• Consolidated Revenue: $176 million, a decrease of 15% compared to the prior year quarter.
• Consolidated Operating Income: $2.2 million.
• Adjusted EBITDA: $22 million.
• Net Loss: $5.2 million or $0.17 per share, excluding impacts of convertible debt repurchases.
• Hotels and Resorts Revenue: $74.5 million, an increase of 6.3% compared to the prior year.
• RevPAR Growth for Owned Hotels: 6.5% increase.
• Average Occupancy Rate for Owned Hotels: 72.7%.
• Hotels Adjusted EBITDA: $11.4 million.
• Theater Revenue: $101.5 million, a decrease of 25.9% compared to the prior year.
• Comparable Theater Admission Revenue: Decreased 28.8%.
• Average Admission Price: Decreased by 3.1%.
• Concession Food and Beverage Revenue Per Person: Increased by 2.3%.
• Theater Adjusted EBITDA: $15.1 million, down from $31.3 million in the prior year quarter.
• Cash Flow from Operations: $36 million, down from $55 million in the prior year quarter.
• Capital Expenditures: $19.8 million, compared to $7 million in the prior year quarter.
• Total Liquidity: Over $208 million.
• Debt to Capitalization Ratio: 28%.
• Net Leverage: 1.9 times net debt to adjusted EBITDA.

• Warning! GuruFocus has detected 5 Warning Signs with MCS.

Release Date: August 01, 2024

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

Positive Points

• Marcus Corp (NYSE:MCS) reported a significant improvement in theater attendance in June, indicating a recovery from earlier content supply challenges.
• The Hotels and Resorts division saw a 6.3% increase in revenue compared to the prior year, driven by strong group business and improved occupancy rates.
• RevPAR for comparable owned hotels grew by 6.5%, outperforming both competitive hotels in their markets and the upper upscale hotel segment nationally.
• The company successfully completed refinancing transactions, extending their weighted average debt maturity from 1.6 years to over four years.
• Marcus Corp (NYSE:MCS) is optimistic about the second half of the year, with a strong slate of films expected to drive theater attendance and continued growth in the hotel segment.

Negative Points

• Consolidated revenues decreased by 15% compared to the prior year, primarily due to a decline in the theater division.
• The theater division experienced a 25.9% decrease in total revenue, with comparable theater attendance dropping by 26.3%.
• The company incurred a net loss of $5.2 million for the second quarter, excluding impacts from convertible debt repurchases.
• Average admission prices decreased by 3.1% due to promotional activities aimed at driving attendance, impacting revenue per customer.
• The company faced a challenging comparison with the prior year due to a weaker film slate and fewer blockbusters in the second quarter.

Q & A Highlights

Q: Was there any displacement impact from the RNC event, and did it help tighten the profile of Saint Kate, the Arts Hotel? A: Yes, the RNC did cause some business to move later in the summer, such as the Northwestern Mutual Annual conference. There was also some displacement before the RNC due to extensive setup. Overall, it was a net positive. Regarding Saint Kate, the RNC helped build its profile, and we are considering expanding the concept.

Q: Is film flow more about the number of films or the quality and demographic appeal of the films being released? A: It's primarily about the number of films, assuming a normal slate with a mix of tent poles and smaller films. The box office is predictable with a varied slate. People want to go to the movies, and quality films like Deadpool show that audiences are still interested.

Q: How will alternative content impact the business as traditional content becomes more available? A: Alternative content will remain important but won't be the largest part of our business. It's profitable, and we need to market effectively to specific audiences. Our loyalty program helps us target these audiences, and we see growth in areas like Bollywood films.

Q: Can you continue to grow the hotel segment in the second half of 2024 and into 2025, given previous concerns about leisure softness? A: We saw some leisure softness, but other segments, particularly group bookings, have offset this. Group bookings are strong for the rest of 2024 and into 2025, which should help us manage any leisure softness.

Q: What opportunities do you see for expanding your theater network, and how does the current acquisition environment look? A: We are looking for opportunities, but the M&A model has changed. We focus on individual deals rather than large circuits, as many locations are not cash flow positive. We are open to expanding beyond the Midwest if the right opportunity arises.

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