Q3 2024 Reading International Inc Earnings Call - Pre Recorded
<unk> Vice President of Global operations with me as usual Island Carter, our President and Chief Executive Officer, and Gilbert Avana's, 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 and 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 2024 third quarter earnings release 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.
Search costs could include legal expenses relating to extra ordinary litigation and any other items that we can consider to be nonrecurring. It in accordance with the two year FCC requirement for determining whether an item as 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'll also use an industry accepted financial measure called theater level cash flow T. L. C F, which is theater level revenue less direct theater level expenses.
Average ticket price a T P, 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 our cinemas revenues generated by food and beverage cells by the number of admissions at that cinema.
Please note that our comments unnecessarily submarine nature and anything we say is qualified by the more detailed disclosures 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 Allen, who will review our 'twenty 'twenty four third quarter results and discuss our business strategy going forward.
Those by Gilbert who will provide a more detailed financial review.
Huh.
Thanks, Andre and welcome everyone to the call today and thanks for listening in.
Key financial operating metrics for our third quarter 2024, total revenues operating income and adjusted EBITDA were all materially stronger than the previous three quarters from Q4 of 2023 to Q2 2024.
This trajectory of improvement indicates to us that thankfully the lingering impact on our cinema business from the COVID-19, pandemic and the 'twenty to 'twenty, three Hollywood strikes, which particularly impacted the business. During the nine month period from October 23 through June 24 have come to an end.
For those of you new to reading, where a company in two businesses cinema and real estate in three countries, the United States, Australia, and New Zealand.
Since over 90% of our revenues today come from our cinema business.
Two global macro events presented the most serious challenge for our company.
Which is a microcap public company was not entitled to one Penny of U S. Federal funding through the shattered venue Grant program or the payroll protection program.
At $60 $1 million, our third quarter 2024, Global total revenue was 28% higher than Q2, 2024, 33% higher than Q1, 'twenty 'twenty, four and 33% higher thank you for 2023.
Well not as high as the third quarter in 2023, our Q3 2024 global total revenue was less than 10% off of last year.
This comparative revenue decrease was driven by a 10% reduction in U S screen count as we streamline our circuit.
A weaker film performance in our U S specialty circuit when Oppenheimer Barbie in past lives over perform for us.
And a weaker industry box office in Australia, and New Zealand this quarter versus last year, when Barbie, which is now Australia's first highest grossing movie of all time.
Over performed and was a stronger number one film for the quarter compared to Deadpool and Wolverine.
The Australian industry box office in Q3, 2024 versus Q3 2023 was off 3%.
We reduced our global operating loss to just $246000.
During the previous three quarters, our global operating loss was 4.35 million in Q2 2024.
7.5 dollars 7 million in Q1, 2024, and $6 $95 million in Q4 of 2023.
Our Q3 2024, adjusted EBITDA of just under $3 million is the first positive adjusted EBITDA over the last three quarters.
When our adjusted EBITDA was negative 236000 in the second quarter of 'twenty four negative $388 million in Q1, 'twenty 'twenty four and negative two point to $3 million in Q4 of 2023.
At $56 $4 million, our Q3 2024 global cinema revenue again represented a materially higher level than reported since Q4 2023.
Despite being behind Q3 of 2023 by about 10% and representing just under 85% of pre pandemic Q3 2019 levels.
These cinema revenues were driven by Deadpool and Wolverine, which opened on July 26, 2024. It is now the highest grossing R rated movie of all time and has earned over $1 3 billion in worldwide grosses.
I'll note the Deadpool play proportionately much better in the U S than Australia, and New Zealand.
Despicable me for which opened in early July 2024, now has over $968 million in global box office, leading that franchise to over $5 $6 billion globally.
Franchise rebates twisters, and it'll just be L juice.
Twisters, which opened on July 19th 24 set the highest opening weekend record for a natural disaster film and has earned almost $371 million globally.
But it'll just be it'll juice opened in September and has already earned over $450 million in global box office to becoming Warner brothers highest grossing domestic film of the year.
It ends with US are female driven picture based on choline Hoover's best selling novel had a sensational opening in August and has since become the highest grossing romantic drama since 2000 Eighteen's a star is born.
