Marcus Theatres and Marcus Hotels & Resorts Both Contribute to Strong Operating and Financial Results
The Marcus Corporation (NYSE: MCS) today reported results for the second quarter fiscal 2023 ended June 29, 2023.
“Thanks to continued strong customer demand and operational excellence in both businesses, The Marcus Corporation reported increased revenue, operating income, net earnings and Adjusted EBITDA for the second quarter of fiscal 2023,” said Gregory S. Marcus, chairman, president and chief executive officer of The Marcus Corporation. “A growing wide-release film slate brought new franchises to theatrical, including ‘The Super Mario Bros. Movie,’ a surprise blockbuster that drew diverse audiences to the big screen experience. Hotels continued to see healthy demand with strength in group travel during the quarter. As we look ahead to the second half of fiscal 2023, we are off to a very strong start with huge crowds flocking to Marcus Theatres for a great slate of summer blockbuster films, and strong seasonal demand at Marcus Hotels & Resorts.”
Second Quarter Fiscal 2023 Highlights
- Total revenues for the second quarter of fiscal 2023 were $207.0 million, a 4.3% increase from total revenues of $198.6 million for the second quarter of fiscal 2022.
- Operating income was $20.8 million for the second quarter of fiscal 2023, a 10.1% increase from operating income of $18.9 million for the prior year quarter.
- Net earnings was $13.5 million for the second quarter of fiscal 2023, a 50.3% increase from net earnings of $9.0 million for the same period in fiscal 2022.
- Net earnings per diluted common share was $0.35 for the second quarter of fiscal 2023, a 45.8% increase from net earnings per diluted common share of $0.24 for the second quarter of fiscal 2022.
- Adjusted EBITDA was $38.7 million for the second quarter of fiscal 2023, a 3.7% increase from Adjusted EBITDA of $37.3 million for the prior year quarter.
First Half Fiscal 2023 Highlights
- Total revenues for the first half of fiscal 2023 were $359.3 million, an 8.6% increase from total revenues of $330.8 million for the first half of fiscal 2022.
- Operating income was $11.8 million for the first half of fiscal 2023, a 464.0% increase from operating income of $2.1 million for the first half of fiscal 2022.
- Net earnings was $4.0 million for the first half of fiscal 2023, compared to net loss of $5.9 million for the same period in fiscal 2022.
- Net earnings per diluted common share was $0.13 for the first half of fiscal 2023, compared to net loss per diluted common share of $0.19 for the first half of fiscal 2022.
- Adjusted EBITDA was $48.2 million for the first half of fiscal 2023, an 18.5% increase from Adjusted EBITDA of $40.7 million for the first half of fiscal 2022.
During the second quarter of fiscal 2023, Marcus Theatres’ total revenue of $136.9 million increased 5.7% and comparable same store admission revenue increased 9.7% compared to the second quarter of fiscal 2022. Operating income of $19.8 million increased 20.7% and Adjusted EBITDA of $31.3 million increased 8.7% compared to the second quarter of fiscal 2022.
Strong per capita revenue growth was driven by a 14.2% increase in average ticket price and a 7.3% increase in average concession revenues per person during the second quarter of fiscal 2023 compared to the prior year quarter. Both average ticket price and average concession revenue per person benefited from the new Value Tuesday promotion, which took full effect in the second quarter of fiscal 2023. The new Value Tuesday promotion features $6 admission for members of the free Magical Movie Rewards (MMR) loyalty program and $7 admission for non-MMR members. The new Value Tuesday promotion features other changes including a new 20% discount on all concessions, food and non-alcoholic beverages for MMR members, which helped positively impact concession revenue. Marcus Theatres currently has 5.5 million members in its MMR loyalty program.
“While blockbusters make headlines and remain an important part of our industry, the increase in the number of quality mid-sized wide-release films across a variety of genres created more reasons for moviegoers of all ages and demographics to keep returning to Marcus Theatres,” said Mark A. Gramz, president of Marcus Theatres. “Despite a difficult comparison to the same quarter in 2022, which included not only Top Gun: Maverick but other successful blockbusters, we are very pleased by the increase in the number of new wide-release films that performed well during the quarter, including the huge blockbuster hit The Super Mario Bros. Movie.”
“We are off to a great start to the second half of the year thanks to the global phenomenon known as ‘Barbenheimer,’ with Barbie and Oppenheimer contributing to the fourth highest box office weekend of all time,” added Gramz. “Add in the early third quarter performance of Indiana Jones & The Dial of Destiny and Mission: Impossible – Dead Reckoning Part One, along with surprise hits like the Sound of Freedom, moviegoers continue to reaffirm that the movie theatre – with big screens, incredible sound, comfortable seating, and compelling food and beverage options – remains an appealing part of their out-of-home experiences.”
