Thank you for joining Reading International's earnings call to discuss our 2022 first quarter results. My name is Andrzej Matyczynski, and I am Reading's Executive Vice President of Global Operations.

With me, as usual, 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 just try run through the usual caveats.

In accordance with the safe harbor provision of the Private Securities Litigation Reform Act of 1995, certain matters 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 2022 first 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 operation.

Such costs include legal expenses relating to extraordinary litigation and any other items that can be considered nonrecurring in accordance with the 2-year SEC requirement for determining an item is nonrecurring, infrequent or unusual in nature. We believe 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. We will also use a measure referred to as food and beverage, F&B, spend per patron, SPP, which is a key performance indicator for our cinemas.

The F&B SPP is calculated by dividing a cinema's revenues generated by food and beverage sales by the number of admissions at that cinema. Please note that our comments are necessarily summary in nature. And anything we say is qualified by the more detailed disclosure set forth in our Form 10-Q and other filings with the U.S.

Securities and Exchange Commission. So with that behind us, I'll turn it over to Ellen, who will review our 2022 first quarter results and discuss our strategies for navigating Reading through the post-COVID operating landscape followed by Gilbert, who will provide a more detailed financial review.

Ellen?.

the rental revenue generated from our U.S. live theaters, which were closed during the first quarter of '21 and the resumption of internal similar rental income in Australia and New Zealand, which was abated during 2021.

In the U.S., as a result of the reactivation of our live theaters in New York City, our first quarter 2022 real estate revenue increased by $500,000 or 209% to $700,000 compared to the first quarter last year. And our first quarter 2022 real estate operating loss reduced by 31% to a loss of $1.1 million compared to the first quarter of 2021.

As of March 31, 2022, the combined Australian and New Zealand property portfolio consisted of 72 third-party tenants that were all trading with the exception of one tenant in Australia completing a new fit out. And as a property portfolio, it generated a 90% occupancy rate.

In Australia, Q1 2022 was the initial first quarter to reflect the loss of revenues and income from Auburn Redyard, which was sold in Q2 of 2021. Despite this loss of revenue and income, our Q1 2022 real estate revenue increased by 9% to $3.1 million versus the first quarter of 2021.

And real estate segment operating income increased by $800,000 or 119% compared to Q1 2021. These improvements in our property segment results were driven primarily by the restarting of internal cinema rent being charged to our Reading Cinemas in Australia, which was abated in 2021 due to COVID.

In New Zealand, during the first quarter of 2022, the real estate revenue increased by 55% to $400,000 in the first quarter of 2022. We also experienced a $200,000 decrease in real estate segment operating loss in Q1 2022 compared to the first quarter of 2021.

These improved results were related to the resumption of internal rent income in New Zealand, which was abated during '21, offset by the elimination of internal rental income from the monetization of our [Imber Cargo] property in 2021. Our team continued to progress key real estate projects during the first quarter of 2022.

In the United States, our 44 Union Square property is the newly redeveloped historic Tammany Hall that sits prominently at the intersection of 17th Street and Union Square East in Manhattan and serves as the iconic and monumental Northeast-anchored Union Square Park.

The company and its consulting team, including Architects BKSK, developed the former Tammany Hall to celebrate its historic significance while giving it new life as a spectacular new modern office retail building. As we've mentioned in previous calls, the building and the team continue to be recognized with multiple awards for the innovative design.

The lower level, ground floor and second floor of the building are now fully leased on a long-term basis to a leading international retailer. We're currently fitting out our new tenant space with the free rent period expected to burn off in Q4 of 2022.

We also anticipate completing white-box improvements on certain upper floors to enhance leasing efforts and to be able to use the space for special events and other interim uses pending long-term lease up.

Our new leasing team, CBRE, has taken a fresh look at the remaining space and is currently responding to a variety of inquiries from a broad range of potential users, some looking to take all of the remaining floors in our building.

The location of 44 Union Square will be key to that property success as it's one of the few brandable buildings in the area. Despite the fact that the retail and office leasing environments have been severely impacted by the pandemic, the Midtown South Submarket is showing signs of improvement.

As we regain our footing in our cinema divisions and continue to solidify our foundation, we believe our retained real estate assets, 44 Union Square and Cinemas 1, 2 and 3 in New York, our assets in Wellington, New Zealand, Newmarket Village in Brisbane, Cannon Park in Townsville, the Belmont Common in Western Australia and our Viaduct properties in the Arts District of Philadelphia all continue to offer substantial opportunities to create long-term value for our stockholders.

Before I turn it over to Gilbert for a financial review of the first quarter, on behalf of Margaret, our Board and myself, we again want to extend our sincerest appreciation to the global Reading team. Our team worked tirelessly through the most unprecedented situation in our lifetimes.

