The Marcus(MCS) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Part I presents the company's consolidated financial statements, management's discussion, market risk, and controls Consolidated Financial Statements The consolidated financial statements present The Marcus Corporation's Q1 2025 financial position, operations, and cash flows Consolidated Balance Sheets Balance sheets show total assets decreased to $1.018 billion, driven by lower cash, with equity declining due to net loss Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 26, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $11,865 | $40,841 | | Net property and equipment | $693,120 | $685,734 | | Total current assets | $59,768 | $92,150 | | Total Assets | $1,017,957 | $1,044,528 | | Liabilities & Equity | | | | Total current liabilities | $142,812 | $176,681 | | Long-term debt | $189,062 | $149,007 | | Total liabilities | $576,166 | $579,662 | | Total shareholders' equity | $441,791 | $464,866 | | Total Liabilities & Equity | $1,017,957 | $1,044,528 | Consolidated Statements of Operations The statements of operations show Q1 2025 revenues increased to $148.8 million, but operating and net losses widened due to higher costs Q1 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $148,766 | $138,547 | | Operating loss | $(20,412) | $(16,665) | | Net loss | $(16,816) | $(11,866) | | Net loss per share - diluted (Common) | $(0.54) | $(0.38) | Consolidated Statements of Cash Flows Cash flow statements indicate a significant increase in cash used in operations to $35.3 million, leading to a net cash decrease Q1 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(35,329) | $(15,098) | | Net cash used in investing activities | $(22,779) | $(20,758) | | Net cash provided by (used in) financing activities | $29,252 | $(3,429) | | Net decrease in cash | $(28,856) | $(39,285) | Condensed Notes to Consolidated Financial Statements The notes detail accounting policies, fiscal year change, debt increase, segment performance, and a new hotel joint venture - The company changed its fiscal year from a 52/53-week system ending on the last Thursday of December to a calendar year ending on December 31, effective December 27, 2024[15] - In March 2024, the company invested $5.62 million for an initial 33.3% equity interest in a joint venture to acquire the Loews Minneapolis Hotel, now rebranded as The Lofton Hotel. The interest was later reduced to 24.7% after selling a portion to a minority investor[57] Q1 2025 Segment Performance (in thousands) | Segment | Total Revenues | Operating Loss | | :--- | :--- | :--- | | Theatres | $87,357 | $(6,281) | | Hotels/Resorts | $61,322 | $(6,044) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 results, including revenue growth, widened operating loss due to increased costs, and liquidity, with negative Adjusted EBITDA Overall Results Overall Q1 2025 revenues increased by 7.4% to $148.8 million, but operating and net losses widened due to higher costs Q1 Overall Results Summary (in millions) | Metric | F2025 | F2024 | Variance Amt. | Variance Pct. | | :--- | :--- | :--- | :--- | :--- | | Revenues | $148.8 | $138.5 | $10.2 | 7.4% | | Operating loss | $(20.4) | $(16.7) | $(3.7) | (22.5)% | | Net loss | $(16.8) | $(11.9) | $(5.0) | (41.7)% | - The first quarter of fiscal 2025 included four additional operating days compared to the prior year, which favorably impacted revenues by approximately $9.2 million[70][72] Theatres Theatre division revenues rose 7.5% to $87.4 million, but operating loss increased due to higher costs and lower average ticket price - Comparable theatre admission revenues increased 1.3%, underperforming the U.S. box office increase of 3.1% by 1.8 percentage points, attributed to strategic pricing decisions[79] - Average ticket price decreased by 5.1% in Q1 2025, negatively impacted by promotional pricing and an unfavorable ticket mix with more family films[84] - Average concession revenues per person increased by 2.9% in Q1 2025, driven by market pricing adjustments and changes to the Value Tuesday promotion[85] Hotels and Resorts Hotels and Resorts revenues grew 7.2% to $61.3 million, but operating loss widened due to increased depreciation, despite RevPAR growth Q1 Hotels and Resorts Operating Statistics (Comparable Properties) | Metric | F2025 | F2024 | Variance | | :--- | :--- | :--- | :--- | | Occupancy pct. | 50.3% | 53.7% | (3.4) pts | | ADR | $162.09 | $150.11 | +8.0% | | RevPAR | $81.45 | $80.57 | +1.1% | - The operating loss increase was significantly impacted by a $1.9 million rise in depreciation expense from hotel renovations completed in fiscal 2024[88] - Group room revenue bookings for the remainder of fiscal 2025 are running over 11% ahead of the same time last year (excluding the RNC), and fiscal 2026 bookings are over 20% ahead[95] Adjusted EBITDA Total Adjusted EBITDA for Q1 2025 was a loss of $0.3 million, a decline from prior year, with varied segment performance Adjusted EBITDA Reconciliation (in millions) | Line Item | F2025 | F2024 | | :--- | :--- | :--- | | Net loss | $(16.8) | $(11.9) | | Depreciation and amortization | 17.8 | 16.0 | | Share-based compensation | 3.5 | 2.5 | | Interest expense | 2.8 | 2.5 | | Income tax benefit | (7.4) | (7.4) | | Other adjustments | (0.8) | 1.1 | | Total Adjusted EBITDA | $(0.3) | $2.3 | Adjusted EBITDA by Segment (in millions) | Segment | F2025 | F2024 | | :--- | :--- | :--- | | Theatres | $3.7 | $6.2 | | Hotels and resorts | $1.0 | $— | | Corporate items | $(5.0) | $(3.9) | | Total Adjusted EBITDA | $(0.3) | $2.3 | LIQUIDITY AND CAPITAL RESOURCES The company maintains strong liquidity with $180.2 million available credit, despite increased cash used in operations and capital expenditures - As of March 31, 2025, the company had a cash balance of $11.9 million and $180.2 million of availability under its $225 million revolving credit facility[104] - Capital expenditures in Q1 2025 totaled $23.0 million, including $15.9 million for the hotels division (primarily for Hilton Milwaukee renovations) and $4.4 million for the theatre division[108][109] - During Q1 2025, the company repurchased 0.4 million shares of common stock for $7.1 million[113] Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures were experienced since December 26, 2024 - No material changes in market risk exposures were experienced since December 26, 2024[116] Controls and Procedures Management concluded disclosure controls and procedures are effective, with no significant changes in internal control over financial reporting - The principal executive officer and principal financial officer concluded that disclosure controls and procedures are effective[117] - No significant changes in internal control over financial reporting were identified during the quarter[118] PART II – OTHER INFORMATION Part II provides updates on risk factors, equity security sales, and other required disclosures Risk Factors Updated risk factors highlight potential negative financial impact from tariffs and dependency on film quantity and audience appeal - A new risk factor was added regarding tariffs, which could increase costs for commodities or film production, potentially harming financial results if costs cannot be offset[119] - A revised risk factor highlights the adverse financial impact from a lack of quantity and audience appeal of films, exacerbated by production disruptions from events like pandemics or labor strikes[120] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 452,592 shares of common stock at $16.87 per share, with 1.26 million shares remaining authorized Q1 2025 Share Repurchase Summary | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Dec 26 - Jan 31 | — | $— | | Feb 1 - Feb 28 | 10,989 | $20.81 | | Mar 1 - Mar 31 | 441,603 | $16.77 | | Total | 452,592 | $16.87 | - As of March 31, 2025, 1,262,090 shares remain authorized for repurchase[122] Other Information No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025 - No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025[125] Exhibits The report lists several exhibits filed with the Form 10-Q, including incentive plan agreements and required certifications - Exhibits filed include incentive plan agreements and required CEO/CFO certifications (Sections 302 and 906)[126]