The Marcus Corporation Q2 FY2025 earnings call

• Theater: Benefited from a strong and diverse film slate including Minecraft Movie, Lilo & Stitch, and Sinners. Strategy focuses on driving long-term attendance through pricing and promotional programs. Recently completed concession stand projects at Movie Tavern locations. - Hotels: Hilton Milwaukee renovation completed, with meeting space renovations ongoing. Focus on rate growth, stable group business, and upper upscale positioning to mitigate market volatility.

Theater Division: Second quarter fiscal 2025 total revenue was $131.7 million, a nearly 30% increase compared to the prior year quarter. Comparable theater admission revenue grew 29.3% and comparable theater attendance increased 26.7%. Theater adjusted EBITDA was $26.5 million, a 76% increase over the prior year quarter. Hotels and Resorts Division: Total revenues before cost reimbursements were $64.6 million, a 1.2% increase compared to the prior year. RevPAR for comparable owned hotels decreased 2.9% due to a 5.4 percentage point decrease in occupancy rate, partially offset by a 5% increase in ADR. Hotels adjusted EBITDA decreased $200,000 compared to the prior year quarter.

• Capital expenditures for fiscal 2025 are expected to be $70 million to $85 million. - Theater expects improved admission per cap growth in the second half of 2025. - Hotel capital expenditures to step down next year after heavy reinvestment in recent years.

• Potential impact of economic softening on hotel demand. - Competition in pricing strategies affecting theater box office performance. - Lingering effects of content supply challenges similar to the prior year's Hollywood strikes.

Q: On the hotel segment, can group pace be separated between the Milwaukee area and outside? On the theater side, how large is the blockbuster surcharge and its impact on tickets?

A: Chad mentioned group pace gains due to renovated meeting space at Wisconsin properties, with Greg noting anecdotal positive impact from convention center expansion. On theaters, the Everyday Matinee program moved from $7 to $7.50 and certain films to $8.50, with the delta providing uplift to admission per caps.

Q: Thoughts on domestic box office in the second half? On hotel segment 3Q revenue?

A: Gregory noted positive films like Wicked and Avatar ahead, with Chad mentioning banquet/catering growth and Hilton renovation impact, expecting stability in group and transient business despite economic uncertainty.

Q: Capital allocation and theater/hotel reinvestment cycles?

A: Chad stated hotel CapEx to step down next year after heavy reinvestment, with theater ROI projects at current footprint. Gregory added on hotel CapEx nature and ongoing smaller projects across portfolio.