Balance Sheet and Liquidity
Maintaining a strong balance sheet has been a core philosophy throughout the 85-year history of
On
“These are challenging times, yet we expect both of our businesses will begin returning to more normal conditions once the pandemic is under control. The actions we have taken and continue to take to further fortify our balance sheet and reinforce our liquidity provide us with the financial flexibility to sustain operations throughout fiscal 2021, even if our properties continue to generate significantly reduced revenues or have to reclose due to the effects of the COVID-19 pandemic,” said
Third Quarter Fiscal 2020 Highlights
-
Total revenues for the third quarter of fiscal 2020 were
$33,591,000 , compared to total revenues of$211,462,000 for the third quarter of fiscal 2019. -
Operating loss was
$47,987,000 for the third quarter of fiscal 2020, compared to operating income of$22,387,000 for the prior year quarter. -
Net loss attributable to
The Marcus Corporation was$39,440,000 for the third quarter of fiscal 2020, compared to net earnings attributable toThe Marcus Corporation of$14,289,000 for the same period in fiscal 2019. -
Net loss per diluted common share attributable to
The Marcus Corporation was$1.30 for the third quarter of fiscal 2020, compared to net earnings per diluted common share attributable toThe Marcus Corporation of$0.46 for the third quarter of fiscal 2019. -
Adjusted net loss attributable to
The Marcus Corporation was$36,992,000 for the third quarter of fiscal 2020, compared to Adjusted net earnings attributable toThe Marcus Corporation of$15,531,000 for the third quarter of fiscal 2019. -
Adjusted net loss per diluted common share attributable to
The Marcus Corporation was$1.22 for the third quarter of fiscal 2020, compared to Adjusted net earnings per diluted common share attributable toThe Marcus Corporation of$0.50 for the prior year quarter. -
Adjusted EBITDA was a loss of
$25,808,000 for the third quarter of fiscal 2020, compared to Adjusted EBITDA of$44,161,000 for the comparable prior year period. -
Adjusted net earnings (loss) attributable to
The Marcus Corporation , Adjusted net earnings (loss) per diluted common share attributable toThe Marcus Corporation and Adjusted EBITDA reflect adjustments made by the company to eliminate the impact of a nonrecurring income tax adjustment and certain nonrecurring property closure expenses, reopening expenses and impairment charges during the third quarter of fiscal 2020, as well as certain nonrecurring acquisition and preopening expenses related to theMovie Tavern acquisition and certain nonrecurring preopening expenses and initial startup losses related to the conversion of the former InterContinental Milwaukee hotel intoSaint Kate ® –The Arts Hotel , during the third quarter of fiscal 2019.
First Three Quarters Fiscal 2020 Highlights
-
Total revenues for the first three quarters of fiscal 2020 were
$200,984,000 , compared to total revenues of$614,001,000 for the first three quarters of fiscal 2019. -
Operating loss was
$123,249,000 for the first three quarters of fiscal 2020, compared to operating income of$54,812,000 for the first three quarters of fiscal 2019. -
Net loss attributable to
The Marcus Corporation was$85,821,000 for the first three quarters of fiscal 2020, compared to net earnings attributable toThe Marcus Corporation of$34,215,000 for the first three quarters of fiscal 2019. -
Net loss per diluted common share attributable to
The Marcus Corporation was$2.84 for the first three quarters of fiscal 2020, compared to net earnings per diluted common share attributable toThe Marcus Corporation of$1.10 for the first three quarters of fiscal 2019. -
Adjusted net loss attributable to
The Marcus Corporation was$88,688,000 for the first three quarters of fiscal 2020, compared to Adjusted net earnings attributable toThe Marcus Corporation of$39,809,000 for the first three quarters of fiscal 2019. -
Adjusted net loss per diluted common share attributable to
The Marcus Corporation was$2.93 for the first three quarters of fiscal 2020, compared to Adjusted net earnings per diluted common share attributable toThe Marcus Corporation of$1.28 for the first three quarters of fiscal 2019. -
Adjusted EBITDA was a loss of
$43,804,000 for the first three quarters of fiscal 2020, compared to Adjusted EBITDA of$118,460,000 for the first three quarters of fiscal 2019. -
Adjusted net earnings (loss) attributable to
The Marcus Corporation , Adjusted net earnings (loss) per diluted common share attributable toThe Marcus Corporation and Adjusted EBITDA reflect adjustments made by the company to eliminate the impact of a favorable income tax adjustment and certain nonrecurring property closure expenses, reopening expenses and impairment charges during the first three quarters of fiscal 2020, as well as certain nonrecurring acquisition and preopening expenses related to theMovie Tavern acquisition and certain nonrecurring preopening expenses and initial startup losses related to the conversion of the former InterContinental Milwaukee hotel intoSaint Kate ® –The Arts Hotel , during the first three quarters of fiscal 2019.
