The Marcus Corporation Reports Second Quarter Results

Record operating income for Marcus® Hotels & Resorts helps to offset impact of weaker film slate for Marcus Theatres®

MILWAUKEE--()--The Marcus Corporation (NYSE: MCS) today reported results for the second quarter ended November 26, 2015.

Second Quarter Highlights

  • Total revenues for the second quarter of the transition period ending December 31, 2015 were $115,676,000, a slight decrease from revenues of $116,061,000 for the second quarter of fiscal 2015.
  • Operating income was $10,554,000 for the second quarter of the transition period, a 9.2% decrease from operating income of $11,620,000 for the second quarter of fiscal 2015.
  • Net earnings attributable to The Marcus Corporation were $4,945,000 for the second quarter of the transition period, a 5.3% decrease from net earnings attributable to The Marcus Corporation of $5,223,000 for the second quarter of fiscal 2015.
  • Net earnings per diluted common share attributable to The Marcus Corporation were $0.18 for the second quarter of the transition period, a 5.3% decrease from net earnings per diluted common share attributable to The Marcus Corporation of $0.19 for the second quarter of fiscal 2015.

First 26 Weeks Highlights

  • Total revenues for the first 26 weeks of the transition period ending December 31, 2015 were $264,866,000, a 6.9% increase from revenues of $247,830,000 for the first 26 weeks of fiscal 2015.
  • Operating income was $36,410,000 for the first 26 weeks of the transition period, a 6.1% increase from operating income of $34,309,000 for the same period in the prior year.
  • Net earnings attributable to The Marcus Corporation were $19,596,000 for the first 26 weeks of the transition period, an 11.0% increase from net earnings attributable to The Marcus Corporation of $17,655,000 for the first 26 weeks of fiscal 2015.
  • Net earnings per diluted common share attributable to The Marcus Corporation were $0.70 for the first 26 weeks of the transition period, a 9.4% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.64 for the first 26 weeks of fiscal 2015.

“Although the theatre division had a challenging second quarter, both divisions still achieved record operating income for the first 26 weeks of the transition period. Second quarter results for Marcus Hotels & Resorts benefited from a higher average daily rate and strong cost controls, which helped to offset the impact of a weaker film slate and a significant number of screens out of service for upgrades for Marcus Theatres,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.

Marcus Theatres®

“Marcus Theatres reported record second quarter revenues, as well as record revenues and operating income for the first 26 weeks of the transition period. Our second quarter box-office results generally matched the industry, in spite of an unprecedented number of screens out of service as we prepared for the major opening today of Star Wars: The Force Awakens. Over the past three weeks, we have returned to our nearly two-year record of outperforming the industry as newly renovated screens have come on line,” said Marcus.

“Our successful food and beverage concepts continued to generate significant revenues, with concession revenues per person up 6.6% for the second quarter and 10.1% for the first 26 weeks,” said Rolando B. Rodriguez, president and chief executive officer of Marcus Theatres.

“We recently added 17 newly renovated premium large format screens with DreamLoungerSM recliner seating to our circuit. We now offer premium large format screens in more than 61% of our company-owned, first run theatres, which we believe is the highest percentage among the top chains in the industry. This positions us very well to capitalize on what is expected to be a record-breaking performance for the highly anticipated sequel to the epic Star Wars series,” said Rodriguez.

Rodriguez said the five top-performing films for Marcus Theatres in the second quarter were The Martian, The Hunger Games: Mockingjay – Part 2, Hotel Transylvania 2, Spectre and The Peanuts Movie.

“Looking ahead, potential hits in the pipeline include two other films opening tomorrow, Sisters and Alvin and the Chipmunks – The Road Chip. Five additional pictures, The Big Short, Daddy’s Home, Point Break, Joy and Concussion all open next week, followed by films such as The Revenant, The Hateful Eight and Ride Along 2 in early January,” said Rodriguez.

