The Marcus(US:MCS)2022-05-08 00:29Financial Data and Key Metrics Changes - The company reported a significant increase in consolidated revenues, growing from $50 million in the previous year to over $132 million in the first quarter of fiscal 2022, representing a more than 2.5x increase [10] - Adjusted EBITDA improved from negative $17 million last year to positive $4 million this year, an increase of nearly $21 million [10] - Interest expense decreased by $750,000 due to lower short-term debt and reduced borrowings [12] Business Line Data and Key Metrics Changes - The theater division contributed the majority of the first quarter adjusted EBITDA, with a combined contribution of $7 million prior to unallocated corporate expenses [11] - Average admission prices in the theater division increased by 6.4% compared to last year and by 18% compared to fiscal 2019 [13] - Average concession and food and beverage revenues per person increased by 5.7% compared to last year and by 36.1% compared to fiscal 2019 [14] - Hotel division total revenue for the first quarter was over 95% of 2019 levels, with adjusted revenues at 91% of adjusted 2019 levels [21] Market Data and Key Metrics Changes - U.S. box office receipts decreased by 44.1% during the fiscal 2022 first quarter compared to fiscal 2019, with the company's admission revenue decline outperforming the industry average by 4.7 percentage points [16] - The RevPAR for the company's seven comparable owned hotels decreased just under 16% compared to fiscal 2019, outperforming comparable upper upscale hotels in the U.S. by 2.1 percentage points [23] Company Strategy and Development Direction - The company aims to continue its recovery from the pandemic while focusing on long-term growth and strategic priorities [32][59] - The company is exploring new subscription models to drive recurring traffic to theaters and is testing new entertainment options within theater locations [57][56] - The company remains committed to owning its real estate and maintaining a strong balance sheet [28][59] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, noting that the first quarter results reflect significant year-over-year improvement despite challenges from the Omicron variant [9][31] - There is a belief that business travel will return to pre-pandemic levels as employees return to offices, which will positively impact hotel revenues [37] - Management highlighted the importance of exclusive theatrical windows for maximizing film performance and revenue [51][54] Other Important Information - The company reported cash flow from operations of $6.5 million, benefiting from a $23 million income tax refund and state government grants [25] - Total cash capital expenditures were $6.6 million, primarily for a guest room renovation project [26] - The company ended the quarter with nearly $241 million in cash and revolving credit availability, with no borrowings on its $225 million revolving credit facility [28] Q&A Session Summary Question: Thoughts on the volume of wide releases and potential collaboration with OTT providers - Management acknowledged that the industry is not back to pre-pandemic content levels but noted positive trends in discussions with OTT providers regarding potential collaborations [70][75] Question: Considerations for reinstating dividends - Management confirmed ongoing discussions about reinstating dividends, with expectations to return to being a dividend-paying stock, albeit at lower levels initially [84] Question: Consumer price sensitivity and inflationary pressures - Management indicated that both theater and hotel sides have shown elasticity in pricing, with selective price increases being implemented [88][90] Question: Acquisition environment in the theater sector - Management noted a quiet acquisition environment with limited activity but remains open to opportunities as the market stabilizes [94][95] Question: Exclusive theatrical window and studio compliance - Management confirmed that most major studios have conformed to a 45-day exclusive window, emphasizing the importance of this model for maximizing film revenue [97]