The Marcus(MCS) - 2024 Q3 - Quarterly Results

Overall Performance Summary The Marcus Corporation reported strong Q3 FY2024 results with significant growth in net earnings and Adjusted EBITDA, while year-to-date performance was impacted by debt conversion expenses Third Quarter Fiscal 2024 Highlights The Marcus Corporation achieved record third-quarter fiscal 2024 results, demonstrating significant year-over-year growth across key financial metrics and outperforming industry benchmarks in both divisions Q3 FY2024 Financial Performance vs. Q3 FY2023 | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $232.7M | $208.8M | +11.4% | | Operating Income | $32.8M | $20.9M | +56.6% | | Net Earnings | $23.3M | $12.2M | +90.6% | | Net Earnings per Diluted Share | $0.73 | $0.32 | +128.1% | | Adjusted EBITDA | $52.3M | $42.3M | +23.5% | - Net earnings for Q3 2024 were negatively impacted by $1.5 million ($0.05 per share) due to debt conversion expenses[4][5] - The company completed the retirement of its convertible debt to prevent future dilution and repurchased nearly $10 million of its shares during the quarter[2] First Three Quarters Fiscal 2024 Highlights For the first three quarters of fiscal 2024, the company reported a net loss primarily due to a $16.5 million debt conversion expense, despite a decline in revenues and operating income First Three Quarters FY2024 Financial Performance vs. FY2023 | Metric | First Three Quarters FY2024 | First Three Quarters FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $547.2M | $568.0M | -3.7% | | Operating Income | $18.4M | $32.8M | -43.9% | | Net Earnings (Loss) | ($8.8M) | $16.2M | -154.3% | | Net Earnings (Loss) per Diluted Share | ($0.28) | $0.46 | -160.9% | | Adjusted EBITDA | $76.5M | $90.5M | -15.5% | - The net loss for the first three quarters of fiscal 2024 was significantly impacted by $16.5 million ($0.52 per share) in debt conversion expenses[8][9] Segment Performance Both Marcus Theatres and Marcus Hotels & Resorts divisions achieved record third-quarter results, driven by strong industry outperformance and strategic initiatives Marcus Theatres® The Marcus Theatres division achieved record third-quarter results with significant revenue and operating income growth, driven by strong attendance and increased concession revenues Marcus Theatres Q3 FY2024 Performance | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $143.8M | $126.6M | +13.6% | | Operating Income | $21.8M | $11.4M | +91.3% | | Adjusted EBITDA | $33.2M | $26.7M | +24.3% | - Same-store attendance grew 7.1%, outperforming the industry by 5.7 percentage points, boosted by promotions like Everyday Matinee and Value Tuesday[12] - Average ticket price increased by 2.6%, and average concession revenues per person rose by 7.9% compared to the prior year's quarter[13] - The top-performing films in Q3 were Deadpool & Wolverine, Despicable Me 4, Twisters, Inside Out 2, and Beetlejuice Beetlejuice[14] - The company is optimistic about the Q4 film slate, which includes Gladiator II, Wicked, and Moana 2, expecting to end the year on a high note[14][15] Marcus Hotels & Resorts® The Marcus Hotels & Resorts division delivered record third-quarter results, with strong revenue and operating income growth, significantly boosted by the Republican National Convention and RevPAR outperformance Marcus Hotels & Resorts Q3 FY2024 Performance | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues (before cost reimbursements) | $79.0M | $72.1M (derived) | +9.6% | | Operating Income | $17.0M | $14.4M | +18.5% | | Adjusted EBITDA | $23.1M | $19.4M | +18.7% | - Revenue per available room (RevPAR) at comparable company-owned hotels increased by 9.8%, outperforming the industry by 8.4 percentage points[17] - Key drivers for the record quarter included the Republican National Convention in Milwaukee, improvements in group business, and the summer leisure travel season[18] - Group booking pace for the remainder of fiscal 2024 and for fiscal 2025 is running ahead of the same periods last year[18] - Four of the division's properties received high honors in Condé Nast Traveler's Readers' Choice Awards, including The Pfister Hotel and Grand Geneva Resort & Spa[19] Financial Position and Shareholder Returns The company demonstrated commitment to shareholder returns through share repurchases and strengthened its balance sheet by refinancing convertible debt Return of Capital to Shareholders The company returned $16.5 million to shareholders year-to-date