READING INTERNATIONAL Q2 FY26 earnings call RDI

Reading International reported a strong Q2 2026 with consolidated revenue increasing by $6.5 million to $66.9 million, marking the highest second quarter in six years. Net income attributable to the company rose 185% to $2.3 million, reversing a $2.7 million loss in Q2 2025. Adjusted EBITDA also saw significant growth, increasing by $5 million or 79% to $11.3 million, representing the best second quarter result in seven years. These improvements were significantly aided by the Australian dollar strengthening 11% against the U.S. dollar, as 53% of the company's Q2 revenue was generated internationally.

The company is actively pursuing a strategy of monetizing non-core real estate assets to reduce its overall debt position and fund cinema upgrades. This includes the anticipated sale of the Cinema 1, 2 and 3 property in New York, with a preferred buyer identified and closing expected in early Q4 2026. Proceeds from this sale are earmarked to pay down approximately $19.7 million of Valley National debt and $5.4 million of Bank of America/Hawaii debt. The Newberry Yard property in Pennsylvania also remains classified as held for sale, with interest from strategic industrial buyers. This approach aligns with the founder's strategy to navigate market downturns by monetizing assets that have reached their highest value without significant capital investment.

The global cinema division delivered an 11% revenue increase over last year, reaching $63 million, driven primarily by a strong film slate and the Australian circuit's exceptional performance. Australian cinema revenue increased 31% to a record $30 million, with operating income up 91% to $5.6 million. Key strategic initiatives, such as expanding F&B programs with movie-themed menus and merchandise, and enhancing global loyalty programs, contributed to improved attendance and record F&B spend per person in Australia (AUD 8.37) and New Zealand (NZD 7.22). The company also reduced its global cinema count by 9 loss-making locations since the pandemic to improve profitability.

The global real estate segment demonstrated stability, with total revenue increasing 4% to $4.9 million and operating income up 7% to $1.6 million. The U.S. real estate division, particularly its live theater segment, saw an 11% revenue increase to $1.9 million and a 106% operating income increase to $183,000, driven by improved programming at venues like the Minetta Lane Theatre. Efforts are ongoing to lease the remaining four floors at 44 Union Square, with Newmark generating significant tenant interest. The company maintains a 98% occupancy rate in its Australian and New Zealand real estate portfolio, despite asset monetizations.

Reading International is committed to upgrading its key cinemas, with a major renovation planned for the Reading Cinema in Wellington, New Zealand, expected to launch in late 2027. This project will include luxury recliners, premium large screen concepts, and upgraded F&B offerings. In the U.S., a major renovation of the Bakersfield cinema, including a TITAN LUXE screen and recliner seats, resulted in a 43% revenue increase. The company is also undertaking a circuit-wide seat refurbishment program in the U.S., with Hawaii theaters expected to be completed in Q3 2026, funded primarily through cash flow.

The sale of the Napier property is currently on hold due to unforeseen issues involving the car park owner and unacceptable changes requested by the potential buyer, making the deal less attractive. The company's appeal regarding the Reading Viaduct in Philadelphia continues with the D.C. Circuit Court, expected to be active through at least 2026. Management reiterated its belief that the Reading Viaduct is a valuable asset and any transportation use should represent fair value for stockholders, while noting that adjoining parcels could be separately monetized once a clearer path with the city or a developer emerges.