And today has grossed almost $350 million at the global box office.
The second quarter holdover of inside out too, which opened on June 14th 'twenty 'twenty. Four is now the highest grossing animated film of all time, earning almost $1 $7 billion worldwide.
Even though our third quarter 'twenty four performance was unfavorable to last quarter well highlight for you a couple of standout metrics about our global cinema operations.
Our Australian Cinema Division delivered impressive operational records in the third quarter of 24.
At 37 million Australian dollars are.
Trailing cinema revenue represented the best third quarter performance ever and the second highest reported quarter ever.
At $2 9 million Australian dollars or Australian cinema division's operating income Mark the second highest third quarter performance since Q4 of 2019 surpassed by the third quarter of 2023.
The F N B S. P. P for each of the division was the highest third quarter ever if you measure when all of our screens were open or in other words, excluding certain pandemic periods, where only certain screens were operational.
The box office per screen reported for our U S circuit of $80000 exceeds the box office per U S screen reported by certain publicly traded exhibitors for their U S segments.
Turning to our global real estate Division at.
At $4 $9 million, our third quarter 2024, real estate revenue declined slightly by 3% compared to the third quarter of last year.
However, our global real estate operating income increased 52% to $1 $4 million from $920000 in the third quarter of 'twenty three.
Let me point out a few standout third quarter 24 real estate division metrics.
Driven by the strong and consistent performance of our 73 third party tenant Australian portfolio.
On a local currency basis, our third quarter 'twenty for a real estate operating income of $1 6 million is the best third quarter on record.
And that results takes into account among other things the sale of our mainland property in new South Wales in the fourth quarter of 'twenty, three and the sale of Auburn Red yard in June of 'twenty. One when we had 17 third party tenants at that center.
Our U S real estate business, which includes our two live theaters in New York City.
<unk> second highest third quarter revenue in company history.
Supported now by ramp from 44 Union square and despite the ore at the Orpheum theater being dark for a period of time during the third quarter.
This quarter's operating income represented 94% of the third quarter in 2019.
Despite the elimination of rental revenue associated with our Culver City office building, which we sold in the first quarter of 2024.
Our mainland property, which we sold in the fourth quarter of 'twenty three.
So despite being a bit behind compared to 2023 third quarter results. We believe our operations team, especially in the cinema Division have soldiers on through a very rough nine months from October of 23 through June of 'twenty four.
In addition to maintaining our operations to bolster our long term liquidity during the last summer months. This year, we focused on monetizing for select real estate assets, which I'll touch on shortly and work with our lenders and various financings to extend maturity dates, which Gilbert will mention later on.
All of these efforts and momentum should line us up nicely to be ready for the improvement in the box office is expected during the 24 holiday season.
25 and beyond.
And the reduction in interest rates, which we hope will continue into 2025.
Now, let's look more closely at our global cinema business, which historically has provided the foundational cash flow to support our asset growth.
Let me start with a focus on the upcoming 24 holiday movie slate, which completely reinforces our belief in both our cinema operations and the industry in general.
Starting November 22020 for the industry will be treated to an amazing trifecta lineup of quality tempos being released with sensational marketing campaigns from Paramount Disney and Universal.
Gladiator to the eagerly awaited action packed spectacle is expected to open very well.
Wicket if our pre sales are any indication we expect this cherished musical adaptation to be one of our strongest titles in 2024.
Moana to Disney clearly on a billion dollar roll. This year has high hopes for moana too and we hope it delivers another billion dollar of delays for Disney at the global box office.
Moving to December and ending the year hopefully on a high note on December 20th we look forward to him a faucet lion King and Sonic the Hedgehog three both of which are poised to do very well at the box office.
The variety and quality of the upcoming film slate along with the showcase enthusiasm of moviegoers keeps us optimistic about the industry's future.
It was anticipated the overall box office in 'twenty four would fall short of 23 a.
A year already and recovery, but ultimately hampered by strike induced movie release delays.
But while these production delays in the rescheduling of theatrical release dates have led to a postponement of several major titles. During this year, we believe that 25 looks very promising.