through share repurchases and dividends, including $9.7 million in Q3 2024 - In Q3 2024, the company repurchased 693,000 shares of common stock for $9.7 million[20] - During the first three quarters of 2024, the company returned a total of $16.5 million to shareholders via share repurchases and dividends[20] Balance Sheet and Liquidity The Marcus Corporation maintains a strong financial position with significant liquidity, having simplified its capital structure by retiring convertible debt and refinancing with new senior notes to extend maturities - At the end of Q3 2024, the company had $248.6 million in cash and revolving credit availability[22] - The company repurchased and retired substantially all ($99.9 million of $100 million) of its 5.00% Convertible Senior Notes due 2025[23][24] - The repurchase of convertible notes resulted in a debt conversion expense of $1.4 million in Q3 and $15.3 million for the first three quarters of fiscal 2024[25] - Completed a private placement of $100 million in new senior notes ($60M at 6.89% due 2031 and $40M at 7.02% due 2034) to refinance the repurchases and extend debt maturities[26][27] Financial Statements This section provides detailed consolidated financial statements, including earnings, balance sheets, segment performance, cash flow, and reconciliation of non-GAAP measures Consolidated Statements of Earnings (Loss) The consolidated statement of earnings shows a significant increase in Q3 2024 net earnings, but a year-to-date net loss primarily due to a $15.3 million debt conversion expense Consolidated Earnings Summary (in thousands) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $232,668 | $208,766 | $547,247 | $568,049 | | Operating Income | $32,782 | $20,933 | $18,354 | $32,755 | | Debt Conversion Expense | ($1,410) | $0 | ($15,318) | $0 | | Net Earnings (Loss) | $23,314 | $12,234 | ($8,773) | $16,234 | | Net Earnings (Loss) per Share - Diluted | $0.73 | $0.32 | ($0.28) | $0.46 | Condensed Consolidated Balance Sheets The condensed consolidated balance sheet as of September 26, 2024, reflects a slight decrease in total assets and liabilities, with a minor reduction in shareholders' equity Balance Sheet Summary (in thousands) | Account | Sept 26, 2024 | Dec 28, 2023 | | :--- | :--- | :--- | | Total Assets | $1,046,959 | $1,065,103 | | Cash and cash equivalents | $28,415 | $55,589 | | Property and equipment, net | $686,993 | $682,262 | | Total Liabilities | $584,667 | $593,931 | | Long-term debt (incl. current) | $173,093 | $169,851 | | Total Shareholders' Equity | $462,292 | $471,172 | Segment Information Segment data for Q3 2024 highlights strong year-over-year growth in operating income for both the Theatres and Hotels/Resorts divisions Q3 2024 vs Q3 2023 Segment Performance (in thousands) | Segment | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Theatres | Revenues | $143,843 | $126,585 | | | Operating Income | $21,761 | $11,377 | | | Adjusted EBITDA | $33,187 | $26,695 | | Hotels/Resorts | Revenues | $88,738 | $82,098 | | | Operating Income | $17,041 | $14,377 | | | Adjusted EBITDA | $23,074 | $19,446 | Supplemental Data (Cash Flow) For the first three quarters of 2024, net cash from operating activities decreased, while net cash used in investing activities significantly increased due to higher capital expenditures Cash Flow Summary - First Three Quarters (in thousands) | Activity | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $51,374 | $68,642 | | Net cash from investing activities | ($58,397) | ($26,882) | | Net cash from financing activities | ($19,770) | ($26,184) | | Capital expenditures | ($53,770) | ($25,836) | Reconciliation of Net Earnings (loss) to Adjusted EBITDA This section reconciles GAAP Net Earnings (Loss) to Adjusted EBITDA for both the third quarter and year-to-date periods, detailing key adjustments including debt conversion expenses Q3 2024 Reconciliation Summary (in thousands) | Item | Amount | | :--- | :--- | | Net Earnings | $23,314 | | Depreciation & Amortization | $17,274 | | Income Tax Expense | $5,406 | | Interest Expense | $3,062 | | Debt Conversion Expense | $1,410 | | Other Adjustments | $2,799 | | Adjusted EBITDA | $52,275 | YTD 2024 Reconciliation Summary (in thousands) | Item | Amount | | :--- | :--- | | Net Loss | ($8,773) | | Depreciation & Amortization | $49,988 | | Debt Conversion Expense | $15,318 | | Interest Expense | $8,160 | | Share-based Compensation | $7,157 | | Other Adjustments | $4,676 | | Adjusted EBITDA | $76,526 |