“We are in the process of renovating five additional theatres, each with DreamLounger recliner seating and selected food and beverage outlets. These renovations, plus two new UltraScreen® auditoriums also under construction, are scheduled to be completed during the first half of 2016. In November, we opened the Midwest’s first 4-D movie theatre at our Gurnee Mills Cinema in Gurnee Mills, Ill. This new technology immerses movie-goers into the action like never before, with special effects including motion, wind, lightning flashes and scents. All of these investments are designed to create the ultimate movie-going experience for our guests,” said Rodriguez.

Marcus® Hotels & Resorts

“Marcus Hotels & Resorts achieved record operating income for both the second quarter and first 26 weeks as a result of increased revenues at comparable hotels and a strong focus on operational improvements. Revenue per available room (RevPAR) for comparable company-owned hotels increased 2.4% in the second quarter,” said Marcus.

“The hotel division achieved a 33.1% increase in operating income in the second quarter and a 14.4% increase in operating income for the first 26 weeks, compared to the same periods last year. Our team is focused on delivering exceptional guest experiences, managing costs and increasing profitability in all areas of our properties,” said Joseph Khairallah, chief operating officer of Marcus Hotels & Resorts.

“As part of our strategy to increase our number of rooms under management, we recently expanded our hotel development team with the addition of a senior executive experienced in operations, business development, marketing, feasibility and valuation. The team is aggressively pursuing our strategy to add high-quality management contracts and sourcing potential hotel investment opportunities. We have a number of good potential opportunities in the pipeline, and are continuing to move forward with our growth strategy,” said Khairallah.

Marcus noted that during the second quarter, the company completed the previously announced sale of its former company-owned and operated Hotel Phillips in Kansas City, Mo.

Change in Fiscal Year End

As previously announced, the company has changed its fiscal year end from the last Thursday in May to the last Thursday in December. As a result, the company plans to report its financial results for the 31-week period from May 29, 2015 to December 31, 2015 on a transition report on Form 10-K and thereafter file reports for periods based on the new fiscal year. More specific information on the company’s change in fiscal year, including comparative historical financial information, will be available today on the “presentations” page in the investor relations section of the company’s website: www.marcuscorp.com.

Conference Call and Webcast

Marcus Corporation management will hold a conference call today, Dec. 17, 2015 at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the second quarter results. Interested parties may listen to the call live on the Internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-857-244-7327 and entering the passcode 66817673. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the website at least 15 minutes prior to the call to download and install any necessary audio software.

A telephone replay of the conference call will be available through Thursday, December 24, 2015, by dialing 1-888-286-8010 and entering the passcode 37995807. The webcast will be archived on the company’s website until its next earnings release.

About The Marcus Corporation

Celebrating its 80th anniversary in 2015, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres®, currently owns or manages 668 screens at 53 locations in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. The company’s lodging division, Marcus® Hotels & Resorts, owns and/or manages 19 hotels, resorts and other properties in 10 states. The company is headquartered in Milwaukee, Wis. For more information, please visit the company’s website at www.marcuscorp.com.

Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (3) the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (4) the effects of competitive conditions in our markets; (5) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (6) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our businesses; (7) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (8) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (9) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or other incidents of violence in public venues such as hotels and movie theatres. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

 
 
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(Unaudited)
(In thousands, except per share data)
           
 

13 Weeks Ended

26 Weeks Ended

November 26,

November 27,

November 26,

November 27,

2015

2014

2015

2014

 
Revenues:
Theatre admissions $ 31,741 $ 32,794 $ 79,963 $ 74,139
Rooms 29,464 29,678 63,650 64,359
Theatre concessions 21,006 20,484 52,786 45,406
Food and beverage 19,216 20,134 38,025 36,289
Other revenues   14,249     12,971     30,442     27,637  
Total revenues 115,676 116,061 264,866 247,830
 