Marcus Theatres’ top five highest-performing films in the second quarter of fiscal 2023 were “The Super Mario Bros. Movie,” “Guardians of the Galaxy Vol. 3,” “Spider-Man Across the Spider-Verse,” “The Little Mermaid” and “Fast X.” While schedule changes may occur, new films scheduled to be released during the remainder of 2023 that have the potential to perform very well include: “Gran Turismo,” “Teenage Mutant Ninja Turtles: Mutant Mayhem,” “Blue Beetle,” “Strays,” “The Meg 2: The Trench,” “The Equalizer 3,” “The Nun II,” “The Expendables 4,” “Paw Patrol: The Mighty Movie,” “Killers of the Flower Moon,” “Dune: Part Two,” “Trolls Band Together,” “Hunger Games: The Ballad of Songbirds and Snakes,” “Wish,” “Napoleon,” “Wonka,” “The Color Purple,” and “Aquaman and the Lost Kingdom.”
Marcus Hotels & Resorts
Marcus Hotels & Resorts reported total revenue before cost reimbursements of $60.4 million during the second quarter of fiscal 2023, an increase of 7.2% compared to the second quarter of 2022 (excluding the impact from the sale of The Skirvin Hilton in the fourth quarter of fiscal 2022). During the second quarter of fiscal 2023, Marcus Hotels & Resorts reported increased revenue per available room (RevPAR) at all company-owned properties compared to the second quarter of fiscal 2022, resulting in the division outperforming the industry in the second quarter of fiscal 2023 by approximately 4.3 percentage points.
“Our peak summer travel season is off to a great start,” said Michael R. Evans, president of Marcus Hotels & Resorts. “Group demand continues to grow, resulting in improving weekday and weekend demand and positive booking trends for group events. Leisure demand remains seasonally healthy, while normalizing after a very strong 2022.”
Group demand continued to improve during the second quarter of fiscal 2023 with group booking pace running ahead of comparable pace at this time last year. Banquet and catering revenue pace for fiscal 2023 and 2024 was also ahead of comparable pace at this same time in fiscal 2022.
Last week, The Pfister Hotel in downtown Milwaukee announced that it is undergoing an extensive, state-of-the-art, multi-phase renovation. The renovation, which began in June and is expected to cost approximately $20 million, will feature a full revitalization of the ballrooms and meeting spaces, followed by all-new guest rooms in its historic tower and conclude with enhancements to the hotel’s iconic lobby, lobby bar and Café at the Pfister. All phases of this renovation are expected to be completed by spring 2024.
During the second quarter of fiscal 2023, Grand Geneva Resort & Spa announced that it completed a renovation of its 358 redesigned guest rooms and suites. This multi-phased investment also included updates to the resort’s lobby and lobby lounge, the addition of a 60-seat outdoor dining venue, and renovations to all guest bathrooms. The property is also planning a series of renovations to its meeting and event spaces.
Balance Sheet and Liquidity
The Marcus Corporation’s financial position remains strong with $265.2 million in cash and revolving credit availability at the end of the second quarter of fiscal 2023.
Diluted weighted average shares outstanding and diluted net earnings per common share include the dilutive effect of conversion of the Company’s convertible notes to the extent conversion is dilutive in each period. During the second quarter of fiscal 2023 and 2022, diluted weighted average shares outstanding includes 9.2 million and 9.1 million shares, respectively, from the dilutive effect of the convertible notes, which were excluded from diluted weighted average shares outstanding in the other periods presented as the convertible notes were antidilutive. Diluted weighted average shares outstanding does not include the benefit from the capped call transactions the Company entered into in connection with the issuance of the convertible notes, which mitigate the dilutive effect of the convertible notes by approximately 3.0 million and 2.6 million shares during the second quarter of fiscal 2023 and 2022, respectively, when settled at the maturity date of the convertible notes. Upon conversion, the convertible notes may be settled, at the Company’s election, in cash, shares of common stock or a combination thereof. To the extent the Company settles the convertible notes in cash, there will be no incremental dilution from the settlement of the convertible notes.
About The Marcus Corporation
Headquartered in Milwaukee, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres, is the fourth largest theatre circuit in the U.S. and currently owns or operates 1,027 screens at 82 locations in 17 states under the Marcus Theatres, Movie Tavern by Marcus and BistroPlex brands. The company’s lodging division, Marcus Hotels & Resorts, owns and/or manages 16 hotels, resorts and other properties in eight states. For more information, please visit the company’s website at https://www.marcuscorp.com.