“While the COVID-19 pandemic is truly unprecedented, we believe we remain well-positioned to continue weathering this crisis,” said Marcus. “Over the years, our growth and success has been built on our founding principles of maintaining a strong financial position, owning and maintaining our real estate assets, focusing on quality and value, and managing for the long term. Those principles have served us well during times of growth and prosperity and continue to serve us during times of challenge. I remain grateful to our talented and committed team who continue to lead through these times with grace, grit and an unwavering commitment to each other, our guests and the communities we serve.”
As the film product release schedule continued to change,
“The major film studios have been cautiously awaiting the reopening of major movie markets before releasing new movies,” said
As of the date of this release, several films are scheduled to be released during the remaining months of the year that have the potential to generate box office interest, including “The Croods 2,” “Free Guy,” “Death on the Nile,” “Wonder Woman 1984,” and “News of the World.”
“Thanks to our comprehensive safety protocols and advanced technology, moviegoers are already enjoying the big screen with confidence,” said Rodriguez. “As more films are released, we look forward to welcoming more guests back to seeing movies the way they are meant to be seen.”
During the quarter,
Current demand continues to be largely driven by the “drive-to-leisure” market. While group pace for fiscal 2021 is behind the comparable period last year, a large portion of that decline can be attributed to one-time event bookings in anticipation of
“Our properties are uniquely positioned in their respective markets to continue capturing demand as travel recovers and groups begin to plan for future events,” said
Four of the company’s owned or managed hotels were recently recognized by the coveted
Conference Call and Webcast
A telephone replay of the conference call will be available through
Non-GAAP Financial Measures
Adjusted net earnings (loss) attributable to
Adjusted net earnings (loss) attributable to
Adjusted net earnings (loss) attributable to
About
Headquartered in
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 adverse effects of the COVID-19 pandemic on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the duration of the COVID-19 pandemic and related government restrictions and social distancing requirements and the level of customer demand following the relaxation of such requirements; (3) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (particularly following the COVID-19 pandemic, during which the production of new movie content has essentially ceased and release dates for motion pictures have been postponed), 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; (4) the effects of adverse economic conditions in our markets, including but not limited to, those caused by the COVID-19 pandemic; (5) the effects of adverse economic conditions, including but not limited to, those caused by the COVID-19 pandemic, on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the COVID-19 pandemic and the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets once hotels and resorts have more fully reopened; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) 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 business; (10) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (11) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (12) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in
