The Marcus Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Theater: Mixed film slate with no major blockbusters, but some films like Superman, Weapons, and Demon Slayer performed well. Pricing changes boosted admission per caps, and concession revenues grew. Less concentrated film slate reduced film cost as a percentage of admission revenues.
• Hotels: Overcame tough comp from the RNC impact in the prior year, outperformed competitive sets. Renovated properties like Grand Geneva Resort & Spa and Pfister Hotel did well. ADR grew in most hotels, occupancy strong. Group business stable, with 2026 group pace up.
• Capital Allocation: Expect to move past heavy CapEx cycle, with 2026 CapEx estimated $50M-$55M (primarily maintenance and ROI). Continue share repurchases and dividends, new share repurchase authorization approved.

Segment Performance

• Theater Division: Third quarter fiscal 2025 total revenue was $119.9 million, a ~16% decrease compared to the prior year quarter. Comparable theater admission revenue decreased 15.8% and attendance 18.7%. Theater Division adjusted EBITDA was $22.1 million, a 33% decrease over the prior year quarter. Theater revenue contributed approximately 57.1% of consolidated revenues.
• Hotels and Resorts Division: Total revenues before cost reimbursements were $80.3 million for the third quarter of fiscal 2025, a 1.7% increase compared to the prior year. RevPAR for comparable owned hotels decreased 1.5% due to a 3.6% decrease in average daily rate offsetting a 1.7 percentage point increase in occupancy. Hotels adjusted EBITDA was essentially flat compared to the prior year quarter. Hotels revenue contributed approximately 38.2% of consolidated revenues.

Guidance

• Hotel CapEx for 2026 expected $50M-$55M, primarily maintenance and ROI.
• 2026 theater slate has more franchise films with higher grossing potential than 2025, with 4 films where predecessors earned over $500M domestically vs. 1 in 2025.
• Free cash flow expected to grow significantly in 2026 due to lower CapEx.

Risks

• Film slate variability impacting theater performance.
• Economic uncertainty affecting hotel leisure demand.
• Competitive dynamics in hotel markets affecting ADR.

Question and Answer

Q: On the hotel side, you mentioned rate growth in 4 of 7 hotels. What about the other 3?

A: At the 3 hotels with no ADR growth, it's more market dynamics; 2 have persistent supply-related issues, 1 had recent demand softening. Some small refreshes planned, but nothing major.

Q: With the $50M-$55M CapEx for 2026, is it maintenance or ROI?

A: It's not 100% maintenance; there's some ROI, but primarily maintenance and ROI capital.

Q: On concessions, have you seen change in consumer buying patterns?

A: No significant change in consumer buying patterns over summer; hit rate and basket sizes consistent, with more merchandise sales associated with concessions.

Q: How are you viewing mix for 4Q theater?

A: Tough to tell; no Moana-like film, but has family films and Avatar; mix is uncertain.

Q: On transition plan for Mark retiring, any potential strategy change?

A: In middle of searching for new leader; expect new ideas and approaches, but no wholesale change immediately.