Today, there are several more wide titles from Disney alone as opposed to searchlight and Fox on the release schedule compared to 24 movies, such as Captain America, Brave, New World Snow White, Leila and stitch Helio and try on Aries.
In 25 in addition to those Disney titles audiences will get James Cameron's highly anticipated avatar, three Tom cruise and mission impossible eight a new Jurassic World film from Universal James Gunn Superman from D. C Studios for Warner Brothers, Dirty dancing, too and the Spongebob movie search for <unk>.
Square pants.
During the third quarter of 24, despite the challenges we faced our management teams continue to work a variety of business opportunities to improve our overall business.
Which we believe should set us up for better results in 25 and 26.
In addition to F&B strategic initiatives, we're working on the launch of a new free to join our rewards program for our wedding and consolidated circuits. In addition to a paid subscription program, which we hope to launch in early 'twenty five.
Now, let's turn to our U S Cinema Division.
The U S cinema revenue decreased by 19% to $27 $8 million compared to the third quarter of 'twenty three.
And our operating income decreased to an operating loss of $900000 down from an operating income of $300000 in the same period in the previous year.
The drivers for the U S underperformance this quarter, where.
One as of the third quarter of 24 are U S based screen count decreased by 10% compared to the same quarter in 'twenty three.
We closed four theaters to in Hawaii, one in California, one in Texas.
Each of these theaters, which are underperforming so we expect that the closures in our long term will improve our profitability.
Secondly, our New York City specialty theaters, the angelic and New York villages in cinema, one two and three.
All had much stronger box office in the third quarter of 23 due to Oppenheimer and 70 millimeter projection at the cinema, one two and three.
And the village East there are Barbie grosses and grosses from past lives.
Overall, our specialty theaters in general performed better in the third quarter of 23, driven by movies like as I, Just mentioned director Greta Gerwig Barbie director, Chris Nolan to Oppenheimer Director, Wes Anderson's asteroid city and the critically acclaimed debut past lives from director Saline song.
With respect to our U S circuit performance versus the industry. Our analysis indicates that these.
U S circuit metrics are generally.
Generally favorable or in line with the industry, one our box office of about $80000 per screen.
Our F N B S. P. P of $8.24, our total cinema revenue of $144000 per screen.
When you analyze our operating expenses, we need to remember that 36% of our U S. Cinema revenues are generated in Hawaii, 11% are generated in San Diego and 10% are generated in New York City.
Hawaii, New York, and California are generally regarded as among the most expensive states to do business.
Our occupancy and labor costs are much higher than other U S operating environment.
And in Hawaii in particular, almost every at every operating expense is more expensive than the mainland.
As I mentioned earlier, we're looking forward to rolling out a new free to join our rewards program and our commercial theaters, which will line up with our free to join Angelica membership program.
Today that program has about 145000 members who account for approximately 25% of all paid attendance for Angelika cinema within our U S circuit based on year to date attendance.
We're also developing a paid subscription program for all of our U S screens, which you hope to launch in the next few months.
In addition, we've examined our F&B pricing and implemented a variety of price increases, but at the same time, we've rolled out a special 2024 week date deal program, where guests seeking the best values can enjoy a different but compelling discount on our F&B menus everyday of the week.
Now, let's turn to our cinemas in Australia, and New Zealand.
In the third quarter of this year, our Australian cinema revenue increased 2% to $24 7 million U S dollars versus Q3 2023.
And our operating income decreased 717% to $2 9 million U S dollars versus Q3 2023.
In the third quarter of 24 are New Zealand cinema revenues decreased 11% to $3 8 million U S dollars versus third quarter of last year.
And the operating income decreased 54% to $250000 versus the third quarter last year.
As I mentioned earlier, well, Deadpool and Wolverine and inside out where strong Q3 films. They were on balance still not as strong for the Australian and New Zealand film industry is Barbie and Oppenheimer.
Notable milestones achieved during the third quarter of 24 include the following all of them functional currency.
Our Australian total revenues delivered the highest third quarter ever for our Australian cinemas at 37 million Australian dollars.
Our Q3 2020 for Australian F&B revenues of $16 $5 million is the highest third quarter of all time.
