The Marcus Corporation (NYSE: MCS) today reported results for the third quarter fiscal 2023 ended September 28, 2023.

“It was another strong quarter for The Marcus Corporation, with growth in revenue, operating income, net earnings and Adjusted EBITDA during the third quarter of fiscal 2023,” said Gregory S. Marcus, chairman, president and chief executive officer of The Marcus Corporation. “Marcus Theatres led the way with the box office phenomenon ‘Barbenheimer,’ along with the surprise hit, ‘Sound of Freedom,’ delivering strong performances and impressive attendance growth at theatres across our circuit. At Marcus Hotels & Resorts, our peak leisure travel season was bolstered by great weather, while group travel continued to show strong demand. We are pleased by the continued performance of both divisions and remain focused on driving operational and financial excellence in all facets of our business.”

Third Quarter Fiscal 2023 Highlights

• Total revenues for the third quarter of fiscal 2023 were $208.8 million, a 13.7% increase from total revenues of $183.7 million for the third quarter of fiscal 2022.
• Operating income was $20.9 million for the third quarter of fiscal 2023, a 133.9% increase from operating income of $8.9 million for the prior year quarter.
  Net earnings was $12.2 million for the third quarter of fiscal 2023, a 272.0% increase from net earnings of $3.3 million for the same period in fiscal 2022.
  Net earnings per diluted common share was $0.32 for the third quarter of fiscal 2023, a 220.0% increase from net earnings per diluted common share of $0.10 for the third quarter of fiscal 2022.
  Adjusted EBITDA was $42.3 million for the third quarter of fiscal 2023, a 51.9% increase from Adjusted EBITDA of $27.9 million for the prior year quarter.

First Three Quarters Fiscal 2023 Highlights

• Total revenues for the first three quarters of fiscal 2023 were $568.0 million, a 10.4% increase from total revenues of $514.4 million for the first three quarters of fiscal 2022.
• Operating income was $32.8 million for the first three quarters of fiscal 2023, a 196.6% increase from operating income of $11.0 million for the first three quarters of fiscal 2022.
• Net earnings was $16.2 million for the first three quarters of fiscal 2023, compared to net loss of $2.7 million for the same period in fiscal 2022.
• Net earnings per diluted common share was $0.46 for the first three quarters of fiscal 2023, compared to net loss per diluted common share of $0.09 for the first three quarters of fiscal 2022.
• Adjusted EBITDA was $90.5 million for the first three quarters of fiscal 2023, a 32.1% increase from Adjusted EBITDA of $68.5 million for the first three quarters of fiscal 2022.

Marcus Theatres
Revenue, operating income and Adjusted EBITDA for Marcus Theatres improved significantly in the third quarter and first three quarters of fiscal 2023 compared to the same periods in fiscal 2022.

For the third quarter of fiscal 2023, the division reported total revenues of $126.6 million, a 25.0% increase compared to the same period last year, with comparable same store admission revenues increasing 29.8% compared to the third quarter of fiscal 2022. Operating income of $11.4 million in the third quarter of fiscal 2023 improved from an operating loss of $0.7 million in the third quarter of fiscal 2022 thanks to strong revenue growth and improved labor productivity. The division reported Adjusted EBITDA of $26.7 million in the third quarter of fiscal 2023, an increase of 114.3% compared to the third quarter of fiscal 2022.

Marcus Theatres attendance grew 15.6% at comparable same store theatres during the third quarter of fiscal 2023 compared to the same period last year, on a strong performance from blockbuster films. Average ticket price and average concession revenues continued to be positively impacted by the new Value Tuesday program, with average ticket price up 12.8% and average concession revenues up 6.5% during the third quarter of fiscal 2023 compared to the same period last year.

“Overall attendance in the third quarter grew significantly thanks to the strong performance of a variety of exciting films like ‘Barbie’ and ‘Oppenheimer,’” said Mark A. Gramz, president of Marcus Theatres. “Moviegoers also came to enjoy films that were more under the radar, like ‘Sound of Freedom,’ which played very well in our markets. The lesson continues to be that when there are great films to be seen – blockbuster, mid-sized or alternative content – moviegoers of all ages want to experience them on the big screen.”

