The Marcus(US:MCS)2020-02-24 19:36Theatre Operations - As of December 26, 2019, the company operated 91 movie theatres with a total of 1,106 screens across 17 states, making it the 4th largest theatre circuit in the United States[15]. - The acquisition of Movie Tavern on February 1, 2019, added 208 screens at 22 locations, increasing the total number of screens by approximately 23% for a total purchase price of approximately $139.3 million[21]. - As of December 26, 2019, the company offered DreamLounger recliner seating in 63 theatres, representing approximately 72% of its company-owned, first-run theatres[23]. - The company operates 51 theatres with bar service, representing approximately 59% of its company-owned, first-run theatres as of December 26, 2019[25]. - As of December 26, 2019, the company operated 32 theatres with full-service, in-theatre dining, representing approximately 37% of its company-owned, first-run theatres[28]. - The company has digital cinema projection on 100% of its first-run screens, allowing for non-motion picture programming, including live performances and special events[29]. - The theatre division operated 1,106 screens across 91 locations as of fiscal 2019, compared to 889 screens at 68 locations in fiscal 2018[187]. - The acquisition of Movie Tavern added approximately $125.8 million to theatre division revenues during the 47 weeks of ownership in fiscal 2019, increasing total screens by 23%[189]. - Total theatre attendance increased by 8.8% in fiscal 2019, although attendance at comparable theatres decreased by approximately 8.6%[190]. - The "$5 Tuesday" promotion has significantly increased attendance, with a similar response observed at Movie Tavern theatres[178]. - The top 15 performing films accounted for 48% of total admission revenues in fiscal 2019, up from 42% in fiscal 2018[197]. - Average ticket price increased by 8.0% in fiscal 2019, contributing approximately $7.6 million to admission revenues[200]. - Total concession revenues increased by 38.8% in fiscal 2019, with average concession sales per person rising by 27.6%[201]. - The theatre division contributed 67.9% of consolidated revenues and 88.4% of consolidated operating income in fiscal 2019, up from 63.2% and 87.7% in fiscal 2018[187]. - Total revenues for the theatre division increased by 24.7% to $557.1 million in fiscal 2019, driven by the acquisition of Movie Tavern theatres and increased admission and concession revenues[188]. Financial Performance - Revenues for fiscal 2019 were $820,863,000, an increase of 16.0% from $707,120,000 in fiscal 2018[139]. - Net earnings attributable to The Marcus Corporation for fiscal 2019 were $42,017,000, a decrease of 21.3% from $53,391,000 in fiscal 2018[139]. - Net earnings per common share for fiscal 2019 were $1.35, down from $1.86 in fiscal 2018, representing a decline of 27.4%[139]. - Total assets increased to $1,359,186,000 in fiscal 2019 from $989,331,000 in fiscal 2018, reflecting a growth of 37.4%[139]. - Long-term debt decreased to $206,432,000 in fiscal 2019 from $228,863,000 in fiscal 2018, a reduction of 9.8%[139]. - Shareholders' equity attributable to The Marcus Corporation rose to $621,435,000 in fiscal 2019, up 26.9% from $490,009,000 in fiscal 2018[139]. - Capital expenditures and acquisitions for fiscal 2019 totaled $94,167,000, an increase from $58,660,000 in fiscal 2018[139]. - The current ratio for fiscal 2019 was 0.45, slightly down from 0.46 in fiscal 2018[139]. - The debt/capitalization ratio improved to 0.26 in fiscal 2019 from 0.33 in fiscal 2018[139]. - Return on average shareholders' equity for fiscal 2019 was 7.6%, down from 11.4% in fiscal 2018[139]. - Operating income decreased by 18.0% to $68.2 million in fiscal 2019, down from $83.2 million in fiscal 2018[154]. - Investment income rose to $1.4 million in fiscal 2019, compared to $208,000 in fiscal 2018, due to increases in the value of marketable securities[159]. - Interest expense decreased by 9.8% to $11.8 million in fiscal 2019, down from $13.1 million in fiscal 2018[160]. - Other expense decreased by 3.2% to $1.9 million in fiscal 2019, compared to $2.0 million in fiscal 2018[161]. - Fiscal 2019 income tax expense was $12.3 million, a decrease of approximately $800,000, or 6.1%, compared to $13.1 million in fiscal 2018[165]. - The effective income tax rate for fiscal 2019 was 22.7%, up from 19.7% in fiscal 2018, with an anticipated increase to the 24-26% range for fiscal 2020[165]. Hotel and Resort Operations - The hotels and resorts division contributed 