Q3 2024 Reading International Inc Earnings Call - Pre Recorded
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.
Speaker Change: Before we begin the substance of the call I will run through the usual caveats.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: We have adjusted where applicable the EBIT dollar items, we believe to be external to our business and not reflective of our cost of doing business or results of operations.
Speaker Change: Such 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.
Speaker Change: We believe that the adjusted EBITDA is an important supplemental measure of our performance.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 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.
Speaker Change: 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.
Speaker Change: Those by Gilbert who will provide a more detailed financial review.
Speaker Change: Huh.
Speaker Change: Thanks, Andre and welcome everyone to the call today and thanks for listening in.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Since over 90% of our revenues today come from our cinema business.
Speaker Change: These two global macro events presented the most serious challenge for our company.
Speaker Change: Which is a micro cap public company was not entitled to one Penny of you watch federal funding through the shattered venue Grant program or the payroll protection program.
Speaker Change: At $61 million, our third quarter 2024, Global total revenue was 28% higher than Q2 2024 30.
Speaker Change: 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.
Speaker Change: A weaker film performance in our U S specialty circuit when Oppenheimer Barbie in past lives over perform for us.
Speaker Change: And a weaker industry box office in Australia, and New Zealand this quarter versus last year, when Barbie, which is now Australia's fifth highest grossing movie of all time.
Speaker Change: Over performed and was a stronger number one film for the quarter compared to that pool and Wolverine.
Speaker Change: The Australian industry box office in Q3, 2024 versus Q3 2023 was off 3%.
Speaker Change: We reduced our global operating loss to just $246000.
Speaker Change: During the previous three quarters, our global operating loss was 4.35 million in Q2 2024.
Speaker Change: 7.57 million in Q1, 2024, and $6 $95 million in Q4 of 2023.
Speaker Change: Our Q3 2024, adjusted EBITDA of just under $3 million is the first positive adjusted EBITDA over the last three quarters.
Speaker Change: 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.
Speaker Change: At $56 $4 million, our Q3 2024 global cinema revenue again represented a materially higher level than reported since Q4 of 2023.
Speaker Change: Despite being behind Q3 of 2023 by about 10% and representing just under 85% of pre pandemic Q3 2019 levels.
Speaker Change: These cinema revenues were driven by that pulling 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.
Speaker Change: I'll note that that pool play proportionately much better in the U S than Australia, and New Zealand.
Speaker Change: 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.
Speaker Change: Franchise rebates twisters, and it'll just be L juice.
Speaker Change: Twisters, which opened on July 1924 set the highest opening weekend record for a natural disaster film and has earned almost $371 million globally.
Speaker Change: 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.
Speaker Change: It ends with US are female driven picture based on choline Hoover's bestselling novel had a sensational opening in August and has since become the highest grossing romantic drama since 2000 Eighteen's a star is born.
Speaker Change: And today has grossed almost $350 million at the global box office.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Our Australian Cinema Division delivered impressive operational records in the third quarter of 24.
Speaker Change: At 37 million Australian dollars are.
Speaker Change: Alien cinema revenue represented the best third quarter performance ever and the second highest reported quarter ever.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 segment.
Speaker Change: Turning to our global real estate Division.
Speaker Change: At $4 $9 million, our third quarter 2024, real estate revenue declined slightly by 3% compared to the third quarter of last year.
Speaker Change: However, our global real estate operating income increased 52% to $1 $4 million from $920000 in the third quarter of 'twenty three.
Speaker Change: Let me point out a few standout third quarter 24 real estate division metrics.
Speaker Change: Driven by the strong and consistent performance of our 73 third party tenant Australian portfolio.
Speaker Change: On a local currency basis, our third quarter 24 real estate operating income of $1 6 million is the best third quarter on record.
Speaker Change: 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.
Speaker Change: Our U S real estate business, which includes our two live theaters in New York City.
Speaker Change: <unk> second highest third quarter revenue in company history.
Speaker Change: 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.
Speaker Change: This quarter's operating income represented 94% of the third quarter in 2019.
Speaker Change: Despite the elimination of rental revenue associated with our Culver City office building, which we sold in the first quarter of 2024.
Speaker Change: Our mainland property, which we sold in the fourth quarter of 'twenty three.
Speaker Change: So despite being a bit behind compared to 2023 third quarter results. We believe our operations team, especially in the cinema Division has soldier dawn through a very rough nine months from October of 23 through June of 'twenty four.
Yeah.
Speaker Change: In addition to maintaining our operations to bolster our long term liquidity during the last several 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 Globo will mention later on.
Speaker Change: 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 2025 and beyond.
Speaker Change: And the reduction in interest rates, which we hope will continue into 2025.
