson's Phoenician Scheme, Sorry, Baby from Q3, and Guillermo Del Toro's Frankenstein, released by Netflix in 35mm.
Given these positive trends, we expect a similar performance in the art house and specialty film sector in 2026. Oscar contender Kokuho from Director Lee Sang-il will be released at the Angelika, following impressive presales during its qualifying run. We also look forward to the release of No Other Choice from Director Park Chan-wook and more specialty films like A Private Life starring Jodie Foster and The Drama featuring Zendaya and Robert Pattinson from A24. On our capital expenditures for 2026, we are currently renovating our Reading Cinemas in Bakersfield, California, expected to complete by January 2026. We are adding recliners to our IMAX screen, the only IMAX with recliners within a 100-mile radius of Bakersfield, and a new premium screen, TITAN LUXE, with Dolby Atmos sound and heated recliners which will premiere with Wicked: For Good. We are also adding recliners to eight additional screens, three of which are already opened.
We plan to further enhance our offerings at the Angelika in Mosaic, Fairfax, Virginia with TITAN LUXE and recliners by the end of 2026, and throughout next year, we aim to refurbish existing recliner seats damaged during the pandemic. By the end of 2026, 68% of our U.S. screens will feature recliners while 44% will have premium screens. Turning to Australia and New Zealand, our revenue trends aligned with industry patterns in Q3 2025 when compared to Q3 2024. Australian cinema revenue decreased 17% to $20.5 million, and operating income dropped 38% to $1.8 million. In New Zealand, revenue fell 23% to $2.9 million, with a dramatic 96% decrease in operating income to $10,000. Additional milestones in Australia include achieving an ATP of $15.44, the highest ever for Q3, and securing a major ancillary revenue sponsorship with a prominent telco for our "turn your cell phone off" naming rights agreement through March 2027.
In New Zealand, we also reached a highest-ever ATP of $13.65 for Q3. Regarding CapEx projects in Australia and New Zealand for 2026, we plan to renovate our Reading Cinemas at Courtenay Central in Wellington with recliners in all theaters, at least two premium screens, and improved food and beverage offerings, completing the renovation by 2027. In Australia, we intend to add a TITAN LUXE with Dolby Atmos to another Reading cinema in 2026; by the end of the year, 36% of our screens will have recliners, and 59% of our international theaters will feature premium screens. Now turning to our global real estate business, which includes both third-party rental income and our live theater operations in New York City. In Q3 2025, total global real estate revenues decreased 7% to $4.6 million, and total income remained flat at $1.4 million. The decline was largely due to the loss of property level cash flow from third-party rents at the properties sold earlier in 2025 to enhance liquidity.
In Australia, we noted a 22% reduction in real estate revenue to $2.4 million and a 35% drop in income to $1 million. Our New Zealand real estate revenue fell by 41% to $221,000, while operating income substantially increased by 169% to $90,000 from an operating loss of $130,000 a year ago. As of September 30, 2025, our third-party tenant portfolio in Australia and New Zealand comprises 58 tenants, focused mainly on Newmarket Village in Brisbane and Belmont Common in Perth, with a strong occupancy rate of 98%. Notably, our combined third-party tenant sales from Australian real estate totaled AUD 25.9 million. We completed five lease transactions with existing tenants, reflecting tenant retention and portfolio stability. Recently, we also signed an agreement to sell our Napier property in New Zealand for NZD 2.5 million, subject to conditions including due diligence. In our U.S. real estate sector, which includes our two live theaters in New York City, we saw a significant 35% revenue increase and a 433% rise in operating income to $253,000.
Our live theater segment performed exceptionally well, aided by critically acclaimed productions and audience favorites. At Minetta Lane Theatre, attendance surged over 450%, and theater-level cash flow grew by more than 140%. The success of shows from Audible, including the musical Mexodus, has contributed to these strong results, with Audible extending their license through March 2027. Following STOMP’s departure, the Orpheum theater has also been a high-demand venue for producers, hosting strong productions such as Ginger Twinsies and the upcoming show from TikTok duo Cost N' Mayor in January 2026. We have ongoing discussions regarding leasing opportunities at 44 Union Square and are evaluating the local leasing environment, which has shown substantial improvement. Our Newberry Yard property in Williamsport, Pennsylvania is currently under review, and we are exploring marketing strategies to attract potential buyers.
The City of Philadelphia has expressed an interest in condemning portions of our Reading Viaduct for a public park, but as per Pennsylvania law, they would need to compensate us at fair market value. We continue to defend ourselves against this claim and remain committed to protecting our assets. To summarize, despite the challenges faced over the past five years and an underwhelming third quarter, we have focused on protecting our theaters and sustaining shareholder equity. We’ve strategically closed underperforming theaters, optimally managed costs, and sold select real estate assets to improve liquidity while also significantly reducing our debt. Our cinema teams have implemented initiatives to boost revenue and achieve cost efficiency, complemented by our real estate teams securing a robust base of tenants. With decreasing interest expenses and a promising film lineup ahead, we believe our company is poised for growth and returning to profitability through the end of 2026 and beyond.