32.1% of consolidated revenues and 11.6% of consolidated operating income in fiscal 2019, down from 36.8% and 12.3% in fiscal 2018, respectively[210]. - Total revenues for the hotels and resorts division in fiscal 2019 were $263.4 million, representing a 1.3% increase from $259.9 million in fiscal 2018[212]. - Operating income decreased to $10.1 million in fiscal 2019, a decline of 19.5% compared to $12.5 million in fiscal 2018[210]. - Room revenues fell to $105.9 million in fiscal 2019, a decrease of 2.7% from $108.8 million in fiscal 2018[212]. - Food and beverage revenues increased to $74.7 million in fiscal 2019, up 2.6% from $72.8 million in fiscal 2018[212]. - Other revenues rose to $46.5 million in fiscal 2019, reflecting a 2.7% increase from $45.3 million in fiscal 2018[212]. - The total number of available rooms increased to 5,385 in fiscal 2019, up from 5,275 in fiscal 2018[210]. - Management contracts with other owners increased to 1,945 rooms in fiscal 2019, compared to 1,833 rooms in fiscal 2018[210]. - Cost reimbursements grew by 10.0% to $36.3 million in fiscal 2019, up from $33.0 million in fiscal 2018[212]. - The operating margin for the hotels and resorts division was 3.8% in fiscal 2019, down from 4.8% in fiscal 2018[210]. Strategic Initiatives and Challenges - The company continues to pursue additional strategies to increase ancillary revenue sources, including advertising and sponsorships[36]. - The company faces intense competition from larger national and regional chains, impacting its market positioning[71]. - Economic downturns may adversely affect the hotels and resorts division, particularly impacting group travel customers[89]. - The company expects to derive most of its business from traditional distribution channels, but increasing sales through third-party internet travel intermediaries could decrease consumer loyalty[90]. - Strategic initiatives may require significant capital expenditures, with uncertain returns on investment from these initiatives[92]. - The company has a history of successfully integrating acquisitions, including the Movie Tavern business, but faces operational risks such as management distraction and market entry challenges[93]. - The movie theatre and hotels and resorts businesses are heavily capital intensive, requiring substantial upfront cash investments before generating sufficient revenues[94]. - The company periodically assesses indicators of impairment for long-lived assets, as demographic changes and economic conditions may render some properties unprofitable[95]. - Achieving growth objectives in both theatre and hotels and resorts divisions depends on the ability to identify suitable properties for acquisition and development[96]. - The company may act as an investment fund sponsor to acquire additional hotel properties, which requires identifying suitable joint venture partners or raising equity funds[98]. - Adverse economic conditions may hinder the company's ability to obtain financing on reasonable terms, impacting liquidity and growth objectives[99]. - Joint venture investments may involve risks such as shared control and potential bankruptcy of partners, affecting the management of joint venture assets[100]. - The company’s properties are subject to risks from acts of God, terrorism, and other crises, which may adversely affect financial results[101]. - Information technology systems are critical for operations, and any failure or cyber attack could disrupt business and lead to increased costs[102]. Future Outlook - Fiscal 2020 capital expenditures in the theatre division are anticipated to total approximately $45-$60 million[177]. - The company plans to invest approximately $20-$25 million in capital expenditures for hotels and resorts in fiscal 2020, excluding unidentified acquisitions[185]. - The company has assumed management of the Hyatt Regency Schaumburg hotel, which has 468 rooms and underwent a $15 million renovation[185]. - The company increased its quarterly common stock cash dividend rate by 6.3% in the first quarter of fiscal 2020, following increases of 20.0% and 6.7% in previous years[185]. - Fiscal 2020 is expected to benefit from an additional week of operations, potentially increasing revenues and operating income[209]. - The film slate for fiscal 2020 is anticipated to include a higher quantity of films, which may enhance box office performance[208]. - The company expects an increase in average concession sales per person in fiscal 2020 due to more non-traditional food and beverage outlets[201].