Marcus Corporation (the) · NYSE:MCS
Marcus Corporation (the) — Q4 2022 Earnings Presentation
44 slides from Marcus Corporation (the)'s earnings presentation, Mar 2, 2023
Slide 1: Investor Presentation March 2023
INVESTOR PRESENTATION MARCH 2023
Slide 2: Forward Looking Statement
Forward Looking Statement Certain matters discussed in this presentation 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
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA has been presented in this press release as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. The company defines Adjusted EBITDA as net earnings (loss) attributable to The Marcus Corporation be
Slide 4: A Leader in Lodging and Entertainment
A Leader in Lodging and Entertainment Founded in 1935 and headquartered in Milwaukee, Wisconsin Fiscal 2022 by Division 40% 30% Operating 39% Revenues* Adjusted Income EBITDA 60% 61% 70% • Fourth largest U.S. exhibitor • 1,053 screens at 84 locations in 17 states Fiscal 2019 by Division(1) – Pre-Pan
Slide 5: Company Overview
Company Overview FY 2019 Revenues: FY 2022 Revenues: $820.9M $677.4M FY 2019 Adjusted FY 2022 Adjusted EBITDA: EBITDA: $155.2M(1) $85.1M(1) FY 2019 Adj. FY 2022 Adj. EBITDA Margin: EBITDA Margin: 18.9%(1) 12.6%(1) Market Cap: Since ~$504.2M 1993 (as of 3/7/2023) (1) Adjusted EBITDA is a Non-GAAP mea
Slide 6: Investment Thesis
Diversified business platform Outperform respective markets and industries Focused and disciplined growth strategy Investment Strong balance sheet with significant Thesis liquidity Significant real estate assets Long-term track record of success Consistent shareholder returns 6
Slide 7: Strong, Stable Senior Management Team
Strong, Stable Senior Management Team Gregory S. Marcus Thomas F. Kissinger Chad Paris Mark A. Gramz Michael R. Evans Kim M. Lueck Steve V. Martin President and Senior Executive Vice Chief Financial Officer & President, Marcus President, Marcus Chief Information Chief Human Chief Executive Officer P
Slide 8: Significant Full Year Improvement Over Prior Year
Significant Full Year Improvement Over Prior Year Revenues Operating Income (Loss) Net Earnings (Loss) Adjusted EBITDA (in millions) (in millions) (in millions) (in millions) $800 $20 $10 $6.4 $90 $85.1 $14.0 $700 $677.4 $8.3 $80 $10 $0 Q4 2021 Q4 2022 Fiscal Fiscal $70 $600 $0 2021 2022 -$10 $(9.3)
Slide 9: 85-Year History of Prudent Balance Sheet and Liquidity Management
85-Year History of Prudent Balance Sheet and Liquidity Management • Approach has been and will remain thoughtful, opportunistic and focused long-term • Match our debt portfolio to our asset base • Assets primarily of fixed and long-lived assets • Strive to have a significant portion of our debt port
Slide 10: Strong Balance Sheet and Access to Capital
Strong Balance Sheet and Access to Capital • Historically strong and consistent cash flow Debt Ratios • $243.5 million in cash and revolving credit 50% Debt/Capitalization % Net Debt to Adjusted EBITDA Ratio 10 availability (as of 12/29/2022) 9 • Received $4.9 million from the sale of non-core 40% 8
Slide 11: Reinstated Dividend; Long History of Returning Capital to Shareholders
Reinstated Dividend; Long History of Returning Capital to Shareholders •Reinstated $0.05 quarterly cash Annual Cash Dividends dividend Q3 2022; first paid dividend since March 2020 $0.7 $0.64 •Annual cash dividend was $0.68 prior to $0.6 $0.60 suspension on 4/29/20 (3-year average $0.50 yield of 1.7
Slide 12: Unique Real Estate Ownership Profile
Unique Real Estate Ownership Profile In addition to our owned hotels, unlike most of our peers, we own the underlying real estate for the majority of our theatres • Real estate ownership enables us to 100% quickly react to changing theatre trends • Reduces our monthly fixed lease 38% payments 75% •
Slide 13: Marcus Theatres
Marcus Theatres 13
Slide 14: Leading U.S. Theatre Exhibitor
Leading U.S. Theatre Exhibitor Marcus Theatres by Location(1) 1,053 screens ND Fourth 2 MN at 84 locations in 9 WI NY 1 largest 17 states(1) 23 IA PA NE 4 5 OH 7 IL 2 U.S. exhibitor CO 1 MO 8 KY VA 1 9 1 AR 1 GA TX LA 3 3 3 Added 36 Acquisition of Movie Marcus Theatres by Screen(1) theatres, 425 Tav
Slide 15: Domestic Attendance & Box Office (Pre-Pandemic)