Consolidated Statements of Earnings (Loss) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Revenues: | ||||||||||||||||
Theatre admissions |
$ |
3,118 |
|
$ |
69,753 |
|
$ |
58,667 |
|
$ |
211,777 |
|
||||
Rooms |
|
9,772 |
|
|
34,185 |
|
|
27,618 |
|
|
81,317 |
|
||||
Theatre concessions |
|
3,243 |
|
|
57,051 |
|
|
50,277 |
|
|
172,126 |
|
||||
Food and beverage |
|
5,420 |
|
|
20,170 |
|
|
19,620 |
|
|
54,568 |
|
||||
Other revenues |
|
8,813 |
|
|
22,872 |
|
|
30,886 |
|
|
66,234 |
|
||||
|
30,366 |
|
|
204,031 |
|
|
187,068 |
|
|
586,022 |
|
|||||
Cost reimbursements |
|
3,225 |
|
|
7,431 |
|
|
13,916 |
|
|
27,979 |
|
||||
Total revenues |
|
33,591 |
|
|
211,462 |
|
|
200,984 |
|
|
614,001 |
|
||||
Costs and expenses: | ||||||||||||||||
Theatre operations |
|
14,150 |
|
|
66,971 |
|
|
76,806 |
|
|
199,542 |
|
||||
Rooms |
|
4,611 |
|
|
10,829 |
|
|
16,132 |
|
|
30,173 |
|
||||
Theatre concessions |
|
2,592 |
|
|
21,471 |
|
|
25,634 |
|
|
63,789 |
|
||||
Food and beverage |
|
5,109 |
|
|
15,842 |
|
|
20,725 |
|
|
44,353 |
|
||||
Advertising and marketing |
|
1,981 |
|
|
6,653 |
|
|
8,446 |
|
|
17,664 |
|
||||
Administrative |
|
11,645 |
|
|
18,053 |
|
|
40,555 |
|
|
54,862 |
|
||||
Depreciation and amortization |
|
18,690 |
|
|
19,226 |
|
|
56,568 |
|
|
53,484 |
|
||||
Rent |
|
6,594 |
|
|
6,806 |
|
|
19,876 |
|
|
19,087 |
|
||||
Property taxes |
|
5,950 |
|
|
5,666 |
|
|
18,004 |
|
|
16,527 |
|
||||
Other operating expenses |
|
6,266 |
|
|
10,127 |
|
|
18,094 |
|
|
31,729 |
|
||||
Impairment charges |
|
765 |
|
|
- |
|
|
9,477 |
|
|
- |
|
||||
Reimbursed costs |
|
3,225 |
|
|
7,431 |
|
|
13,916 |
|
|
27,979 |
|
||||
Total costs and expenses |
|
81,578 |
|
|
189,075 |
|
|
324,233 |
|
|
559,189 |
|
||||
Operating income (loss) |
|
(47,987 |
) |
|
22,387 |
|
|
(123,249 |
) |
|
54,812 |
|
||||
Other income (expense): | ||||||||||||||||
Investment income |
|
66 |
|
|
187 |
|
|
207 |
|
|
835 |
|
||||
Interest expense |
|
(4,132 |
) |
|
(2,807 |
) |
|
(10,177 |
) |
|
(8,959 |
) |
||||
Other expense |
|
(590 |
) |
|
(481 |
) |
|
(1,771 |
) |
|
(1,441 |
) |
||||
Loss on disposition of property, equipment and other assets |
|
(251 |
) |
|
(129 |
) |
|
(299 |
) |
|
(269 |
) |
||||
Equity losses from unconsolidated joint ventures |
|
(1,054 |
) |
|
(84 |
) |
|
(1,539 |
) |
|
(252 |
) |
||||
|
(5,961 |
) |
|
(3,314 |
) |
|
(13,579 |
) |
|
(10,086 |
) |
|||||
Earnings (loss) before income taxes |
|
(53,948 |
) |
|
19,073 |
|
|
(136,828 |
) |
|
44,726 |
|
||||
Income taxes (benefit) |
|
(14,508 |
) |
|
4,843 |
|
|
(50,984 |
) |
|
10,465 |
|
||||
Net earnings (loss) |
|
(39,440 |
) |
|
14,230 |
|
|
(85,844 |
) |
|
34,261 |
|
||||
Net (earnings) loss attributable to noncontrolling interests |
|
- |
|
|
(59 |
) |
|
(23 |
) |
|
46 |
|
||||
Net earnings (loss) attributable to |
$ |
(39,440 |
) |
$ |
14,289 |
|
$ |
(85,821 |
) |
$ |
34,215 |
|
||||
Net earnings (loss) per common share attributable to | ||||||||||||||||
$ |
(1.30 |
) |
$ |
0.46 |
|
$ |
(2.84 |
) |
$ |
1.10 |
|
|||||
Condensed Consolidated Balance Sheets | |||||||
(In thousands) | |||||||
(Unaudited) | (Audited) | ||||||
2020 |
2019 |
||||||
Assets: | |||||||
Cash and cash equivalents |
$ |
8,244 |
$ |
20,862 |
|||
Restricted cash |
|
8,509 |
|
4,756 |
|||
Accounts receivable |
|
6,907 |
|
29,465 |
|||
Refundable income taxes |
|
54,434 |
|
5,916 |
|||
Assets held for sale |
|
2,119 |
|
- |
|||
Other current assets |
|
11,477 |
|
18,265 |
|||
Property and equipment, net |
|
877,702 |
|
923,254 |
|||
Operating lease right-of-use assets |
|
236,632 |
|
243,855 |
|||
Other assets |
|
110,398 |
|
112,813 |