I want to express our heartfelt appreciation to the entire management team, our Board, and all employees for their dedication and efforts in moving the company forward and pursuing its long-term vision. Thank you.
Thank you, Ellen. Consolidated revenue for the quarter ended September 30, 2025, decreased by $7.9 million to $52.2 million when compared to the third quarter of 2024. This decrease was due to decreased cinema revenue from lower attendance in all 3 countries as a result of weaker overall movie slate released from the Hollywood studios in the third quarter of 2025 compared to the same period in 2024 and the reduction in screen count due to closure of one of our cinema complexes in San Diego, California. These decreases in revenues were compounded by the decline in real estate rent revenue in Australia and New Zealand due to the sale of Cannon Park and Courtenay Central and the weakening of Australia and New Zealand foreign exchange rate against the U.S. dollar, partially offset by the improved live theater rental and ancillary income. Consolidated revenue for the 9 months ended September 30, 2025, increased slightly by $0.8 million to $152.7 million when compared to the same period of 2024.
This increase is due to improved box office from better movie slates as Lilo & Stitch and Minecraft movies released during the second quarter of 2025 improved U.S. food and beverage revenue and better live theater rental and ancillary income, which was partially offset by a decrease in real estate rental revenue and decrease in food and beverage revenue in Australia and New Zealand. Net loss attributable to Reading International Inc. for the quarter ended September 30, 2025, decreased by $2.9 million to a loss of $4.2 million compared to a loss of $7 million in Q3 2024. Q3 2025 basic loss per share improved by $0.13 to a basic loss per share of $0.18 compared to a basic loss per share of $0.31 for Q3 2024. These improved results were partially due to a $1.1 million reduction in interest expense, a $1.2 million increase in other income and a $0.7 million reduction in depreciation and amortization expense compared to the same period in the prior year.
Net loss attributable to Reading International Inc. for the 9 months ended September 30, 2025, decreased by $21.1 million from a loss of $33.1 million to a loss of $11.6 million when compared to the same period in the prior year. Basic loss per share improved by $0.90 to a loss of $0.51 compared to a loss of $1.48 for the first 9 months of 2024. These results were primarily due to strengthened segment results, a $2.6 million reduction in interest expense and the $9.7 million increase in gain on sale of assets as a result of gain on selling our Courtenay Central and Cannon Park properties in 2025 compared to a loss on selling our previously owned Culver City office in 2024. Our total company depreciation, amortization impairment and general and administrative expenses for the quarter ended September 30, 2025, decreased by $1 million to $7.9 million compared to Q3 2024. For the 9 months ended September 30, 2025, it decreased by $2.6 million to $25.2 million compared to the same period in the prior year.
Income tax expense for the 3 months ended September 30, 2025, decreased by $0.4 million compared to the equivalent prior year period. The change between 2025 and 2024 is primarily related to a decrease in reserve for valuation allowance in 2025. Income tax expense for the 9 months ended September 30, 2025, increased by $0.8 million compared to the equivalent prior year period. The change between 2025 and 2024 is primarily related to a decrease in consolidated loss in 2025. For the third quarter of 2025, our adjusted EBITDA increased by $0.7 million to an income of $3.6 million from an income of $2.8 million compared to Q3 2024. This increase was primarily due to an increase in other income. For the 9 months ended September 30, 2025, our adjusted EBITDA increased by $17.4 million to an income of $12.8 million compared to the same prior year period. This increase was due to improved operational performance through more efficient management of operating expenses and gains from asset monetization as mentioned previously.
Shifting to cash flow for the 9 months ended September 30, 2025, net cash used in operating activities decreased by $6 million to $5.9 million compared to the cash used in 9 months ended September 30, 2024, of $11.8 million. This was primarily driven by a decrease in net operating loss, partially offset by a decrease in net payables. Cash provided by investing activities during the 9 months ended September 30, 2025, increased by $32.3 million to $37.3 million compared to the cash provided in the 9 months ended September 30, 2024, of $5 million. This was due to proceeds from the sale of our Cannon Park property assets in May 2025 and the Wellington property assets in January 2025 compared to the proceeds from the sale of our Culver City office in February 2024. Cash used in financing activities for the 9 months ended September 30, 2025, increased by $38.3 million to $36.2 million compared to the cash provided in 9 months ended September 30, 2024, of $2.1 million.