Our Australia in third quarter 2020 for F. N B S. P. P result of $7.90 is our highest ever quarterly result.
With respect to our New Zealand cinemas, our Q3 2020 for F. N B S. P. P of $6.62 was the highest third quarter ever.
Our Q3 2024 screen advertising revenue in Australia was the highest third quarter ever driven in part by the rollout of another circuit wide click to pay promotional program with Mastercard.
And we officially launched Angelica rewards at the state theater in Tasmania. This quarter. The new loyalty program is modeled off of our successful angelic rewards program at the Angelica and South City Square Brisbane.
Now, let's turn to our global real estate business.
I mentioned earlier the results of our global real estate operations compared to the third quarter of last year.
Our Q3 2024 global real estate total revenues of $4 $9 million dipped by 3%, while our total operating income of $1 $4 million increased by 52%.
Since our intercompany rents are reflected in our segment reporting the recent decline in certain real estate metrics reflects the loss of rental income from the Q4 2023 sale of our mainland property in New South Wales, Australia.
And the Q1 2020 for sale of our Culver City office building for $10 million.
In the third quarter of this year, our live theatres reported a 16% decline in revenues compared to the same period in 2023 due to European being dark in the early months of the third quarter.
In mid September 24, the Orpheum open the big Gay Jamboree, which we expect to run through the end of 'twenty four.
Audible Amazon company continued to operate or Monero Lane theater, and the third quarter of 2024 hosted the show I'm almost there Todd Ellman and is now playing strategic lab play.
Recall that in April of 24, we've renewed the license agreement with audible through March 15th 26, with a one year extension.
Turning to our real estate assets in the U S.
To manage the remaining leasing at 44 Union Square in New York, We engaged George comfort and sons earlier in 'twenty four.
Over the past few months George comfort is work with non office users for the remaining 43000 square foot space.
We've been working on one deal in particular that we believe has an interesting use that would be compelling in the union square area.
However, we will note that when we finish construction of the building at the start of the pandemic in 2020.
While we're clearly disappointed with the market conditions since that time, we believe that the market in general and the Union square area is showing signs of improvement and we hope that this key union square anchor space will attract strong creditworthy tenants over the next six months.
As mentioned earlier, our company's key short term priority is to lower our interest expense by reducing our debt.
Our board directed management to assess our global real estate portfolio to identify assets that can be sold to generate liquidity to pay down debt over the next few years.
This strategy will help us manage our financial obligations, while we await a full recovery in the global cinema industry.
In the U S. We've been advancing sales efforts on our Newberry yard asset in Williamsport, Pennsylvania.
We recently resolved some necessary rail track easement issues and are engaging with certain parties about a purchase of the now 24 acre site.
One of our stockholders asked about the appraised value of Newbury yard.
We don't report on the appraised or fair market values of our properties. However, we will note that the appraised value of this particular asset is well in excess of what we reported as the historic book value of Newbury yard.
Also recall that there is no mortgage on this or any of our rail assets.
Now turning to our international real estate assets.
Our third quarter 2020 for Australia in real estate revenue slightly increased to $3.1 million.
In our New Zealand real estate revenue of $372000 slightly decrease compared to the third quarter of last year.
As of September 30, 24, we had 76 third party tenants and our combined Australian and New Zealand real estate portfolio.
Our combined third party tenant sales for the quarter from Australian Real estate was $30 8 million Australian dollars.
Our third party occupancy rate remains strong at 96%.
During the quarter, we executed one new lease and two lease renewals.
Today with respect to our international assets, we're marketing for sale, our Cannon Park assets in Townsville, Australia as well as our road of real property in five contiguous parcels in Wellington New Zealand.
We've been working with various groups on these Australian and New Zealand assets, our sales processes for each of these asset sales is ongoing as we're working with various groups on these Australian and New Zealand assets.
In order to preserve the confidentiality of our ongoing negotiations we.
We don't intend to provide any updates until definitive sales documentation is executed and delivered.
Note. However that there are no assurances that any acceptable transaction will be forth coming with respect to any of these properties.
Throughout 2024, we've worked with our lenders and landlords to secure financial relief and initiated another round of asset sales.