|||
Total Assets |
$ |
1,316,422 |
$ |
1,359,186 |
|||
Liabilities and Shareholders' Equity: | |||||||
Accounts payable |
$ |
15,824 |
$ |
49,370 |
|||
Taxes other than income taxes |
|
16,638 |
|
20,613 |
|||
Other current liabilities |
|
61,638 |
|
79,189 |
|||
Short-term borrowings |
|
89,932 |
|
- |
|||
Current portion of finance lease obligations |
|
2,908 |
|
2,571 |
|||
Current portion of operating lease obligations |
|
20,646 |
|
13,335 |
|||
Current maturities of long-term debt |
|
12,927 |
|
9,910 |
|||
Finance lease obligations |
|
20,256 |
|
20,802 |
|||
Operating lease obligations |
|
231,552 |
|
232,111 |
|||
Long-term debt |
|
199,357 |
|
206,432 |
|||
Deferred income taxes |
|
46,838 |
|
48,262 |
|||
Deferred compensation and other |
|
58,938 |
|
55,133 |
|||
Equity |
|
538,968 |
|
621,458 |
|||
Total Liabilities and Shareholders' Equity |
$ |
1,316,422 |
$ |
1,359,186 |
|||
Business Segment Information | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Theatres | Hotels/ Resorts |
Corporate Items |
Total | |||||||||||||
13 Weeks Ended |
||||||||||||||||
Revenues |
$ |
7,354 |
|
$ |
26,178 |
|
$ |
59 |
|
$ |
33,591 |
|
||||
Operating income (loss) |
|
(37,174 |
) |
|
(6,925 |
) |
|
(3,888 |
) |
|
(47,987 |
) |
||||
Depreciation and amortization |
|
13,353 |
|
|
5,210 |
|
|
127 |
|
|
18,690 |
|
||||
13 Weeks Ended |
||||||||||||||||
Revenues |
$ |
136,802 |
|
$ |
74,572 |
|
$ |
88 |
|
$ |
211,462 |
|
||||
Operating income (loss) |
|
16,843 |
|
|
10,580 |
|
|
(5,036 |
) |
|
22,387 |
|
||||
Depreciation and amortization |
|
13,438 |
|
|
5,451 |
|
|
337 |
|
|
19,226 |
|
||||
39 Weeks Ended |
||||||||||||||||
Revenues |
$ |
118,414 |
|
$ |
82,253 |
|
$ |
317 |
|
$ |
200,984 |
|
||||
Operating income (loss) |
|
(78,788 |
) |
|
(32,459 |
) |
|
(12,002 |
) |
|
(123,249 |
) |
||||
Depreciation and amortization |
|
40,245 |
|
|
15,955 |
|
|
368 |
|
|
56,568 |
|
||||
39 Weeks Ended |
||||||||||||||||
Revenues |
$ |
414,074 |
|
$ |
199,604 |
|
$ |
323 |
|
$ |
614,001 |
|
||||
Operating income (loss) |
|
57,656 |
|
|
11,443 |
|
|
(14,287 |
) |
|
54,812 |
|
||||
Depreciation and amortization |
|
37,918 |
|
|
15,050 |
|
|
516 |
|
|
53,484 |
|
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.
Reconciliation of Adjusted net earnings (loss) and Adjusted net earnings (loss) per diluted common share | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||
Net earnings (loss) attributable to |
$ |
(39,440 |
) |
$ |
14,289 |
|
$ |
(85,821 |
) |
$ |
34,215 |
|
|||||
Add (deduct): | |||||||||||||||||
Adjustment to income taxes (a) |
|
168 |
|
|
(17,420 |
) |
|||||||||||
Acquisition/preopening expenses - theatres (b) |
|
- |
|
|
60 |
|
|
- |
|
|
2,036 |
|
|||||
Preopening expenses - hotels (c) |
|
- |
|
|
1,620 |
|
|
- |
|
|
5,534 |
|
|||||
Property closure/reopening expenses - theatres (d) |
|
1,173 |
|
|
4,630 |
|
|||||||||||
Property closure/reopening expenses - hotels (e) |
|
443 |
|
|
5,484 |
|
|||||||||||
Impairment charges (f) |
|
765 |
|
|
- |
|
|
9,477 |
|
|
- |
|
|||||
Joint venture impairment charge (g) |
|
811 |
|
|
811 |
|
|||||||||||
Tax impact of adjustments to net earnings (h) |
|
(912 |
) |
|
(438 |
) |
|
(5,849 |
) |
|
(1,976 |
) |
|||||
Adjusted net earnings (loss) attributable to |
$ |
(36,992 |
) |
$ |
15,531 |
|
$ |
(88,688 |
) |
$ |
39,809 |
|
|||||
Net earnings (loss) per diluted common share attributable to |
$ |
(1.30 |
) |
$ |
0.46 |
$ |
(2.84 |
) |
$ |
1.10 |
|
||||||
Adjusted net earnings (loss) per diluted common share attributable to |
$ |
(1.22 |
) |
$ |
0.50 |
$ |
(2.93 |
) |
$ |
1.28 |
|