Speaker Change: Now, let's look more closely at our global cinema business, which historically has provided the foundational cash flow to support our asset growth.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 release for Disney at the Global box office.
Speaker Change: 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.
Speaker Change: The variety and quality of the upcoming film slate along with the showcase enthusiasm of moviegoers keeps us optimistic about the industry's future.
Speaker Change: It was anticipated the overall box office in 'twenty four would fall short of 23.
Speaker Change: A year already and recovery, but ultimately hampered by strike induced movie release delays.
Speaker Change: But while these production delays in the rescheduling of theatrical release states have led to a postponement of several major titles. During this year, we believe that 25 looks very promising.
Speaker Change: 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.
Speaker Change: And 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>.
Speaker Change: Square pants.
Speaker Change: 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.
Speaker Change: And 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.
Speaker Change: Now, let's turn to our U S Cinema Division.
Speaker Change: The U S cinema revenue decreased by 19% to $27 $8 million compared to the third quarter of 'twenty three.
Speaker Change: 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.
Speaker Change: The drivers for the U S underperformance this quarter were.
Speaker Change: 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, and one in Texas.
Speaker Change: Each of these theaters, which are underperforming so we expect that the closures in the long term, we will improve our profitability.
Speaker Change: Secondly, our New York City specialty theaters, the angelic and New York villages in cinema, one two and three.
Speaker Change: 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.
Speaker Change: And the village East there are Barbie grosses and grosses from past lives.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Hawaii, New York, and California are generally regarded as among the most expensive states to do business.
Speaker Change: Our occupancy and labor costs are much higher than other U S operating environment.
Speaker Change: And in Hawaii in particular, almost every every operating expense is more expensive than the mainland.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Now, let's turn to our cinemas in Australia, and New Zealand.
Speaker Change: In the third quarter of this year, our Australian cinema revenue increased 2% to $24 7 million U S dollars versus Q3 2023.
Speaker Change: And our operating income decreased 717% to $2 9 million U S dollars versus Q3 2023.
Speaker Change: 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.
Speaker Change: And the operating income decreased 54% to $250000 versus the third quarter last year.
Speaker Change: As I mentioned earlier, while 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.
Speaker Change: Notable milestones achieved during the third quarter of 24 include the following all of them functional currency.
Speaker Change: Our Australia total revenues delivered the highest third quarter ever for our Australian cinemas at $37 million Australian dollars.
Speaker Change: Our Q3 2020 for Australian F&B revenues of $16 $5 million is the highest third quarter of all time.
Speaker Change: Our Australia in third quarter 2020 for F. N B S. P. P result of $7.90 is our highest ever quarterly result.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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 in South City Square Brisbane.
Speaker Change: Now, let's turn to our global real estate business.
Speaker Change: I mentioned earlier the results of our global real estate operations compared to the third quarter of last year.
Speaker Change: 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%.
Speaker Change: 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.
Speaker Change: And the Q1 2020 for sale of our Culver City office building for $10 million.
Speaker Change: 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 the Orpheum being dark in the early months of the third quarter.
Speaker Change: In mid September 24, the Orpheum open the big Gay Jamboree.
Speaker Change: We expect to run through the end of 'twenty four.
Speaker Change: Audible Amazon company continue to operator, Minetta Lane theater, and the third quarter of 2024 hosted the show I'm almost there Todd Ellman and is now playing strategic lab play.
Speaker Change: Recall that in April of 24, we've renewed the license agreement with the audible through March 15th 26, with a one year extension.
Speaker Change: Turning to our real estate assets in the U S.
Speaker Change: To manage the remaining leasing at 44 Union Square in New York, We engaged George comfort and sons earlier in 'twenty four.
Speaker Change: Over the past few months George comfort is work with non office users for the remaining 43000 square foot space.
Speaker Change: We've been working on one deal in particular that we believe has an interesting use that will be compelling in the union square area.
Speaker Change: However, we will note that when we finish construction of the building at the start of the pandemic in 2020.
Speaker Change: 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.
Speaker Change: As mentioned earlier, our company's key short term priority is to lower our interest expense by reducing our debt.
Speaker Change: 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.
Speaker Change: This strategy will help us manage our financial obligations, while we await a full recovery in the global cinema industry.
Speaker Change: In the U S. We've been advancing sales efforts on our Newberry yard asset in Williamsport, Pennsylvania.
Speaker Change: We recently resolved some necessary rail track easement issues and are engaging with certain parties about a purchase of the now 24 acre site.
Speaker Change: One of our stockholders asked about the appraised value of Newbury yard.
Speaker Change: 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.
Speaker Change: Also recall that there is no mortgage on this or any of our rail assets.