These steps will help us navigate through the remainder of 'twenty four and lay a stronger foundation for 25 and beyond when we expect the global box office and cinema industry to be on a much brighter Pat.
That wraps it up for me I'll turn it over to Gilbert.
Gilbert: Thank you Ellen.
Gilbert: Consolidated revenue for the quarter ended September 32020, Ford decreased by $6 5 million to $60 1 million when compared to the third quarter of 2023.
Gilbert: Consolidated revenue for the nine months ended September 32024 decreased by $25 5 million to $152 million when compared to the nine months September 32023.
Gilbert: These decreases are attributable to.
Gilbert: Lower attendance in all three countries as a result of closing cinemas in the U S Longwood lower performing titles.
Gilbert: Theatres in the third quarter of 2024 compared to 2023.
Gilbert: Slightly decreases in property rent revenue.
Gilbert: Lower U S live theater revenue.
Gilbert: Net loss attributable to <unk> International Bank for the quarter ended September 32024 was $6 9 million compared to a loss of $4 4 million in Q3, 2023 or $2 5 million loss.
Gilbert: Kris.
Kris: Basic loss per share increased by 11 to a loss of 31 compared to a loss of 24 Q3 2023.
Kris: These results were primarily due to weakened cinemark performance increased interest expense.
Kris: Property rent revenue, partially offset by reduced depreciation and G&A expenses.
Kris: Net loss attributable to running International Inc. For the nine months ended September 32024 increased by $11 2 million to a loss of 29 5 million from a loss of $18 3 million when compared to our nine months ended September 32023.
Kris: Basic loss per share increased by 50 to a loss of $1 32 compared to a loss of 82 for the nine months.
Kris: After 2023.
Kris: These results were primarily due to decrease cinema segment result.
Kris: Increased interest expense and a loss of sales of our Culver City office building, partially offset by reduced depreciation.
Kris: Our total company depreciation and amortization impairment and G&A expense for the quarter ended September 32024 decreased by $1 1 million to $8 9 million compared to Q3 2023.
Kris: For the nine months ended September 32024.
Kris: Decreased by $1 8 million to $27 8 million compared to the nine months ended September 32023.
Kris: These decreases were due to decreases in depreciation and amortization as a result of the sale of our <unk> Linda.
Linda on Culver City property.
Kris: No depreciation on our held for sale property, along with decreases in G&A expenses.
Kris: Income tax expense for the quarter ended September 32024 decreased by $2 million compared to Q3 2023.
Kris: Between 24, and 23 is primarily related to an increase in pre tax loss in 2024.
Kris: Income tax expense for.
Kris: For the nine months ended September 32024 increased by.
Kris: Zero $1 million compared to the nine months ended September 32023.
Kris: The change between 24, and 23, primarily related to an increase in unrecognized tax benefit and 24, partially offset by an increase in pretax loss in 2024.
Kris: Okay.
Kris: For the third quarter of 2024, our adjusted EBITDA income decreased by $3 2 million to an income of $2 9 million from an income of $6 1 million in Q3 2023.
Kris: For the nine months ended September 32024, we have an adjusted EBITDA loss of $1 3 million compared to an EBITDA of $10 million for the nine months ended September 32023.
Kris: These results were primarily the result of the weakened cinema and real estate performance as mentioned previously.
Kris: Shifting to cash flow for the nine months ended September 32024, net cash used in operating activity increased by $5 4 million.
Kris: <unk> 8 million compared to the cash used in nine months ended September 32023 of $6 4 million.
Kris: This was primarily driven by an increase in net loss and offset by an increase in payables.
Kris: Cash provided in investing activities. During the nine months ended September 32024 was $5 million compared to cash used and nine months ended September 32023 of $6 2 million.
This was primarily due to $9 7 million proceeds from sale of our Culver City office building in February 2024.
Kris: Cash provided in financing activities for the nine months ended September 32024 increased by $6 million to $2 1 million compared to the cash used in nine months ended September 32023. This was primarily due to new bridge loan of $13 9 million from <unk>.
Kris: On April 10, 2024, and an increase of $3 2 million.
