Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Marcus Corp (NYSE:MCS) reported a strong year-over-year improvement in their 4th quarter operating performance, continuing a positive trend from the 3rd quarter.
• The theater division saw significant attendance growth driven by a stronger film slate, featuring several blockbuster films.
• The hotel division experienced continued strength in group business and strong revenue management, delivering RevPAR growth that outperformed the industry.
• Marcus Corp (NYSE:MCS) generated consolidated revenues of $188 million, marking over a 16% increase compared to the fourth quarter last year.
• The company successfully launched the Marcus Movie Club, a subscription program that has shown early signs of strong customer interest and sign-ups.

Negative Points

• The 4th quarter operating loss was negatively impacted by a $6.4 million non-cash impairment charge in the theater division and $2.4 million of non-recurring expenses.
• The average admission price in theaters decreased by 10.6% during the fourth quarter of fiscal 2024 compared to last year.
• Marcus Corp (NYSE:MCS) theaters underperformed the industry by approximately 7.5% points in box office receipts during the 4th quarter.
• The renovation of the Hilton Milwaukee negatively impacted RevPAR growth by approximately 1.3% points during the fourth quarter.
• Adjusted EBITDA for the full year decreased by 5.8% to $102.4 million.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with MCS.

Q: How are you thinking about average ticket price and attendance growth compared to 2024, especially given your excitement about the 2025 and 2026 film slate? A: Greg Marcus, CEO, mentioned that they are closely monitoring their pricing strategy. They got aggressive with pricing in 2023 and are now trying to find the right price for the right person at the right time. The focus remains on driving attendance, which is crucial for other revenue streams. They are pleased with the attendance driven by their programs and will continue to evaluate them. As for screen count, while it's important, cash flow is prioritized, and they are looking for growth opportunities as they arise.

Q: Are there any strategies or offerings that could further enhance per capita spend on concessions? A: Greg Marcus, CEO, believes that moving to a more digital environment could increase spend. Digital ordering allows for upselling and suggestive selling without missing opportunities, unlike a busy concession stand. Chad Paris, CFO, added that making the digital purchase experience more frictionless could also enhance sales, as customers tend to bypass long concession lines.

Q: How impactful do you see the Marcus Movie Club being as a long-term driver for attendance and engagement? A: Greg Marcus, CEO, sees the Movie Club as very impactful, providing a steady cash flow stream and encouraging regular moviegoing. While they are imitating a successful model from another company, they are cautious not to extrapolate that company's performance to theirs due to their strong Tuesday program. It's early days, but the potential is promising.

Q: Can you talk about your views on the capacity of the circuit and the ability to sustain or grow market share in 2025? A: Greg Marcus, CEO, believes they have the capacity to grow market share through their operations and strategies. Chad Paris, CFO, added that their advanced showtime scheduling and proprietary PLFs allow them to manage customer load effectively, even during peak times, without seat capacity being a limitation.

Q: Is there any reason why you can't be back at a $50 million net income level in a year or two, given the progress and current conditions? A: Chad Paris, CFO, stated that achieving that level of net income depends on the theater business box office performance. There's significant operating leverage in the business, and while they demonstrated the ability to reach old margins with less attendance, sustained volume is necessary. They are optimistic about the film slate in the coming years, which could support this goal.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.