Marcus Corp. ((MCS)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Marcus Corporation presented a mixed outlook for the company. While there were positive developments such as revenue growth in both the theater and hotel divisions, a strong April for theaters, and a robust balance sheet, the company also faced challenges. These included an operating loss in the theater division, occupancy impacts from hotel renovations, and increased costs affecting profitability. However, the positive outlook for the summer movie season and strategic capital returns to shareholders provide some optimism for the future.
Revenue Growth in Both Divisions
Marcus Corporation reported a consolidated revenue increase of $10.2 million, or 7.4%, compared to the previous year, reaching $148.8 million. This growth was observed across both the theaters and hotels divisions, indicating a solid performance in both sectors.
Positive April and Summer Outlook for Theaters
April marked a significant turnaround for Marcus Corporation’s theater division, with several films exceeding expectations and contributing to a strong start for the summer movie season. The industry saw an increase of nearly 16% year-to-date through April, with upcoming major releases further enhancing the positive outlook.
Hotel Division RevPAR and Revenue Growth
The hotels and resorts division experienced a revenue increase of 7.2%, reaching $61.3 million. RevPAR for comparable owned hotels grew by 1.1%, with an 8% increase in the average daily rate, showcasing the division’s steady performance.
Strong Balance Sheet and Liquidity
Marcus Corporation ended the quarter with $12 million in cash and over $192 million in total liquidity. The company maintained a debt-to-capitalization ratio of 31% and a net leverage of 2x, reflecting a strong financial position.
Successful Capital Return to Shareholders
Demonstrating confidence in its business, Marcus Corporation repurchased approximately 424,000 shares for $7.1 million. Over the last four quarters, the company returned over $25 million to shareholders through dividends and share repurchases.
Theater Division Operating Loss and Attendance Decrease
The theater division faced an operating loss of $20.4 million for the quarter, impacted by increased costs. Additionally, theater attendance decreased by 8% on a straight calendar quarter basis, trailing the industry by 1.8 percentage points.
Renovation Impact on Hotel Occupancy
The renovation of the Hilton Milwaukee led to a 3.4 percentage point decrease in overall occupancy rate, negatively impacting RevPAR growth by nearly 4 percentage points, highlighting the challenges faced by the hotel division.
Increased Costs and Decreased Adjusted EBITDA
The company reported a consolidated adjusted EBITDA loss of $300,000, a decrease of $2.6 million. Increased depreciation, stock-based compensation, and labor costs contributed to this decline, reflecting the financial pressures faced by Marcus Corporation.
Forward-Looking Guidance
Looking ahead, Marcus Corporation provided guidance for the first quarter of fiscal 2025, with consolidated revenues of $148.8 million, an increase of 7.4% from the previous year. The theater division contributed $87.4 million, up 7.5%, while the hotels and resorts division contributed $61.3 million, up 7.2%. Despite challenges, including higher film and labor costs, the theater division’s adjusted EBITDA was $3.7 million, while the hotels segment achieved $1 million in adjusted EBITDA. The company also repurchased 424,000 shares for $7.1 million, reflecting confidence in its business and commitment to returning capital to shareholders.
In conclusion, Marcus Corporation’s earnings call revealed a mixed sentiment, with both positive and challenging aspects. While revenue growth and a strong balance sheet provide optimism, the company faces hurdles in the form of operating losses and increased costs. Nevertheless, the positive outlook for the summer movie season and strategic capital returns to shareholders offer hope for future performance.