Costs and expenses:
Theatre operations 29,217 27,953 70,896 62,816
Rooms 10,298 10,725 21,485 22,127
Theatre concessions 6,517 5,841 15,555 12,562
Food and beverage 14,519 15,924 29,281 27,987
Advertising and marketing 5,822 6,710 12,311 14,098
Administrative 14,787 12,955 29,353 25,347
Depreciation and amortization 10,242 10,156 20,668 19,234
Rent 2,159 2,160 4,352 4,314
Property taxes 4,003 3,719 7,824 7,625
Other operating expenses   7,558     8,298     16,731     17,411  
Total costs and expenses   105,122     104,441     228,456     213,521  
 
Operating income 10,554 11,620 36,410 34,309
 
Other income (expense):
Investment income 20 25 25 50
Interest expense (2,382 ) (2,388 ) (4,783 ) (4,792 )
Loss on disposition of property, equipment and other assets (226 ) (495 ) (31 ) (501 )
Equity earnings (losses) from unconsolidated joint ventures, net   39     27     20     (14 )
  (2,549 )   (2,831 )   (4,769 )   (5,257 )
 
Earnings before income taxes 8,005 8,789 31,641 29,052
Income taxes   2,897     3,398     12,080     11,385  
Net earnings 5,108 5,391 19,561 17,667
Net earnings (loss) attributable to noncontrolling interests   163     168     (35 )   12  
Net earnings attributable to The Marcus Corporation $ 4,945   $ 5,223   $ 19,596   $ 17,655  
 
Net earnings per common share attributable to
The Marcus Corporation - diluted $ 0.18 $ 0.19 $ 0.70 $ 0.64
 
Weighted ave. shares outstanding - diluted 27,945 27,568 27,913 27,589
 
 
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
           
 
(Unaudited) (Audited)
November 26, May 28,
2015 2015
 
Assets:
 
Cash and cash equivalents $ 24,273 $ 15,483
Accounts and notes receivable 12,873 16,339
Refundable income taxes - 4,022
Deferred income taxes 3,187 2,997
Other current assets 6,507 6,732
Property and equipment, net 662,698 680,117
Other assets   90,049   83,352
 
Total Assets $ 799,587 $ 809,042
 
Liabilities and Shareholders' Equity:
 
Accounts payable $ 21,701 $ 36,776
Income taxes 1,172 -
Taxes other than income taxes 16,075 15,099
Other current liabilities 50,693 50,574
Current portion of capital lease obligation 5,146 5,053
Current maturities of long-term debt 19,672 17,742
Capital lease obligation 15,714 18,317
Long-term debt 217,457 229,669
Deferred income taxes 46,149 47,502
Deferred compensation and other 44,283 42,075
Equity   361,525   346,235
 
Total Liabilities and Shareholders' Equity $ 799,587 $ 809,042
 
 
THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)
             
 
Theatres

Hotels/
Resorts

Corporate
Items

Total
 
13 Weeks Ended November 26, 2015
Revenues $ 56,463 $ 59,089 $ 124 $ 115,676
Operating income (loss) 7,329 7,628 (4,403 ) 10,554
Depreciation and amortization 5,594 4,501 147 10,242
 
13 Weeks Ended November 27, 2014
Revenues $ 56,275 $ 59,626 $ 160 $ 116,061
Operating income (loss) 9,783 5,729 (3,892 ) 11,620
Depreciation and amortization 5,005 5,035 116 10,156
 
26 Weeks Ended November 26, 2015
Revenues $ 139,787 $ 124,830 $ 249 $ 264,866
Operating income (loss) 25,389 19,140 (8,119 ) 36,410
Depreciation and amortization 11,280 9,101 287 20,668
 
26 Weeks Ended November 27, 2014
Revenues $ 125,662 $ 121,873 $ 295 $ 247,830
Operating income (loss) 24,637 16,733 (7,061 ) 34,309
Depreciation and amortization 9,735 9,282 217 19,234
 
 
Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.
 

 

Contacts

The Marcus Corporation
Douglas A. Neis
(414) 905-1100

Release Summary

The Marcus Corporation Reports Second Quarter Results

Contacts

The Marcus Corporation
Douglas A. Neis
(414) 905-1100