(a) | Reflects a nonrecurring adjustment to income taxes related to net operating loss carrybacks to a higher federal income tax rate year, made as a result of the CARES Act. |
(b) | Acquisition and preopening costs incurred related to the |
(c) | Preopening costs and initial startup losses incurred related to the conversion of the |
(d) | Reflects nonrecurring costs (primarily payroll) related to the required closure of all of the company's movie theatres due to the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening theatres. |
(e) | Reflects nonrecurring costs (primarily payroll) related to the closure of the company's hotels and resorts due to reduced occupancy as a result of the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening hotels. |
(f) | Impairment charges related to intangible assets (trade name) and several theatre locations. |
(g) | Impairment charge related to an investment in a joint venture |
(h) | Represents the tax effect related to adjustments (b), (c), (d), (e), (f), and (g) to net earnings, calculated using statutory tax rates of 28.7% for the fiscal 2020 periods and 26.1% for the fiscal 2019 periods. |
Reconciliation of Net earnings (loss) to Adjusted EBITDA | |||||||||||||||||
(Unaudited) | |||||||||||||||||
(In thousands) | |||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||
Net earnings (loss) attributable to |
$ |
(39,440 |
) |
$ |
14,289 |
|
$ |
(85,821 |
) |
$ |
34,215 |
|
|||||
Add (deduct): | |||||||||||||||||
Investment income |
|
(66 |
) |
|
(187 |
) |
|
(207 |
) |
|
(835 |
) |
|||||
Interest expense |
|
4,132 |
|
|
2,807 |
|
|
10,177 |
|
|
8,959 |
|
|||||
Other expense |
|
590 |
|
|
481 |
|
|
1,771 |
|
|
1,441 |
|
|||||
Loss on disposition of property, equipment and other assets |
|
251 |
|
|
129 |
|
|
299 |
|
|
269 |
|
|||||
Equity losses from unconsolidated joint ventures |
|
1,054 |
|
|
84 |
|
|
1,539 |
|
|
252 |
|
|||||
Net earnings (loss) attributable to noncontrolling interests |
|
- |
|
|
(59 |
) |
|
(23 |
) |
|
46 |
|
|||||
Income tax expense (benefit) |
|
(14,508 |
) |
|
4,843 |
|
|
(50,984 |
) |
|
10,465 |
|
|||||
Depreciation and amortization |
|
18,690 |
|
|
19,226 |
|
|
56,568 |
|
|
53,484 |
|
|||||
Share-based compensation expenses (a) |
|
1,108 |
|
|
868 |
|
|
3,286 |
|
|
2,594 |
|
|||||
Acquisition/preopening expenses - theatres (b) |
|
- |
|
|
60 |
|
|
- |
|
|
2,036 |
|
|||||
Preopening expenses - hotels (c) |
|
- |
|
|
1,620 |
|
|
- |
|
|
5,534 |
|
|||||
Property closure/reopening expenses - theatres (d) |
|
1,173 |
|
|
4,630 |
|
|||||||||||
Property closure/reopening expenses - hotels (e) |
|
443 |
|
|
5,484 |
|
|||||||||||
Impairment charges (f) |
|
765 |
|
|
- |
|
|
9,477 |
|
|
- |
|
|||||
Adjusted EBITDA |
$ |
(25,808 |
) |
$ |
44,161 |
|
$ |
(43,804 |
) |
$ |
118,460 |
|
|||||
(a) | Non-cash charges related to share-based compensation programs. |
(b) | Acquisition and preopening costs incurred related to the |
(c) | Preopening costs and initial startup losses incurred related to the conversion of the |
(d) | Reflects nonrecurring costs (primarily payroll) related to the required closure of all of the company's movie theatres due to the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening theatres. |
(e) | Reflects nonrecurring costs (primarily payroll) related to the closure of the company's hotels and resorts due to reduced occupancy as a result of the COVID-19 pandemic, plus subsequent nonrecurring costs related to reopening hotels. |
(f) | Impairment charges related to intangible assets (trade name) and several theatre locations. |
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