Marcus Hotels Results

Marcus Hotels & Resorts Reports Record Revenues and Operating Income for the Third Quarter of Fiscal 2018

The Marcus Corporation Reports Record Revenues and Earnings for the Third Quarter of Fiscal 2018

Marcus Hotels

The Marcus Corporation (NYSE: MCS) today reported record revenues and net earnings for the third quarter of fiscal 2018 ended September 27, 2018.

Third Quarter Fiscal 2018 Highlights

  • Total revenues for the third quarter of fiscal 2018 were a record $170,599,000, a 5.1% increase from revenues of $162,375,000 for the third quarter of fiscal 2017.
  • Operating income for the third quarter of fiscal 2018 was $22,413,000, a 2.5% increase from operating income of $21,863,000 for the third quarter of fiscal 2017.
  • Net earnings attributable to The Marcus Corporation were a record $16,231,000 for the third quarter of fiscal 2018, a 47.9% increase from net earnings attributable to The Marcus Corporation of $10,978,000 for the third quarter of fiscal 2017.
  • Net earnings per diluted common share attributable to The Marcus Corporation were a record $0.56 for the third quarter of fiscal 2018, a 43.6% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.39 for the third quarter of fiscal 2017.

First Three Quarters Fiscal 2018 Highlights

  • Total revenues for the first three quarters of fiscal 2018 were a record $532,088,000, a 9.0% increase from revenues of $487,971,000 for the first three quarters of fiscal 2017.
  • Operating income was a record $68,536,000 for the first three quarters of fiscal 2018, a 15.2% increase from operating income of $59,485,000 for the first three quarters of fiscal 2017.
  • Net earnings attributable to The Marcus Corporation were a record $44,671,000 for the first three quarters of fiscal 2018, a 46.2% increase from net earnings attributable to The Marcus Corporation of $30,555,000 for the first three quarters of fiscal 2017.
  • Net earnings per diluted common share attributable to The Marcus Corporation were a record $1.56 for the first three quarters of fiscal 2018, a 44.4% increase from net earnings per diluted common share attributable to The Marcus Corporation of $1.08 for the first three quarters of fiscal 2017.

“The third quarter of 2018 was another record for The Marcus Corporation, with record revenues and net earnings,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation. “In what historically is a strong quarter, the team at Marcus Hotels & Resorts did not disappoint, delivering record revenue and operating income. Marcus Theatres reported record revenues and had yet another very profitable quarter, although its operating income was impacted by several one-time costs and a film mix that contributed to slightly higher film costs.”

“For the first nine months of the year, The Marcus Corporation achieved record revenues, operating income and net earnings thanks to record revenues and operating income from both divisions,” said Marcus.

Marcus also noted that net earnings continued to benefit from a lower income tax rate, particularly during the third quarter when results were favorably impacted by additional one-time tax benefits.

Marcus  Hotels & Resorts

Third-quarter revenues for Marcus Hotels & Resorts increased 4.9% in the third quarter and operating income was up 24.5% thanks to significant margin improvement. Revenue per available room (RevPAR) for comparable company-owned properties increased 5.2% in the third quarter, outperforming the industry by three percentage points during the quarter.

“This was a very strong quarter for Marcus Hotels & Resorts, as evidenced by record revenue and operating income growth. Much credit for our revenue growth goes to our outstanding sales team, as our group business increased considerably across the majority of our properties. Meanwhile, our operating team did a tremendous job converting these revenue gains to profit. With baseball at its peak, some of our markets were also the beneficiaries of increased bookings connected to the 2018 MLB regular season drive for the playoffs,” said Marcus.

During the quarter, the division assumed management of the newly constructed Courtyard by Marriott El Paso Downtown/Convention Center in El Paso, Texas. In addition, three Marcus Hotels & Resorts properties received the coveted Condé Nast Traveler 2018 Readers’ Choice Awards. The Pfister Hotel in Milwaukee was voted the #4 Top Hotel in the Midwest by the publication’s readers, while the Grand Geneva Resort & Spa in Lake Geneva, Wis. ranked as the #6 Top Resort in the Midwest, and The Garland in North Hollywood, Calif. was recognized as the #9 Top Hotel in Los Angeles.

Marcus Theatres 

Revenues for Marcus Theatres increased 5.2% in the third quarter, compared to the same period last year. In addition to increased depreciation and a film mix that contributed to higher film costs this quarter, operating income was also impacted by several one-time items. In addition, the same baseball dynamic that helped our hotels resulted in lower attendance at some of our theatres in key markets such as Chicago, Milwaukee and St. Louis.

“After a busy second quarter opening up new amenities, we continued to invest in our theatres in the third quarter, including adding DreamLoungerSM recliner seating to one more location and converting an additional auditorium to our SuperScreen DLX® format. We are looking forward to the holiday season, with several additional projects underway,” said Rolando Rodriguez, chairman, president and chief executive officer of Marcus Theatres.

The five top-performing films for Marcus Theatres in the third quarter of fiscal 2018 were Incredibles 2; Jurassic World: Fallen Kingdom; Ant-Man and the Wasp; Mission Impossible – Fallout; and Hotel Transylvania 3: Summer Vacation.

Rodriguez said the fourth quarter is off to a good start with successful October films including Venom; A Star is Born; First Man; and Halloween. Additional films opening during the popular holiday season include The Nutcracker and the Four Realms; Bohemian Rhapsody; Dr. Seuss’ The Grinch; Fantastic Beasts: The Crimes of Grindelwald; Ralph Breaks the Internet: Wreck-It; Creed II; Mary Poppins Returns; Bumblebee; Aquaman; and Holmes and Watson.

