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The Marcus Corporation Reports Record Third Quarter Revenues and 29% Increase in Operating Income

Marcus Theatres® reports record operating results and again outperforms the industry

MILWAUKEE--(BUSINESS WIRE)--Mar. 19, 2015-- The Marcus Corporation (NYSE: MCS) today reported results for the third quarter ended February 26, 2015.

Third Quarter Fiscal 2015 Highlights

  • Total revenues for the third quarter of fiscal 2015 were a record $120,153,000, a 9.4% increase from revenues of $109,845,000 for the third quarter of fiscal 2014.
  • Operating income was $7,305,000 for the third quarter of fiscal 2015, a 29.0% increase from operating income of $5,661,000 for the third quarter of fiscal 2014.
  • Net earnings (before net earnings/losses attributable to non-controlling interests) were $2,834,000 for the third quarter of fiscal 2015, a 938% increase from net earnings of $273,000 for the third quarter of fiscal 2014.
  • Net earnings attributable to The Marcus Corporation were $3,091,000 for the third quarter of fiscal 2015, a 24.1% decrease from net earnings attributable to The Marcus Corporation of $4,071,000 for the third quarter of fiscal 2014.
  • Net earnings per diluted common share attributable to The Marcus Corporation were $0.11 for the third quarter of fiscal 2015, a 26.7% decrease from net earnings per diluted common share attributable to The Marcus Corporation of $0.15 for the third quarter of fiscal 2014.
  • Comparisons of net earnings attributable to The Marcus Corporation for the third quarter of fiscal 2015 were negatively impacted by the fact that results for the third quarter of fiscal 2014 benefited from an allocation of a $3.8 million pre-tax loss attributable to non-controlling interests related to a settlement with the company’s partners in the Skirvin Hilton hotel. The settlement increased third quarter fiscal 2014 net earnings attributable to The Marcus Corporation by approximately $0.08 per diluted common share.

First Three Quarters Fiscal 2015 Highlights

  • Total revenues for the first three quarters of fiscal 2015 were $367,983,000, an 8.4% increase from revenues of $339,465,000 for the same period in fiscal 2014.
  • Operating income was $41,614,000 for the first three quarters of fiscal 2015, a 7.2% increase from operating income of $38,818,000 for the first three quarters of fiscal 2014.
  • Net earnings (before net earnings/losses attributable to non-controlling interests) were $20,501,000 for the first three quarters of fiscal 2015, a 23.5% increase from net earnings of $16,601,000 for the same period in fiscal 2014.
  • Net earnings attributable to The Marcus Corporation were $20,746,000 for the first three quarters of fiscal 2015, basically flat with net earnings attributable to The Marcus Corporation of $20,747,000 for the same period in fiscal 2014.
  • Net earnings per diluted common share attributable to The Marcus Corporation were $0.75 for the first three quarters of fiscal 2015, a 2.6% decrease from net earnings per diluted common share attributable to The Marcus Corporation of $0.77 for the same period in fiscal 2014.

“We are pleased to report record revenues and another strong third quarter, driven by record results for Marcus Theatres. The division significantly outperformed the industry for the fifth consecutive quarter. Marcus Hotels & Resorts also reported record third quarter revenues, although operating income was reduced by the temporary impact of construction for the conversion of our downtown Chicago hotel into one of the first AC Hotels by Marriott in the U.S.,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.

Marcus Theatres®

“Marcus Theatres achieved an 11.5% increase in revenues and a 17.1% increase in operating income for the third quarter and significantly outperformed the industry for the fifth quarter in a row. The national box office was up 0.5% for the corresponding weeks of our third quarter, according to Rentrak, while our box office was up 8.3%. This achievement is especially noteworthy because a number of screens were not in use during renovation,” said Marcus.

“Our multi-million dollar investments in creating the ultimate movie-going experience, along with successful marketing and pricing strategies, continue to generate industry-leading attendance gains and corresponding strong results for Marcus Theatres. Our expanded food and beverage concepts contributed to a 19.6% increase in concession revenues for the third quarter and our $5 Tuesday promotion, now in its second year, continued to generate strong attendance for us. We are also very pleased that we achieved our goal of reaching one million members in our innovative Magical Movie Rewards® loyalty program within its first year,” said Rolando B. Rodriguez, president and chief executive officer of Marcus Theatres.

