The Marcus(US:MCS)2023-03-02 22:20Theatre Operations - As of December 29, 2022, the company operated 85 movie theatres with a total of 1,064 screens across 17 states, making it the 4th largest theatre circuit in the United States[8]. - The acquisition of Movie Tavern in 2019 added 208 screens at 22 locations, increasing the total number of screens by approximately 23% for the company[12]. - As of December 29, 2022, 66 theatres, or approximately 78% of the company's theatres, offered DreamLounger recliner seating, which has increased attendance and outperformed nearby competitors[13]. - The company offers digital cinema projection on 100% of its screens, allowing for alternative content programming, including live performances and sports events[19]. - As of December 29, 2022, the company had the capability to offer digital 3D presentations in approximately 34% of its screens, including most UltraScreens[23]. - The company introduced the Marcus Private Cinema program, which accounted for approximately 21% of admission revenues during peak weeks in fiscal 2021[17]. - The company plans to invest approximately $15 - $20 million in capital expenditures for theatre upgrades in fiscal 2023[157]. - The company introduced the Marcus Passport program in January 2023, allowing customers access to a series of films at a discounted rate[158]. - The company plans to expand its subscription programs to additional markets in fiscal 2023[158]. - The company aims to modernize pricing strategies, including successful promotions like "Value Tuesday" and "Student Thursday," to increase movie-going frequency[157]. - The company is exploring new viewing experiences, including a 4DX auditorium and a ScreenX auditorium, to enhance customer engagement[158]. Financial Performance - Revenues for fiscal 2022 were $677.4 million, a 47.8% increase from $458.2 million in fiscal 2021[171]. - Operating income improved to $8.3 million in fiscal 2022, compared to an operating loss of $41.5 million in fiscal 2021, marking a 120.0% increase[171]. - Net loss attributable to The Marcus Corporation decreased to $12.0 million in fiscal 2022 from $43.3 million in fiscal 2021, a 72.3% improvement[171]. - Interest expense decreased by $3.4 million, or 18.2%, to $15.3 million in fiscal 2022 compared to $18.7 million in fiscal 2021[176]. - The effective income tax rate for fiscal 2022 was (147.6)%, with an anticipated range of 24-26% for fiscal 2023[183]. - The company has resumed paying dividends, but future payments are restricted by debt agreements and depend on financial performance[90]. - The company anticipates total sales proceeds from real estate sales during the next fiscal year to be approximately $5 - $10 million[170]. Customer Engagement and Loyalty - Approximately 5.1 million members are enrolled in the Magical Movie Rewards loyalty program, accounting for 45% of box office transactions and 40% of total transactions in fiscal 2022[18]. - The company has continued to enhance its mobile ticketing capabilities and installed additional technology to improve customer interactions at theatres[18]. Competition and Market Challenges - The company faces intense competition from larger national and regional chains, as well as local franchises, which have greater financial and marketing resources[50]. - The company competes with various alternative motion picture distribution channels, including streaming services, which are producing theatrical-quality original content[71]. - The hotel and resorts division may face adverse effects from an oversupply of hotel rooms in major markets, leading to decreased occupancy and profitability[74]. - Intense competition exists across all business segments, with no significant barriers to entry in the motion picture exhibition industry, impacting the ability to attract patrons[75]. - Labor costs, including wages and benefits, are significant and could increase due to regulatory actions, impacting the ability to attract and retain quality employees[76]. Operational Challenges - The company is experiencing challenges related to a labor shortage, impacting its ability to service increasing customer counts in both theatres and hotels[59]. - Supply chain disruptions, including shortages and delays, may negatively impact the availability and cost of critical items, affecting operations[77]. - Seasonal variations lead to unpredictable quarterly results, with the first fiscal quarter typically being the weakest due to reduced travel during winter months[80]. - Economic downturns, particularly in the Midwest, could adversely affect demand for business and group travel, impacting the hotels and resorts division[83]. Investments and Capital Expenditures - The company invested approximately $391 million over the last nine-plus years to enhance the movie-going experience and amenities in new and existing theatres[12]. - Aggregate cash capital expenditures, acquisitions, and contributions to joint ventures were $36.8 million in fiscal 2022, up from $19.5 million in fiscal 2021[153]. - The company expects cash capital expenditures to increase to a range of $60 million to $75 million during fiscal 2023[153]. - Strategic initiatives in the theatre and hotels divisions require significant capital expenditures, with no assurance of generating sufficient cash flow for expected returns[98]. Real Estate and Asset Management - The company sold The Skirvin Hilton for $36.75 million on December 16, 2022[34]. - The company reported a gain of $6.3 million from the sale of The Skirvin Hilton on December 16, 2022[180]. - The company formed a joint venture with Searchlight Capital Partners in December 2021 to co-invest in lifestyle hotels and resorts[167]. - The company expects to pursue additional management contracts and may acquire other hotel management companies to enhance growth[168]. Regulatory and Compliance Issues - The company is subject to substantial government regulations, which could entail significant costs and impact operations[105]. - Changes in tax rates and legislation could adversely affect the company's financial condition and operating results[106]. - Environmental regulations have not materially affected the company's capital expenditures or earnings, but they complicate real estate transactions[54]. Employee Relations - As of December 29, 2022, the company employed approximately 8,050 employees, with about 61% working on a variable or part-time basis[58]. - Approximately 5% of the company's employees are covered by collective bargaining agreements, with none expiring before December 28, 2023[58]. - The company emphasizes a commitment to diversity and inclusion in its workplace, promoting ethical conduct and adherence to a code of conduct among all employees[60].