About The Marcus Corporation

Headquartered in Milwaukee, 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®, is the fourth largest theatre circuit in the U.S. and currently owns or operates 890 screens at 68 locations in eight states. The company’s lodging division, Marcus® Hotels & Resorts, owns and/or manages 21 hotels, resorts and other properties in nine states.

 

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

   

 

 

 

13 Weeks Ended

39 Weeks Ended

Sept. 27,

Sept. 28,

Sept. 27,

Sept. 28,

2018

2017

2018

2017

Revenues:

Theatre admissions

$ 52,422

$ 50,246

$ 185,035

$ 166,222

Rooms

34,467

32,785

84,256

82,844

Theatre concessions

35,476

33,290

123,687

109,365

Food and beverage

19,333

18,670

53,972

52,487

Other revenues

  19,813  

  18,827  

  59,362  

  53,629  

161,511

153,818

506,312

464,547

Cost reimbursements

  9,088  

  8,557  

  25,776  

  23,424  
Total revenues

170,599

162,375

532,088

487,971

 
Costs and expenses:

Theatre operations

48,644

44,403

164,452

145,844

Rooms

10,958

10,658

31,026

30,117

Theatre concessions

10,168

9,567

35,105

30,666

Food and beverage

14,966

15,125

43,930

44,093

Advertising and marketing

6,178

6,296

17,317

17,880

Administrative

16,813

16,448

52,653

50,370

Depreciation and amortization

14,569

12,993

42,899

37,544

Rent

2,815

3,113

8,351

9,718

Property taxes

5,018

5,052

15,011

14,575

Other operating expenses

8,969

8,300

27,032

24,255

Reimbursed costs

  9,088  

  8,557  

  25,776  

  23,424  
Total costs and expenses

  148,186  

  140,512  

  463,552  

  428,486  

 
Operating income

22,413

21,863

68,536

59,485

 
Other income (expense):

Investment income

442

119

433

229

Interest expense

(3,180 )

(3,367 )

(10,000 )

(9,454 )
Other expense

(497 )

(428 )

(1,489 )

(1,284 )
Loss on disposition of property, equipment and other assets

(359 )

(449 )

(767 )

(420 )
Equity earnings (losses) from unconsolidated joint ventures, net

  30  

  (12 )

  282  

  75  

  (3,564 )

  (4,137 )

  (11,541 )

  (10,854 )

 
Earnings before income taxes

18,849

17,726

56,995

48,631

Income taxes

  2,626  

  6,908  

  12,254  

  18,571  
Net earnings

16,223

10,818

44,741

30,060

Net earnings (loss) attributable to noncontrolling interests

  (8 )

  (160 )

  70  

  (495 )
Net earnings attributable to The Marcus Corporation

$ 16,231  

$ 10,978  

$ 44,671  

$ 30,555  

 
Net earnings per common share attributable to

The Marcus Corporation - diluted

$ 0.56

$ 0.39

$ 1.56

$ 1.08

 
Weighted average shares outstanding - diluted

28,818

28,350

28,634

28,410

 
 
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)

     

     

(Unaudited)

(Audited)

September 27,

December 28,

2018

2017

 
Assets:

 
Cash, cash equivalents and restricted cash

$ 12,629

$ 20,747
Accounts and notes receivable

26,006

27,230
Refundable income taxes

3,531

15,335

Other current assets

15,202

13,409
Property and equipment, net

847,137

860,064
Other assets

  82,181

  81,012

 
Total Assets

$ 986,686

$ 1,017,797

 
Liabilities and Shareholders' Equity:

Accounts payable

$ 23,108

$ 51,541
Taxes other than income taxes

17,675

19,638
Other current liabilities

63,001

68,918
Current portion of capital lease obligations

7,120

7,570
Current maturities of long-term debt

10,077

12,016
Capital lease obligations

22,989

28,282
Long-term debt

262,149

289,813
Deferred income taxes

38,374

38,233
Deferred compensation and other

59,157

56,662
Equity

  483,036

  445,124

 
Total Liabilities and Shareholders' Equity

$ 986,686

$ 1,017,797
 
 
THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)

 

 

 

 

Theatres

Hotels/ Resorts

Corporate Items

Total
13 Weeks Ended September 27, 2018

Revenues(1)

$ 95,009

$ 75,492

$ 98

$ 170,599
Operating income (loss)

14,457

12,024

(4,068 )

22,413
Depreciation and amortization

9,867

4,616

86

14,569

 
13 Weeks Ended September 28, 2017

Revenues(1)

$ 90,273

$ 71,952

$ 150

$ 162,375
Operating income (loss)

15,861

9,659

(3,657 )

21,863
Depreciation and amortization

8,399

4,512

82

12,993

 
39 Weeks Ended September 27, 2018

Revenues(1)

$ 333,397

$ 198,373

$ 318

$ 532,088
Operating income (loss)

66,317

15,737

(13,518 )

68,536
Depreciation and amortization

28,751

13,890

258

42,899

 
39 Weeks Ended September 28, 2017

Revenues(1)

$ 296,636

$ 190,903

$ 432

$ 487,971
Operating income (loss)

58,576

12,803

(11,894 )

59,485
Depreciation and amortization

24,000

13,270

274

37,544

 

 
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.

 
(1) Revenues include cost reimbursements of $9,088 for the 13 weeks ended September 27, 2018 (Theatres - $218, Hotels/Resorts - $8,870), $8,557 for the 13 weeks ended September 28, 2017 (Theatres - $500, Hotels/Resorts - $8,057), $25,776 for the 39 weeks ended September 27, 2018 (Theatres - $1,084, Hotels/Resorts - $24,692) and $23,424 for the 39 weeks ended September 28, 2017 (Theatres - $1,659, Hotels/Resorts - $21,765).



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