This was primarily due to the paydown of our Westpac debt, Bank of America debt and NAV facility in 2025 as discussed previously, compared to the NAV bridge facility drawn in the same period of 2024. Turning now to our financial position. Our total assets on September 30, 2025, were $435.2 million compared to $471 million on December 31, 2024. This decrease was driven by a $4.3 million decrease in cash and cash equivalents from which we funded our ongoing business operations, a $31.9 million decrease in land and property held for sale due to the sale of our Cannon Park and Courtenay Central assets. As of September 30, 2025, our total outstanding borrowings were $172.6 million compared to $202.7 million on December 31, 2024. The debt reduction was primarily funded by the net proceeds from the sale of our 2 major property assets, Cannon Park in Australia and Courtenay Central in New Zealand.
Our cash and cash equivalents as of September 30, 2025, were $8.1 million. Further to address liquidity pressure on our business, we continue to work with our lenders to amend certain debt facilities, and we continue to have our Newbury Yard, Williamsport, Pennsylvania property classified as held for sale. During the third quarter and the beginning of the fourth quarter of 2025, we made progress with our lenders on the following financing arrangements. On July 3, 2025, we extended the maturity date of our Bank of America loan to May 18, 2026, and modified the principal repayment schedule. On July 18, 2025, we extended the maturity date of our Santander loan, which is the loan on our live theater assets in New York City to June 1, 2026. We also paid down $100,000 on the loan at signing. On November 12, 2025, we extended the maturity of our National Australia Bank loan to July 31, 2030, and modified the principal repayment schedule. On November 13, 2025, we extended the maturity of our Valley National Bank loan to October 1, 2026.
Thank you, 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 additional insights from management. The first such question, which Ellen will address, there was a mention in the 10-Q about the Noosa Australian cinema development project still planned for 2027 or has it been deferred indefinitely? What is the current budget and expected ROI for this project? Ellen?
Yes. We're still expecting the Reading Cinema, which is being an 8-screen cinema with the TITAN LUXE to be built out in Noosa in Queensland. Our landlord and developer of the Stockwell Development Group is still in the town planning stage of its major multi-use project. Today, we believe the completion of the theater construction and the opening won't happen until around 2028. And we don't announce the terms and conditions of specific cinema deals. However, as we've reported in the past for third-party cinema lease deals, we usually target at least a high-teen double-digit return. And the current deal for the Noosa Cinema is consistent with those targets.
The next question, we've been asked several questions about our plans for the refinancing of our Bank of America, Emerald and Valley National loans. Can you please elaborate? Gilbert?
We plan to refinance this debt in 2026 and are considering a variety of alternatives and structures. We are encouraged by what we see as the improving environment from real estate financing, including anticipated reduction in interest rates, improving commercial rental market in Manhattan and the current industry box office projections for 2026. Obviously, a significant factor in any refinancing of our Emerald debt would be the lease status of our 44 Union Square. While no assurance can be given, we anticipate resolution of our current nonexclusive LOI by the end of the year.
The next question, given Reading has no present New Zealand debt and the excess proceeds from the Wellington Courtenay sale were upstream to pay down costly U.S. debt, can you share what your likely use of the Napier sale proceeds will be? Ellen?
The Napier transaction closes, we'll likely use the proceeds to support the renovation of our Reading Cinema Courtenay Central in Wellington, New Zealand or we may use the proceeds for general corporate purposes in New Zealand.
And finally, one last question, which I will deal with. We also received a number of questions about the Sutton Hill Associates acquisition that involves RDI assuming $13.65 million in third-party notes at 4.75% interest maturing September 30, 2035, who will be the holder of these third-party notes? What assets will secure the guarantee and guarantee these notes? Sutton Hill Associates 25%, Sutton Hill Properties interest and Village East ground lease and Reading USA or Reading International, respectively. I appreciate the low interest rate on the debt. Can you explain why so favorable, especially with a 10-year maturity? Well, a very complex question. We believe that this will be a good transaction for Reading. It will, in essence, wind up and close out of our master lease transaction we entered into with Sutton Hill Capital, LLC in the year 2000. The third-party notes are, as previously disclosed, payable to a third party and the reasons for that third party's willingness to do the deal described in our 10-Q would only be a matter of speculation on our part.
As part of the transaction, the third-party notes would be guaranteed by Reading International, Inc., but would otherwise be unsecured. And that marks the conclusion of our third quarter conference call for 2025. This year continues to see a gradual resurgence of the breadth and depth of the cinematic experience despite the slight downturn in the third quarter numbers. And we aspire to translate this into future enhanced value for our stockholders as the end of 2025 comes and the full 2026 year unfolds. We appreciate you listening to the call today. We thank you for your attention and support and wish everyone safety. And as always, we look forward to seeing you at our movie venues.