MARCUS CORP Q3 FY2024 earnings call

• Consolidated Results: Record third quarter with both divisions contributing. Theatres benefited from strong film slate and promotions; Hotels & Resorts benefited from the Republican National Convention in Milwaukee.
• Theatres Division: Strong box office performance, outperformed the industry by ~5.7 percentage points, favorable film mix, improved margins, benefits from Value Tuesday promotion (reintroduction of free popcorn for MMR members) and $7 Everyday Matinee promotion.
• Hotels & Resorts Division: Revenue growth, RevPAR growth, impact of RNC on Milwaukee properties (~$3 million revenue increase), group business growth, awards received from Conde Nast Traveler and others.
• Financing: Repurchased substantially all remaining convertible notes, completed private placement of $100 million senior notes, and began share repurchases, buying ~693,000 shares for $9.7 million.

Theatres: Third quarter fiscal 2024 total revenue was $143.8 million, a 13.6% increase compared to the prior year. Adjusted EBITDA was $33.2 million, a 24.3% increase y/y. Revenue contribution: Approximately 61.7% of total company revenue ($233 million). Hotels & Resorts: Revenues were $88.7 million, a 8.1% increase y/y. Adjusted EBITDA was $23.1 million, an 18.7% increase y/y. Revenue contribution: Approximately 38.3% of total company revenue ($233 million).

• Continued strong fourth quarter slate for theatres with films like Gladiator II, Moana 2, etc.
• Positive outlook for 2025 with a strong film slate including Superman: Legacy, Captain America, etc.
• Confidence in businesses to continue investing in operations and return capital to shareholders through dividends and share repurchases.

• Uncertainties in economic conditions that could impact consumer spending on entertainment.
• Impact of competitive landscape on market share for both theatres and hotels.
• Risks related to financing and capital structure, including potential effects of interest rate changes.

Q: Greg, do you think The Marcus Corporation is benefiting from a trade down in the consumer market due to inflation?

A: Greg Marcus said it's likely that the theatre business benefits as it's the cheapest form of outside home entertainment, but it's a combination of factors including product mix and customer behavior.

Q: Chad, can you estimate the benefit from changes to Value Tuesday and the $7 Matinee in the quarter?

A: Chad Paris said it's difficult to precisely measure, but customer feedback is positive and it's a net positive driving attendance. Changes will be lapped in May next year.

Q: On the hotel side, what's needed for M&A opportunities?

A: Greg Marcus said it's a slow market for transactions as many owners are hesitant to sell with higher interest rates, and rates coming down could loosen up the market for opportunities.