Kris: For our Westpac loan on August 19, 2024.
Kris: The increase was partially offset by the payoff of citizens loan of $8 4 million following the sale of the Colver City office building.
Kris: 4 million scheduled loan repayments to bank of America.
Kris: 3 million debt repayment to Santander on August 23, 2024.
Kris: Turning now to our financial position total assets on September 32024 were $495 7 million compared to $533 1 million on December 31 2023.
Kris: This decrease was driven by $6 1 million decrease in cash and cash equivalent and receivable from which.
We funded our ongoing business operations.
Kris: Decrease in operating properties as a result of.
Kris: The offer Culver City office and $11 million decrease in operating lease right of use assets.
Kris: As of September 32024, our total outstanding borrowings were $215 million compared to $210 3 million on December 31 2023.
Kris: Our cash and cash equivalents as of September 32024 were $10 1 million, which includes approximately $3 8 million in the U S $4 9 million in Australia, and $1 4 million in New Zealand.
Kris: Further to address the liquidity pressure.
Kris: On our business, we are working with our lenders to amend certain debt facilities and we have selected certain real estate assets for potential monetization and had listed them for sale.
Kris: During the first quarter of 2024 completed.
Kris: Monetization of our Culver City, La office building for $10 million.
Kris: Fully discharged.
Kris: <unk> mortgage.
Kris: The third quarter of 2024, we made progress with our lenders on the following financing arrangements.
Kris: On August one 2024, we extended the maturity.
$8 million loan with Santander Bank, which is secured by our Minetta an orphan theaters.
Kris: Previously matured on June one 2024.
Kris: And that facility now matures on June <unk>, 2025 requires monthly principal and interest payments.
Kris: 250000 loan reduction upon signing and another 250000 before January one 2025.
Kris: With the balloon payment of the remaining balance on maturity.
Kris: On August 13, 2024, we increased our with our corporate credit facility.
Kris: New Zealand $5 million to New Zealand $18 8 million.
Kris: In October 2024, we extend that.
Kris: An amendment to our bank of America loan to deferred the monthly principal payment of 500000 in October November and December 2024 to the end of December 2024.
Kris: Go over 2024, we obtained two further six months extension for our loan with rally National.
Kris: The first of which we exercised.
Kris: Connection with these extensions we have increased our cash deposited Drayton Valley National Bank by 500000 to $1 5 million.
Andre: With that I will now turn it over to Andre.
Andre: Thanks.
Andre: First I'd like to thank our stockholders for affording questions to our Investor relations email as usual in addition to addressing many of your questions in the prepared remarks for melon and go but we've selected a few additional questions to offer additional insight from management.
Andre: Cost of sales questions.
Speaker Change: How many more auditoriums are planned for additions of Recliners when will the re seating program be completed in 2024 and beyond.
Speaker Change: In the U S for targeting to convert 23 screens to luxury Recliners and three third three theaters over the next 24 months. If these conversions were completed that would result in almost 70% of our existing U S circuit featuring Recliners.
Speaker Change: We'd also be intending to create a premium screen concept in each of those theaters.
Speaker Change: In Australia, and New Zealand were also targeting to convert certain screens to luxury recliners are over the next two years.
Speaker Change: The completion of these capex upgrades are subject to successful negotiations with various landlords the improved movie slate and obviously a stronger liquidity position.
Speaker Change: Assuming all goes well in this regard our global circuit will be in a much better position to take advantage of the improved movie slate expected for 2025 and beyond.
Speaker Change: Thanks, Alan perhaps you can answer the next one as well we just wanted to get a better sense of what needs to happen for the company to achieve results in the U S. Similar to what we saw in second quarter 'twenty three in third quarter 'twenty three being mindful that the screen fleet is 10% smaller.
Speaker Change: So is it possible to quantify the difference from the specialty circuit year on year and through in third quarter.
Speaker Change: The speciality circuit to reduce these results again is that something that can be done by a collection of good releases or does that have to be a major one off release like Oppenheimer driving that performance.
First let me reiterate that despite the reduction in revenues, we believe that the streamlining of our U S circuit or the closure of those four theaters will in the long run boost our overall theater level cash flow since those theatres historically lost money or broke even.