Marcus Theatres’ top five highest-performing films in the third quarter of fiscal 2023 were “Barbie,” “Oppenheimer,” “Sound of Freedom,” “Indiana Jones and the Dial of Destiny” and “Mission: Impossible – Dead Reckoning Part One.” The fourth quarter of fiscal 2023 is already off to a strong start with “Taylor Swift: The Eras Tour” producing the highest box office concert film of all time in North America. Films such as “The Exorcist: Believer,” “Paw Patrol: The Mighty Movie,” “Saw X,” “The Creator” and “Five Nights at Freddy’s” are also performing well during the first few weeks of the fourth quarter of fiscal 2023.

While film schedule changes may occur, there are several new films planned to be released during the remainder of fiscal 2023 that have the potential to perform very well, including: “The Marvels,” “The Holdovers,” “Trolls Band Together,” “Hunger Games: The Ballad of Songbirds and Snakes,” “Wish,” “Napoleon,” “Renaissance: A Film by Beyoncé,” “Wonka,” “Aquaman and the Lost Kingdom,” and “The Color Purple.”

Marcus Hotels & Resorts
For the third quarter of fiscal 2023, Marcus Hotels & Resorts comparable hotels revenues before cost reimbursements increased 4.1% from the third quarter of fiscal 2022 (which excludes the impact from the sale of The Skirvin Hilton). For the first three quarters of fiscal 2023, comparable hotels revenues before cost reimbursements increased 7.0%.

Revenue per available room, or RevPAR, increased at six of seven comparable company-owned hotels during the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022. As a result, the division outperformed the industry and its competitive sets during the third quarter of fiscal 2023 by 2.3 percentage points and 0.8 percentage points, respectively.

“The third quarter is typically our strongest given the peak summer leisure travel season, and this year was no different,” said Michael R. Evans, president of Marcus Hotels & Resorts. “Group demand continues to grow and we are capitalizing on our newly renovated meeting spaces with event bookings. Our strong commitment to operational excellence and exceptional service, combined with our continued investment in our award-winning properties, ideally positions our hotels and resorts to stand out within the markets where they compete.”

Group booking pace for fiscal 2023 and fiscal 2024 are running ahead of comparable pace during the same period of fiscal 2022. Banquet and catering booking pace for fiscal 2023 and 2024 are also ahead compared to the same period last year.

In October, four Marcus Hotels & Resorts properties earned high honors in Condé Nast Traveler’s Readers’ Choice Awards. The Pfister Hotel and Saint Kate – The Arts Hotel, both in Milwaukee, were named the #2 and #4 in Top Hotels in the Midwest. The Kimpton Hotel Monaco Pittsburgh was recognized as the #9 Top Hotel in the Mid-Atlantic and The Garland in North Hollywood, California was ranked the #16 Top Hotel in Los Angeles. The Condé Nast Traveler Readers’ Choice Awards are the longest-running and most prestigious recognition of excellence in the travel industry and are commonly known as “the best of the best of travel.”

Grand Geneva Resort & Spa in Lake Geneva, Wisconsin, recently announced the continuation of its multi-phased renovation at the iconic resort. With newly redesigned guest rooms and suites, updates to the resorts lobby and lobby lounge, and the addition of a new outdoor dining venue complete, the Grand Geneva is now beginning renovations of its 62,000 square foot meeting and event space. These renovations are expected to be complete by spring 2024. In addition, the Timber Ridge Lodge & Waterpark, located on the same resort campus as the Grand Geneva, will be unveiling new experiences in November 2023 at its popular Moose Mountain Falls indoor waterpark ahead of the holiday travel season.

Balance Sheet and Liquidity
At the end of the third quarter of fiscal 2023, the company had $256.7 million in cash and revolving credit availability.

Subsequent to the end of the third quarter, on October 16, 2023, The Marcus Corporation entered into a credit agreement amendment to provide for a new $225 million five-year revolving credit facility that matures in October 2028. This replaces the previous credit facility that was set to mature in January 2025. Commenting on the new credit agreement, Chad M. Paris, chief financial officer and treasurer, said: “The successful closing of this facility demonstrates our continued proactive approach to managing our balance sheet. Maintaining a strong balance sheet has been a hallmark of The Marcus Corporation for 88 years. Our new credit facility ensures we have significant liquidity and financial flexibility to invest in our long-term future growth. The continued support from our long-term relationships within our lending group is greatly appreciated.”

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 third 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. During the first three quarters of fiscal 2023, diluted weighted average shares outstanding includes 9.2 million shares from the dilutive effect of the convertible notes, which were excluded from diluted weighted average shares outstanding during the first three quarters of fiscal 2022 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 2.7 million and 2.6 million shares during the third 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.