The Marcus(US:MCS)2023-08-03 01:00Financial Performance - Revenues for the second quarter of fiscal 2023 increased to $207.0 million, up 4.3% from $198.6 million in the second quarter of fiscal 2022[78] - Operating income for the second quarter of fiscal 2023 was $20.8 million, a 10.1% increase from $18.9 million in the same period last year[78] - Net earnings for the second quarter of fiscal 2023 were $13.5 million, representing a 50.3% increase compared to $9.0 million in the second quarter of fiscal 2022[78] - Adjusted EBITDA for Q2 FY2023 was $38.7 million, a 3.7% increase from $37.3 million in Q2 FY2022, and for the first half of FY2023, it was $48.2 million, up 18.5% from $40.7 million in FY2022[111] Theatre Division Performance - Admission revenues in the theatre division for the second quarter of fiscal 2023 were $69.0 million, a 9.4% increase from $63.1 million in the second quarter of fiscal 2022[84] - Total theatre attendance decreased by 3.8% during the second quarter of fiscal 2023 compared to the same period in fiscal 2022, primarily due to lower performances from top films[86] - The theatre division's operating margin improved to 14.5% in the second quarter of fiscal 2023, up from 12.7% in the second quarter of fiscal 2022[83] - Average ticket price rose by 14.2% in the second quarter of fiscal 2023, contributing an additional $8.5 million to admission revenues compared to the same period in fiscal 2022[90] - Average concession revenues per person increased by 7.3% in the second quarter of fiscal 2023, resulting in an additional $3.9 million in concession revenues compared to the prior year[91] - The top five films accounted for 64% of total box office results in the second quarter of fiscal 2023, down from 68% in the same quarter of fiscal 2022[89] - The company ended the second quarter of fiscal 2023 with 1,027 company-owned screens in 82 theatres, a decrease from 1,064 screens in 85 theatres a year earlier[96] Hotels and Resorts Performance - Hotels and resorts revenues increased by 8.5% in the second quarter of fiscal 2023, excluding the impact of the sale of The Skirvin Hilton[98] - Average daily room rate (ADR) increased by 4.5% to $187.34 in the second quarter of fiscal 2023 compared to $179.33 in the prior year[102] - RevPAR increased by 9.1% to $127.70 in the second quarter of fiscal 2023, reflecting improved occupancy rates[102] - Group business represented approximately 40% of total rooms revenue in the second quarter of fiscal 2023, up from 38% in the same quarter of fiscal 2022[103] - Hotels in competitive sets experienced a RevPAR increase of 10.1% in Q2 FY2023 compared to the same period in FY2022, while the company underperformed by approximately 1.0 percentage points[106] - For the first half of FY2023, competitive sets saw a RevPAR increase of 14.7%, leading to an underperformance of approximately 2.5 percentage points for the company[106] - Group room revenue bookings for FY2023 are running approximately 8% ahead of the same time last year, while FY2024 bookings are approximately 7% ahead of early FY2022[107] Cash Flow and Capital Expenditures - Net cash provided by operating activities totaled $47.3 million in the first half of FY2023, down from $55.2 million in the same period of FY2022[114] - Net cash used in investing activities increased to $16.6 million in the first half of FY2023 from $11.5 million in FY2022, primarily due to the absence of prior year asset sales[115] - Total cash capital expenditures for the first half of FY2023 were $15.9 million, slightly down from $16.3 million in FY2022[115] - Approximately $6.8 million of capital expenditures in FY2023 were incurred in the theatre division, with $8.9 million in the hotels and resorts division for renovations and maintenance[116] - Net cash used in financing activities during the first half of fiscal 2023 totaled $6.3 million, an increase from $4.4 million in the same period of fiscal 2022[117] Debt and Financial Position - The debt-to-capitalization ratio was 0.28 as of June 29, 2023, unchanged from December 29, 2022[118] - The company had a cash balance of approximately $44.6 million and $220.6 million available under its revolving credit facility as of June 29, 2023[113] - Principal payments on long-term debt were approximately $0.8 million in the first half of fiscal 2023, compared to $0.9 million in the first half of fiscal 2022[118] - Dividends paid during the first half of fiscal 2023 were $3.1 million, while no dividends were paid in the first half of fiscal 2022[121] - The company has approximately 2.5 million shares available for repurchase under prior Board of Directors repurchase authorizations[119] - The Credit Agreement was amended to replace the LIBOR benchmark with the secured overnight financing rate (SOFR) effective February 10, 2023[122] - The company returned to compliance with prior financial covenants under the Credit Agreement starting in the first quarter of fiscal 2023, removing limitations on quarterly dividends and share repurchases[121] - New short-term revolving credit facility borrowings added in the first half of fiscal 2023 totaled $38.0 million, with an equal amount of repayments, resulting in net zero borrowings[117] Taxation - The effective income tax rate for the first half of fiscal 2023 was 24.0%, compared to 23.1% in the first half of fiscal 2022[82] - The company anticipates an effective income tax rate for fiscal 2023 in the range of 24-28%[82] Market Conditions and Future Outlook - The company anticipates an increase in the quantity of available films in 2023 compared to the prior year, despite ongoing labor disputes affecting film production[93] - The company has not experienced any material changes in market risk exposures since December 29, 2022[124]