MARCUS CORP SEC 10-K Report

The Marcus Corporation, a leading company in the entertainment and hospitality industries, has released its 2024 10-K report, detailing its financial performance, business operations, strategic initiatives, and the challenges it faces. The report provides a comprehensive overview of the company's activities across its theatre and hotel divisions, highlighting key metrics and future outlooks.

Financial Highlights

Revenues: $735.6 million, an increase of $6.0 million or 0.8% compared to fiscal 2023, driven by increased revenues from the hotel division offsetting a decrease in revenues from the theatre division.

Operating Income: $16.2 million, a decrease of $17.8 million or 52.3% compared to fiscal 2023, primarily due to a decrease in operating income from the theatre division and an increase in corporate operating losses.

Net Earnings (Loss) Attributable to The Marcus Corporation: $(7.8) million, a decrease of $22.6 million or 152.6% compared to fiscal 2023, primarily due to decreases in operating income and investment income, and an increase in equity losses from unconsolidated joint ventures.

Net Earnings (Loss) Per Common Share - Diluted: $(0.25), a decrease of $0.71 or 154.3% compared to fiscal 2023, reflecting the overall decrease in net earnings.

Business Highlights

Theatre Operations: As of December 26, 2024, the company operated 79 movie theatre locations with a total of 995 screens across 17 states. The theatre operations included brands such as Marcus Theatres, Movie Tavern by Marcus, and BistroPlex. The company is the 4th largest theatre circuit in the United States.

Hotels and Resorts Operations: The company owned and operated seven hotels and resorts in Wisconsin, Illinois, and Nebraska, and managed nine additional properties for third parties across various states. As of December 26, 2024, the company owned or managed approximately 4,700 hotel and resort rooms.

DreamLounger Recliner Additions: By the end of fiscal 2024, DreamLounger recliner seating was available in 67 theatres, representing approximately 86% of company-owned theatres. Including premium large format auditoriums, DreamLounger seating was offered in approximately 88% of company-owned screens.

Premium Large Format Screens: The company had 125 PLF screens at 65 theatre locations, including UltraScreen DLX, SuperScreen DLX, and IMAX screens. Approximately 83% of company-owned theatres offered at least one PLF screen.

Food and Beverage Enhancements: The company expanded its food and beverage offerings with concepts like Take Five Lounge, Zaffiro’s Express, and Reel Sizzle. As of December 26, 2024, bars/full liquor service was available at 49 theatres, and in-lobby dining concepts were present in 40 theatres.

In-Theatre Dining: A complete menu of drinks and chef-prepared meals was offered at 29 theatres, with two service models under the BistroPlex and Movie Tavern by Marcus brands.

Value Tuesday Promotion: The Value Tuesday promotion, which includes discounted admission and a free complementary-size popcorn for loyalty program members, significantly increased Tuesday attendance.

Magical Movie Rewards Program: The loyalty program had approximately 6.5 million members, with 48% of all box office transactions and 41% of total transactions completed by registered members during fiscal 2024.

Marcus Movie Club Subscription: Launched in November 2024, the subscription program offers moviegoers a credit to see any 2D movie each month, a 20% discount on food and beverage, and other benefits for $9.99 per month or $109.89 annually.

Alternative Content Programming: The company offered alternative content programming, including live and pre-recorded performances, sports, concerts, and other events, to expand its audience base beyond traditional moviegoers.

Hotel Renovations: Significant renovations were completed at The Pfister Hotel and Grand Geneva Resort & Spa, with ongoing renovations at the Hilton Milwaukee expected to be completed in fiscal 2025.

Future Outlook for Theatres: The company plans to expand PLF formats, enhance food and beverage operations, and invest in technology to improve customer experience and operational efficiency.

Future Outlook for Hotels and Resorts: The company aims to grow revenues and profits through operational excellence, strategic reinvestment in existing properties, and potential acquisitions or management contracts.

Strategic Initiatives

Strategic Initiatives: The company is focused on maximizing and leveraging existing assets in its theatre division by expanding PLF formats, enhancing food and beverage operations, and evolving its customer loyalty program. In the hotels and resorts division, the company aims to grow revenues and profits through operational excellence, leveraging food and beverage expertise, and optimizing revenue management strategies. The company is also exploring strategic growth opportunities, including potential acquisitions and management contracts in both divisions.

Capital Management: The company repurchased 0.7 million shares of its common stock for $9.7 million and maintained a regular quarterly dividend of $0.07 per share. It also refinanced $100.1 million of Convertible Notes with $100 million of new senior notes to manage its debt profile. The company maintains a strong liquidity position with $40.8 million in cash and $220.2 million available under its revolving credit facility. The debt-to-capitalization ratio is 0.26, and net leverage is 1.3 times net debt to Adjusted EBITDA.

Future Outlook: The company plans to continue its strategic initiatives by investing $70 - $85 million in capital expenditures during fiscal 2025, with significant investments in the hotels division. It aims to maintain a strong balance sheet and liquidity position to support ongoing operations and strategic growth opportunities. The company is also considering potential real estate sales to capitalize on the underlying value of its assets and may explore further acquisitions or management contracts to expand its portfolio.

Challenges and Risks

Operational Risks: The COVID-19 pandemic had a significant adverse impact on the company's operations, particularly in theatres and hotels. Future pandemics or epidemics could similarly affect business operations, liquidity, and financial condition. The lack of appealing motion pictures and disruptions in film production, such as labor strikes, could negatively impact theatre revenues. The shrinking video release window and increasing piracy pose additional risks to the theatre segment.

Market Risks: The company faces competition from alternative motion picture distribution channels and other forms of entertainment, which could adversely affect theatre attendance and revenues. The hotel segment is vulnerable to economic downturns, particularly in the Midwest, which could reduce demand for business and group travel.

Regulatory Risks: The company is subject to various federal, state, and local regulations, including health, sanitation, and environmental laws. Changes in these regulations could increase operational costs. Additionally, the company faces risks related to taxation, as changes in tax laws or disagreements with tax authorities could impact financial results.

Emerging Risks: The company is exposed to risks related to cybersecurity and information systems. Any failure to protect these systems could disrupt operations and damage reputation. The increasing use of third-party internet travel intermediaries could reduce consumer loyalty to the company's hotels.

Management Strategies: Management has identified several strategic initiatives to address these challenges, including expanding premium large format screens, enhancing food and beverage offerings, and leveraging the Magical Movie Rewards loyalty program. The company plans to invest in technology to improve customer experience and operational efficiency. Management is also focused on optimizing pricing strategies and exploring new revenue streams, such as lobby monetization and subscription programs.

The company plans to continue evaluating the financial viability of its assets, closing underperforming locations, and upgrading existing facilities to maintain competitiveness. Capital expenditures for fiscal 2025 are expected to be in the range of $70 - $85 million, with significant investments in the hotels division.

Overall, the company is taking proactive steps to mitigate risks and capitalize on growth opportunities, but remains vulnerable to external factors such as economic conditions, regulatory changes, and technological advancements.

SEC Filing: MARCUS CORP [ MCS ] - 10-K - Feb. 27, 2025