The Marcus(MCS) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements for the quarterly period ended June 30, 2025, highlighting key changes in assets, liabilities, revenue, and net earnings Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows a decrease in total assets and shareholders' equity, with an increase in long-term debt Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 26, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $14,901 | $40,841 | | Total current assets | $61,009 | $92,150 | | Net property and equipment | $694,239 | $685,734 | | Total Assets | $1,016,307 | $1,044,528 | | Total current liabilities | $156,529 | $176,681 | | Long-term debt | $170,116 | $149,007 | | Total Liabilities | $567,889 | $579,662 | | Total Shareholders' Equity | $448,418 | $464,866 | Consolidated Statements of Operations The company reported a significant increase in Q2 2025 revenues and a shift from net loss to net earnings, with improved six-month results Key Operating Results (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $206,043 | $176,032 | $354,809 | $314,579 | | Operating Income (Loss) | $13,007 | $2,237 | $(7,405) | $(14,428) | | Net Earnings (Loss) | $7,321 | $(20,221) | $(9,495) | $(32,087) | | Diluted EPS (Common Stock) | $0.23 | $(0.64) | $(0.31) | $(1.03) | Consolidated Statements of Cash Flows Net cash used in operating activities shifted to a use of $3.7 million in H1 2025, with a net decrease in total cash and equivalents Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 27, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(3,689) | $20,877 | | Net cash used in investing activities | $(31,545) | $(40,640) | | Net cash provided by (used in) financing activities | $7,354 | $(2,290) | | Net decrease in cash, cash equivalents and restricted cash | $(27,880) | $(22,053) | Condensed Notes to Consolidated Financial Statements The notes detail the basis of presentation, including a fiscal year-end change, disaggregated revenue, debt, and segment operations - Effective December 27, 2024, the company changed its fiscal year-end from the last Thursday in December to December 31 of each year[17] Total Revenues by Segment - Six Months Ended June 30, 2025 (in thousands) | Segment | Total Revenues | | :--- | :--- | | Theatres | $219,007 | | Hotels/Resorts | $135,604 | | Corporate | $198 | | Total | $354,809 | - As of June 30, 2025, the company had $179.9 million in total debt (net of issuance costs), an increase from $159.1 million at year-end 2024, primarily due to $21 million in borrowings on its revolving credit facility[45][46] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant improvement in Q2 and H1 2025 financial results, driven by the Theatre division, and reviews liquidity Overall Results of Operations Consolidated revenues increased significantly in Q2 and H1 2025, leading to improved operating income and a shift to net earnings in Q2 Overall Financial Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Variance (%) | H1 2025 | H1 2024 | Variance (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $206.0 | $176.0 | 17.0% | $354.8 | $314.6 | 12.8% | | Operating Income (Loss) | $13.0 | $2.2 | 481.4% | $(7.4) | $(14.4) | 48.7% | | Net Earnings (Loss) | $7.3 | $(20.2) | 136.2% | $(9.5) | $(32.1) | 70.4% | - The first half of fiscal 2025 included four additional operating days compared to the prior year period, which favorably impacted revenues by approximately $9.2 million[77] - The significant improvement in net earnings was aided by the absence of a $13.9 million debt conversion expense that was incurred in Q2 2024[84][85] Theatres Segment Analysis The Theatre division experienced significant revenue and operating income growth in Q2 and H1 2025, driven by increased attendance Theatres Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Variance (%) | H1 2025 | H1 2024 | Variance (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $131.7 | $101.5 | 29.8% | $219.0 | $182.7 | 19.9% | | Operating Income (Loss) | $15.7 | $2.8 | 464.5% | $9.4 | $(3.0) | 418.4% | - Comparable theatre attendance increased 26.7% in Q2 2025, attributed to a stronger film slate with 32 wide-release films compared to 28 in Q2 2024[90] - The company's admission revenue growth for comparable theatres (29.3% in Q2) underperformed the U.S. box office increase (36.5%), which management attributes to strategic pricing and value promotions[88] Key Theatre Operating Metrics (Q2 2025 vs Q2 2024) | Metric | Change | | :--- | :--- | | Average Ticket Price | +2.0% | | Average Concession Revenues per Person | +3.1% | Hotels and Resorts Segment Analysis The Hotels and Resorts division saw a slight Q2 revenue decrease and