The five top-performing films for Marcus Theatres for the third quarter of fiscal 2015 were American Sniper, The Hobbit: The Battle of the Five Armies, The Hunger Games: Mockingjay – Part 1, Fifty Shades of Grey and Unbroken.

Cinderella opened strong this past weekend. Other pictures with good box office potential opening during our fiscal fourth quarter include The Divergent Series: Insurgent, Get Hard, Fast & Furious 7, Paul Blart: Mall Cop 2, Avengers: Age of Ultron, Pitch Perfect 2 and Tomorrowland,” said Rodriguez. “Looking ahead to the busy summer season and the start of our new fiscal year, the slate of highly anticipated films includes Spy, Jurassic World, Pixar’s Inside Out, Ted 2, Magic Mike XXL, Terminator: Genisys, Minions, Ant-Man and Mission Impossible 5.”

“We are making good progress on our plans for significant renovations and additional new amenities at a number of our theatres. We added DreamLoungerSM recliner seating to two additional theatres during the third quarter, with another location to be completed next week. We have also recently converted two auditoriums to our UltraScreen DLX® concept and added another Take FiveSM lounge and Zaffiro’s® Express to our circuit. Two more Zaffiro’s Express locations and another Take Five lounge will be added in early fiscal 2016, with additional major investments in the developmental stage,” said Rodriguez.

“A highlight of the fourth quarter will be the opening of the Palace at Sun Prairie Cinema, our brand-new 12-screen theatre located near Madison, Wis. Opening April 30, this exciting new entertainment destination will feature all of our new amenities in one location. The new theatre will be the ultimate in movie-going, with options, comforts and conveniences that will appeal to guests of all ages,” added Rodriguez.

Marcus® Hotels & Resorts

“Marcus Hotels & Resorts achieved record revenues for the third quarter, which is typically the weakest quarter for the division due to the impact of winter weather on our predominantly Midwestern locations. Excluding the Chicago property that is undergoing a significant renovation, revenue per available room (RevPAR) for comparable company-owned hotels was up 5.3% for the third quarter and 6.1% year to date. The decrease in operating income for the third quarter was due entirely to the construction at our Chicago property, which resulted in reduced occupancy and a lower average daily rate,” said Marcus.

“While the construction had a temporary negative impact on operating income, we look forward to the opening of our new AC Hotel by Marriott in May. This stylish, urban lifestyle brand is a perfect fit for our location in Chicago’s popular River North area. The AC Hotel brand is generating a lot of excitement across the lodging industry and will be an excellent addition to our portfolio,” said Joseph Khairallah, chief operating officer of Marcus Hotels & Resorts.

“Hotel occupancy rates continue to be at historic highs and we are encouraged by the improvement in group business,” said Khairallah. “We are also continuing to pursue growth opportunities through additional management contracts.”

Conference Call and Webcast

Marcus Corporation management will hold a conference call today, March 19, 2015 at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the third quarter results. Interested parties can listen to the call live on the Internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-857-244-7325 and entering the passcode 51399523. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the website at least 15 minutes prior to the call to download and install any necessary audio software.

A telephone replay of the conference call will be available through Thursday, March 26, 2015, by dialing 1-888-286-8010 and entering the passcode 50720193. The webcast will be archived on the company’s website until its next earnings release.

About The Marcus Corporation

Headquartered in Milwaukee, Wisconsin, 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®, currently owns or manages 685 screens at 55 locations in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. The company’s lodging division, Marcus® Hotels & Resorts, owns and/or manages 20 hotels, resorts and other properties in 11 states. For more information, visit the company’s web site at www.marcuscorp.com.

Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (3) the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (4) the effects of competitive conditions in our markets; (5) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (6) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our businesses; (7) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other markets; (8) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (9) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or incidents such as the tragedy in a movie theatre in Colorado in July 2012. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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

13 Weeks Ended

   

39 Weeks Ended

February 26,

   

February 27,

February 26,

   

February 27,

2015

2014

2015

2014

 
Revenues:
Theatre admissions $ 44,279 $ 40,873 $ 118,418 $ 110,955
Rooms 19,277 19,040 83,636 80,158
Theatre concessions 28,113 23,508 73,519 63,073
Food and beverage 15,107 13,730 51,396 44,806
Other revenues   13,377     12,694     41,014     40,473  
Total revenues 120,153 109,845 367,983 339,465
 
Costs and expenses:
Theatre operations 37,614 35,923 100,430 96,007
Rooms 9,728 9,570 31,855 30,422
Theatre concessions 7,479 6,472 20,041 17,378
Food and beverage 13,443 11,823 41,430 34,860
Advertising and marketing 5,799 5,805 19,897 19,218
Administrative 13,954 11,978 39,301 35,348
Depreciation and amortization 9,808 8,284 29,042 25,068
Rent 2,118 2,139 6,432 6,379
Property taxes 3,874 4,142 11,499 11,316
Other operating expenses 8,715 8,048 26,126 24,651
Impairment charge   316     -     316     -  
Total costs and expenses   112,848     104,184     326,369     300,647  
 
Operating income 7,305 5,661 41,614 38,818
 
Other income (expense):
Investment income (loss) (22 ) 389 28 409
Interest expense (2,326 ) (2,585 ) (7,118 ) (7,563 )
Loss on disposition of property, equipment and other assets (289 ) (193 ) (790 ) (965 )
Equity losses from unconsolidated joint ventures, net   (106 )   (164 )   (120 )   (193 )
  (2,743 )   (2,553 )   (8,000 )   (8,312 )
 
Earnings before income taxes 4,562 3,108 33,614 30,506
Income taxes   1,728     2,835     13,113     13,905  
Net earnings 2,834 273 20,501 16,601
Net loss attributable to noncontrolling interests   (257 )   (3,798 )   (245 )   (4,146 )
Net earnings attributable to The Marcus Corporation $ 3,091   $ 4,071   $ 20,746   $ 20,747  
 
Net earnings per common share attributable to
The Marcus Corporation - diluted $ 0.11 $ 0.15 $ 0.75 $ 0.77
 
Weighted ave. shares outstanding - diluted 27,690 27,036 27,623 27,083
 
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
 
    (Unaudited)     (Audited)
February 26, May 29,
2015 2014
 
Assets:
 
Cash and cash equivalents $ 15,664 $ 14,812
Accounts and notes receivable 10,866 9,472
Refundable income taxes 170 2,958
Deferred income taxes 3,241 3,056
Other current assets 5,970 6,367
Property and equipment, net 659,785 647,592
Other assets   83,067   84,666
 
Total Assets $ 778,763 $ 768,923
 
Liabilities and Shareholders' Equity:
 
Accounts payable $ 19,624 $ 30,954
Taxes other than income taxes 14,939 14,333
Other current liabilities 46,658 44,826
Current portion of capital lease obligation 5,031 4,871
Current maturities of long-term debt 8,330 7,030
Capital lease obligation 19,584 23,370
Long-term debt 233,752 233,557
Deferred income taxes 45,303 42,561
Deferred compensation and other 40,857 37,442
Equity   344,685   329,979
 
Total Liabilities and Shareholders' Equity $ 778,763 $ 768,923
 
THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)
 
        Hotels/     Corporate    
Theatres Resorts Items Total
 
13 Weeks Ended February 26, 2015
Revenues $ 75,642 $ 44,404 $ 107 $ 120,153
Operating income (loss) 16,341 (4,976 ) (4,060 ) 7,305
Depreciation and amortization 5,281 4,396 131 9,808
 
13 Weeks Ended February 27, 2014
Revenues $ 67,810 $ 41,918 $ 117 $ 109,845
Operating income (loss) 13,959 (4,369 ) (3,929 ) 5,661
Depreciation and amortization 4,145 4,036 103 8,284
 
39 Weeks Ended February 26, 2015
Revenues $ 201,304 $ 166,277 $ 402 $ 367,983
Operating income (loss) 40,978 11,757 (11,121 ) 41,614
Depreciation and amortization 15,016 13,678 348 29,042
 
39 Weeks Ended February 27, 2014
Revenues $ 183,694 $ 155,432 $ 339 $ 339,465
Operating income (loss) 36,179 13,574 (10,935 ) 38,818
Depreciation and amortization 12,278 12,386 404 25,068
 
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.

Source: The Marcus Corporation

The Marcus Corporation
Douglas A. Neis, (414) 905-1100