Even though the COVID-19 cases are decreasing, and the government restrictions are easing, we know that we're not completely out of the woods just yet. But it's the daily efforts of the Reading team that are responsible for getting our company and its various divisions to a more stabilized spot. And for that, we again say thank you.

With that, I'll turn it over to Gilbert..

No Way Home and Uncharted, which boosted our Q1 2022 attendance level. Net loss attributable to the RDI common stockholders for the quarter ended March 31, 2022, increased by $34.3 million to a loss of $15.4 million when compared to a net income of $19 million for the same period of 2021.

Basic loss per share was $0.70 for the quarter ended March 31, 2022, compared to a basic earnings per share of $0.87 for the quarter ended March 31, 2021. These results were primarily due to the gain from our sale of asset monetization in the first quarter of 2021 that did not reoccur in the first quarter of 2022.

These results were offset by an increase in income tax benefit during the first quarter of 2022 compared to an income tax expense for the same period in the prior year. For the first quarter of 2022, income tax benefit increased by $8.1 million to $0.4 million compared to the equivalent prior year period.

The change between 2022 and 2021 is primarily related to the pretax income resulting from the gain from asset monetization in the first quarter of 2021 that did not occur during the first quarter of 2022.

Nonsegment G&A expenses for the quarter ended March 31, 2022, grew by 7% or $0.3 million to $4.4 million compared to the quarter ended March 31, 2021, due to an increase in wage and salaries as a result of increased operating activities. This was partially offset by a decrease in legal fees compared to the same period in 2021. Shifting to cash flows.

For the quarter ended March 31, 2022, net cash used in operating activities increased by $10.3 million to net cash used of $14.1 million when compared to the same quarter of 2021.

This was driven by $22.3 million increase in net cash and net changes of operating assets and liabilities, primarily taxes payable, accrued expenses, accounts payable and some rent, partially offset by an increase in cash inflow from an improvement in operating activities.

Cash used in investing activities during the quarter ended March 31, 2022, increased by $65.7 million to $1.8 million mainly related to the proceeds from the monetization of our assets in 2021 that did not occur in Q1 2022.

Cash used in financing activities decreased by $44.1 million to $1.6 million during the quarter ended March 31, 2022, mainly due to the debt repayment in Q1 2021, which did not reoccur during Q1 2022. Turning now to our financial position. Our total assets on March 31, 2022, were $670.6 million compared to $687.7 million at December 31, 2021.

This $17.1 million reduction was primarily driven by a decline in cash and cash equivalents by which we funded our ongoing business operation and paid down debt. As of March 31, 2022, our total outstanding borrowings were $238.1 million compared to $236.9 million in December 31, 2021.

This increase was due to the strengthening of our Australia and New Zealand dollar against the U.S. dollar at March 31, 2022, compared to December 31, 2021. Our cash and cash equivalent as of March 31, 2022, were $67.3 million. We are currently in compliance with all of our loan covenants.

We continue to be in compliance with our terms of our loan agreement without the need of additional loan modifications. We believe that our lenders understand that the current situation relating to COVID-19 pandemic is not of our making and that we are doing everything we can to deliver on our strategic priorities.

We feel that we continue to have a good relationship with our lenders. We did not purchase any shares in the first quarter of 2022 and due to COVID-19 pandemic and its impact on our overall liquidity. Our stock repurchase program has and will likely continue to take a lower capital allocation priority for the foreseeable future.

Our Board extended the stock repurchase program for another 2 years to March 10, 2024. With that, I will now turn it over to Andrzej..

Thanks, Gilbert. First, I'd like to thank our stockholders for forwarding questions to our Investor Relations e-mail. And as always, in addition to addressing some of your questions in Ellen's discourse, we've also compiled a set of questions and answers representing the most common questions and recurring themes e-mailed to us.

So our first question, can you elaborate on prior year's $4 million accrual for the settlement of certain wage and hour claims? Was this amount reflective of multiple years of claimed activity or single year? And does the settlement involve Reading bearing a higher level of wage costs annually going forward? Ellen?.

Stipulation and agreement for class-action settlement involves our California cinema employees who work for the company at its various cinemas in California from early 2015 through the preliminary court approval date. At this point, we expect that the preliminary court date will occur sometime during the second or third quarter of 2022.

The settlement amount reflects, in addition to actual back compensation to employees, plaintiff's attorneys' fees and various statutory penalties and interest. We negotiated the right to contribute any unclaimed portion of the settlement amount to the Will Rogers Charity, which supports employees who serve the motion picture industry.