operating income decline, with RevPAR negatively impacted by renovations Hotels and Resorts Segment Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Variance (%) | H1 2025 | H1 2024 | Variance (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $74.3 | $74.5 | (0.3)% | $135.6 | $131.7 | 3.0% | | Operating Income (Loss) | $4.2 | $6.1 | (31.4)% | $(1.9) | $1.0 | (293.7)% | Key Hotel Operating Statistics (Comparable Properties, Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Occupancy Pct. | 67.3% | 72.7% | (5.4) pts | | ADR | $196.35 | $187.03 | +5.0% | | RevPAR | $132.07 | $136.03 | (2.9)% | - The renovation at the Hilton Milwaukee negatively impacted the division's RevPAR growth by an estimated 3.7 percentage points during Q2 2025[106] - Group room revenue bookings for the remainder of fiscal 2025 are in-line with the prior year, while bookings for fiscal 2026 are running nearly 20% ahead of the same time last year[109] Adjusted EBITDA Analysis Total Adjusted EBITDA increased significantly in Q2 2025, primarily driven by strong performance in the Theatres division Adjusted EBITDA by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | Variance (%) | H1 2025 | H1 2024 | Variance (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Theatres | $26.5 | $15.1 | 76.2% | $30.2 | $21.2 | 42.5% | | Hotels and resorts | $11.2 | $11.4 | (1.8)% | $12.2 | $11.4 | 7.2% | | Corporate items | $(5.5) | $(4.5) | (21.4)% | $(10.5) | $(8.4) | (24.8)% | | Total Adjusted EBITDA | $32.3 | $22.0 | 46.9% | $32.0 | $24.3 | 32.0% | Reconciliation of Net Earnings (Loss) to Adjusted EBITDA (in millions) | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net earnings (loss) | $7.3 | $(20.2) | $(9.5) | $(32.1) | | Depreciation and amortization | $17.6 | $16.7 | $35.4 | $32.7 | | Interest expense | $3.0 | $2.6 | $5.8 | $5.1 | | Income tax expense (benefit) | $2.7 | $5.7 | $(4.6) | $(1.7) | | Debt conversion expense | — | $13.9 | — | $13.9 | | Other adjustments | $1.7 | $3.3 | $1.9 | $6.4 | | Total Adjusted EBITDA | $32.3 | $22.0 | $32.0 | $24.3 | Liquidity and Capital Resources The company maintains strong liquidity with available credit and a 1.61x net leverage ratio, despite cash used in operations - As of June 30, 2025, the company had a cash balance of $14.9 million and $199.2 million of availability under its $225 million revolving credit facility[121] Net Leverage Calculation (in millions) | Metric | June 30, 2025 | | :--- | :--- | | Long-term debt | $179.9 | | Finance lease obligations | $12.4 | | Less: Cash and cash equivalents | $(14.9) | | Net Debt | $177.3 | | LTM Adjusted EBITDA | $110.2 | | Net Leverage Ratio | 1.61x | - During the first half of fiscal 2025, the company repurchased 0.4 million shares of its common stock for $7.1 million and paid dividends of $4.3 million[131][132] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures have occurred since the previous fiscal year-end of December 26, 2024 - No material changes in market risk exposures were experienced since December 26, 2024[138] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no significant changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective[139] - There were no significant changes in internal control over financial reporting during the quarter[140] PART II – OTHER INFORMATION Item 1A. Risk Factors No material changes to risk factors were reported, except for new risks related to tariffs and revised motion picture dependency - A new risk factor was added regarding the potential for tariffs to increase the cost of commodities and film production[141] - The risk factor concerning the dependency on the quantity and audience appeal of motion pictures was revised, noting the negative impact of production disruptions like the WGA and SAG-AFTRA strikes[142] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No common stock was repurchased in Q2 2025, with approximately 1.3 million shares remaining available under authorization Share Repurchases (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - June 30 | 0 | $0.00 | - As of June 30, 2025, 1,262,090 shares remained available for repurchase under the company's authorized plans[143] Item 4. Mine Safety Disclosures This section is reported as not applicable to the company's operations - Not applicable[146] Item 5. Other Information No director or Section 16 officer adopted or terminated trading arrangements during Q2 2025 - No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[147] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including incentive plans and required certifications - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32) and the company's 2025 Omnibus Incentive Plan (10.1)[148]