Speaker Change: Depending on the time period.
Speaker Change: While the third quarter of 24 was not as strong as we would've liked we believe we'll have stronger results in the future based on the Capex improvements that I talked about.
Speaker Change: Which we improve will improve our local market shares the rollout of that free to join rewards and premium membership programs.
Speaker Change: And the better movie slate expected for 25, and 26% and 27.
Speaker Change: With respect to the box office for our U S specialty circuit.
Speaker Change: It was off 32% quarter versus quarter with the villages in the cinema, one two and three being off over 50% due to the over performance in 23 of Oppenheimer and 70 millimeter.
Speaker Change: We believe that the U S specialty circuit of course can produce results like that again, however, it's all totally driven by film product.
Speaker Change: For instance, so far in the month of November.
This year, the angelic and New York Box office is up over 80% compared to prior period.
Speaker Change: Led by an aura in real pain, both of which have performed really well.
Speaker Change: And the cinema, one two and three is up over 50% led by the.
Speaker Change: The movie conclave, which is perfect for the audience on the upper east side.
Speaker Change: Thank you Ellen.
Speaker Change: Our next question is any thoughts being given at selling the U S. Cinema circuit seems like this might be a good idea considering the over saturation in the U S alone.
Speaker Change: Well like I've been saying, we anticipate a much stronger movie slate.
Speaker Change: From 2025, and beyond and even the holiday season in 'twenty four.
Speaker Change: And our U S circuit.
Speaker Change: We anticipate we'll return to producing acceptable levels of income such that the U S Circuit theater level cash flow will contribute to the overall advancement of our global enterprise again.
Speaker Change: Well, we generally believe that the U S market is over screened we think that following our streamlining effort our remaining U S theaters will return to income producing in 2025 and beyond.
Speaker Change: After taking into account not only the improved movie schedule or expected movie schedule, but also the strategic initiatives, we have like Capex upgrades and the rollout of the rewards and the membership program.
Thanks Alan.
Speaker Change: The Santander minutes Arnaud <unk> with secured term loan was only extended out a year from its due date and thus less than nine months from now.
Speaker Change: Do you expect to refinance this loan with Santander or from another source.
Speaker Change: Much of the further increase in interest rate is expected to result from the refinancing term sheets you are pursuing Gilbert.
Speaker Change: Despite our good relationship with our lenders we are.
Speaker Change: Lowering our options with different lenders to make sure.
Speaker Change: It is in the company and our shareholders best interest and matches our financing needs.
Speaker Change: We are closely monitoring how policy makers SaaS, the economy inflation and the appropriate monetary policy.
As we shared previously deferred has recently had two rate cuts 50 basis point in September 25 basis point in November 2024, because of that we are offering to state that the interest rates will be trending downward.
Speaker Change: We will work with lenders that would provide us with most flexibility not just in terms of interest rate floors to ensure we reduce our.
Speaker Change: Interest rates into the future, but also take into account the fees on covenant, which will impact the overall interest expense to revenue.
Speaker Change: Thanks Kelvin.
Speaker Change: And the last question what are your plans in the sources of capital for the $5 9 million purchase price due in two weeks at the end of November 2004 to related party sudden hill for the village is ground lease.
Speaker Change: Can handle that one we are working on the transaction to complete the acquisition of the remaining New York City property the tenants interested in the villages ground lease.
Speaker Change: As envisioned by the Master lease deal that was entered into with no capital well over 20 years ago.
That master lease transaction with sudden who borders are interest in 44 Union square the cinemas, one two and three the Minetta Lane and opium theaters.
Speaker Change: Acting on the direction of our audit and conflicts committee.
Speaker Change: <unk> and our general counsel are working.
Speaker Change: To develop and close a mutually agreeable transaction with the non Carter Pate Neuro Sun Hill.
Speaker Change: While no assurances can be given we anticipate that the conflicts committee, we will be able to report on the deal during our Q4 reporting period.
Speaker Change: And with that we'll bring the call.
Speaker Change: Conference call to an end here, we as usual we appreciate all of you with your questions and listening to this conference call and wish you all the best for the future. Thank you.