Going forward, we anticipate that because of the increases in both minimum wage rates and related employment costs across the country, labor will continue to be a constant operational focus for us. However, we don't believe that the agreement for class-action settlement itself will directly impose material increases in our labor cost for our U.S.

circuit going forward..

Thanks, Ellen. Our next question talks about our debt situation. It looks like it was a sizable BofA U.S. term loan that got reclassified to cause current liabilities to substantially increase.

What is the timing and status of paying off or replacing this loan with longer-term financing? Gilbert?.

The Bank of America line of credit was converted into a term loan with scheduled repayment maturing on March 6, 2023. As with all loans that come up for refinancing, we work diligently with the current lenders and at the same time, reach out for competitive bids from other lenders for most of the beneficial long-term loan financing.

We believe that our company has sufficient resources to meet its obligation as the loan becomes due..

Thanks, Gilbert.

Sticking with the debt situation, now that the 44 Union Square loan can be repaid without penalty, what are your prospects, timing and status toward replacing this loan with a lower rate and longer-term financing? Gilbert?.

Our current 44 Union Square loan with Emerald Creek Capital provided sufficient funding to absorb the construction loan as well as additional funding for the building.

During the first quarter of 2022, we achieved a company milestone by signing a long-term lease with a leading international retail to occupy 3 levels of our 44 Union Square property in New York City. We're currently working actively with potential tenants for the remaining floors.

We continuously monitor the net benefit and the timing for Union Square refinancing based on building's current lease status as compared to the refinancing benefit derived from negotiating ladder with a fully leased building..

Thanks, Gilbert.

Continuing on the 44 Union Square but on the operational side, when does Reading expect the new lease at 44 Union Square to begin to cash flow to us? How much time is typical in a lease location such as 44 Union Square before a landlord can expect to see cash flow being collected once the tenants is signed? For example, what duration of free rent is typical of these deals? Or are we publicly offering? Ellen, would you like to handle this?.

Thanks, Andrzej. Based on our particular lease terms and the construction schedule for completion of the landlord's work, which is already underway at 44 Union Square, we expect cash rent to be paid at some point before the end of the fourth quarter of 2022.

And based on discussions with potential tenants and our brokers about the leasability of 44 Union Square, the length of a free rent period, if any, is subject to multiple variables or various economic terms supporting a deal.

For instance, the particular use, the base rent, the term, the tenant allowance and the extent of any potential landlord work may all factor into how long, if any, a free rent period is offered for a potential tenant..

Thank you, Ellen. Our last question relates to real estate and our ability to fund any buyback of our shares.

In light of the very cheap RDI stock price, what real estate, including Cinemas 1, 2 and 3, doesn't offer optimal returns to monetize that parcel, pay down costly and/or near-term debt and eventually, post-pandemic, fund the buyback of more deeply undervalued RDI shares? Well, our stock repurchase program, as Gilbert mentioned, has been extended by our Board on management's recommendation for another 2 years through March 10, 2024.

We continue to balance our CapEx and OpEx requirements, together with our commitment to our stock repurchase program. And we'll recommence that program as circumstances allow. But clearly, given current cash needs and opportunities, we do not foresee using material assets to buy back stock in the immediate future.

We need a while longer to judge the strength of the rebound in cinema attendances. Currently, we have no plans to further monetize any of our remaining real estate assets. Historically, our approach to real estate assets has been predominantly a buy-and-hold strategy.

However, due to the COVID-19 pandemic, we monetized assets that had minimal impact to our historical cash flows that have greatly appreciated in value, and which would require substantial capital investment to take them to their next level of value. We generated $141.9 million in cash, unlocking book profits of $90.2 million.

We did not take on any high-interest rate debt or dilate stockholders by issuing equity at the stretched prices. In addition, we further enhanced our financial position by giving us the ability to pay down debt. The monetization of these assets has strengthened our balance sheet in a time of global uncertainty.

At this time, we believe our balance sheet is well positioned to provide our company with continued flexibility to allow the cinema industry and our cinema cash flows time to rebound.

As we have already said, we believe our retained real estate assets, 44 Union Square, Cinemas 1, 2 and 3 in New York, our assets in Wellington, New Zealand, Newmarket Village in Brisbane, Cannon Park in Townsville, the Belmont Common in Western Australia and our Viaduct product properties in the Arts District of Philadelphia all continue to offer substantial opportunities to create future long-term value for our stockholders.

Also, it is to be remembered that the monetization of future assets would trigger the recognition of material taxable gains, involve transaction costs and limit our long-range strategic opportunities to add value to these assets. That marks the conclusion of the call. As usual, we appreciate you listening to the call today.

Thank you for your attention, and we wish everyone good health and safety..