Speaker Change: Now turning to our international real estate assets.
Speaker Change: Our third quarter 2020 for Australia in real estate revenue slightly increased to $3.1 million.
Speaker Change: In our New Zealand real estate revenue of $372000 slightly decrease compared to the third quarter of last year.
Speaker Change: As of September 30, 24, we had 76 third party tenants and our combined Australian and New Zealand real estate portfolio.
Speaker Change: Our combined third party tenant sales for the quarter from Australian real estate was $38 million Australian dollars.
Speaker Change: Our third party occupancy rate remains strong at 96%.
Speaker Change: During the quarter, we executed one new lease and two lease renewals.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: In order to preserve the confidentiality of our ongoing negotiations we.
Speaker Change: We don't intend to provide any updates until definitive sales documentation is executed and delivered.
Speaker Change: Note. However that there are no assurances that any acceptable transaction will be forth coming with respect to any of these properties.
Speaker Change: 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.
Speaker Change: 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 force 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 ended 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 along with lower performing titles.
Gilbert: Our theaters 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 cents to a loss of 31 cents compared to a loss of 24 Q3 2023.
Kris: These results were primarily due to weakened cinemark performance increase interest expense reduced.
Kris: Or do you 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 <unk> <unk> for the nine months of.
Kris: 2023.
These results were primarily due to decreased 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.
Kris: $8 9 million compared to Q3 2023.
Kris: For the nine months ended September 32024.
Kris: Increased by $1 8 million to $27 8 million compared to the nine months ended September 32023.
Decreases were due to decreases in depreciation and amortization as a result of the sale of our <unk> Linda.
Kris: Linda and 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.
Kris: Increased by $2 million compared to Q3 2023.
Range 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 pre tax 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: $7 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 the 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.
Kris: 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 three 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.
4 million scheduled loan repayments to bank of America.
Kris: 3 million debt repayment to Santander on August 23, 2024.
Turning now to our financial position total assets on September 32024 were $495 7 million compared to $533 1 million on December 31 2023.
This decrease was driven by $6 1 million decrease in cash and cash equivalent and receivables from which.
Kris: We funded our ongoing business operations.
Kris: Decrease in operating properties as a result of this.
Kris: 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.
Kris: 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 have listed for sale.
Kris: During the first quarter of 2024, we completed the monetization of our Culver City L. A office building for $10 million and fully discharged the related 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.
Kris: Of our $8 million loan with Santander Bank, which is secured by a minute ad-nauseum theaters.
Kris: Previously matured on June one 2024.
Kris: Standard facilities now matures on June <unk>, 2025 requires monthly principal and interest payments to <unk>.
Kris: 50000 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 west 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, along to deferred the monthly principal payment of 500000 in October November and December 2024 to the end of December 2024.
Kris: In October 2024, we obtained two further six months extension for our loan with Rami National.
Kris: First off which we exercised.
Kris: In connection with these extensions we have increased our cash deposited Drayton Valley National Bank by 500000 to $1 5 million.
With that I will now turn it over to Andre.
Andre: Thanks, Steve.
Andre: 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 Alan and good but we selected a few additional questions to offer additional insight from management.
Speaker Change: The first of those questions. How many more <unk> 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.
Speaker Change: 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: Also is it possible to quantify the difference from the specialty circuit year on year and in third quarter for 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.
Speaker Change: <unk> Hello.
Speaker Change: 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 depending on the time period.
Speaker Change: 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 which we improve will improve our local market shares the rollout of that freda 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.
Speaker Change: This year at the Angelica, 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.
Speaker Change: The movie conclave, which is perfect for the audience on the upper east side.
Ellen: 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.
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 efforts our remaining U S theaters will returned to income producing in 2025 and beyond after taking into account not only the improved movies schedule or expected movie schedule, but also the strategic initiatives, we have like Capex up.
Grades and the rollout of the rewards and the membership program.
Speaker Change: Thanks Alan.
Speaker Change: The Santander in minutes or know him theater was 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 up issuing goodbye.
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 a stake.
The interest rates will be trending downwards.
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 write it.
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 24, two related party sudden hill for the village East ground lease.
Speaker Change: Can handle that one we're working on the transaction to complete the acquisition of the remaining New York City property. The tenants interested in the villages groundless as envisioned by the Master lease deal that was entered into with no capital well over 20 years ago.
Speaker Change: That master lease transaction with sudden who bought is our interest in 44 Union square the cinemas, one two and three the Minetta lane on the opium theaters.
Speaker Change: Acting on the direction of our audit and conflicts committee.
Speaker Change: And our general counsel are working.
Speaker Change: To develop and close a mutually agreeable transaction with the non quota partner of 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.
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.
Speaker Change: Yes.