Domestic Attendance & Box Office (Pre-Pandemic) 14 3 Box Office Revenue 12 Box office Revenue in recession years 2.5 Attendence 10 2 US Box Office ($bn) Admissions (bn) 8 1.5 6 1 4 0.5 2 0 0 Source: National Association of Theatre Ow ners DVD Internet 15 Online Video Streaming
Slide 16: Long History of Growth and Outperformance
Long History of Growth and Outperformance Our investments in amenities and implementation of innovative operating and marketing strategies resulted in historically strong performance Box Office Recovery Concessions Revenue Ticket Revenue per vs. 2019(1) per person YoY Growth person YoY Growth 80% 30
Slide 17: Created Industry-Leading Theatre Guest Experience
Created Industry-Leading Theatre Guest Experience Invested ~$594 Million in New and Existing Assets Since June 2013 Recliner Food and PLF Screens Acquisitions New Theatres Seating Beverage • 78% of company- • 78% of company- • 60% of first-run • ~60% of existing • BistroPlex in-theatre owned theatre
Slide 18: Current Plans
Current Plans Maximize Assets in a Post- Re-invent Out-of-Home Strategic Growth Pandemic World Entertainment Experience • Build new theatres. • Expand industry leading amenities – PLF’s, • Test MovieFlex subscription program to F&B concepts. encourage more frequent movie going. • Assume new manageme
Slide 19: 2022 Blockbuster Films Drove Customers to Theatres
2022 Blockbuster Films Drove Customers to Theatres • Highest grossing films for fiscal 2022 were: “Top Gun: Maverick,” “Black Panther: Wakanda Forever,” “Doctor Strange in the Multiverse of Madness,” “Jurassic World: Dominion,” and “Minions: The Rise of Gru” • Each of these films debuted with an exc
Slide 20: 2023 Starting Off Strong
2023 Starting Off Strong • First quarter of fiscal 2023 is off to a strong start with the high performing “Avatar: The Way of Water” continuing its blockbuster run • Several other films performed well during the first two months of the year, including “Puss in Boots: The Last Wish,” “M3GAN,” “A Man
Slide 21: Encouraging 2023 Film Slate
Encouraging 2023 Film Slate* Q1 2023 Q2 2023 Q3 2023 Q4 2023 Ant-Man and the Wasp: Dungeons & Dragons: Honor Indiana Jones and the Dial of Dune: Part Two Quantumania Among Thieves Destiny Cocaine Bear The Super Mario Bros. Movie Mission: Impossible – Dead The Marvels Reckoning Part One Creed III Gua
Slide 22: 2024 Film Slate Includes Highly Anticipated Films
2024 Film Slate Includes Highly Anticipated Films* 2024 Films El, Muerto Captain America: New World Order Mufasa: The Lion King Madame Web Furiosa Joker: Folie a Deux A Quiet Place: Day One IF Untitled Deadpool Movie Kung Fu Panda 4 Kingdom of the Planet of the Apes Untitled Gladiator Sequel Disney’
Slide 23: Outlook
Outlook • Customers across all ages and audience types have shown strong demand for moviegoing post pandemic • Expect theatrical exhibition to remain an important component of studios’ business model; top 5 films fiscal 2022 debuted with exclusive theatrical run • Production delays related to the li
Slide 24: Marcus Hotels & Resorts
Marcus Hotels & Resorts 24
Slide 25: Diverse Portfolio
Diverse Portfolio 7 company majority-owned properties; manage 9 properties for other owners Grand Geneva Resort, AC Hotel Chicago Downtown, Saint Kate – The Arts Hotel, Lake Geneva, WI Chicago, IL Milwaukee, WI Lincoln Marriott Cornhusker, Hilton Milwaukee City Center, The Pfister Hotel, Hilton Madi
Slide 26: Portfolio Management
Portfolio Management The Skirvin Hilton, Oklahoma City – Disposition • Historic hotel located in the heart of downtown Oklahoma City • Acquired a 60% interest through a joint venture in 2006, reopening the hotel in 2007 following an extensive historic renovation • Capital to be redeployed in Hotels
Slide 27: Strategic Growth
Strategic Growth Added New Joint-Venture Property with Management Contract • Through joint venture with Searchlight Capital Partners, acquired Kimpton Hotel Monaco Pittsburgh as minority investor • Assumed management of property, effective 12/16/2021 • Features 248 guest rooms, over 11,300 square fe
Slide 28: Strategic Growth
Strategic Growth Added New Management Contract • Assumed management of The Coralville Hotel & Conference Center in Coralville, Iowa, effective 8/18/2021 • Hotel has been rebranded to Hyatt Regency Coralville Hotel & Conference Center • Features 286 guest rooms, 57,588 square feet of meeting and conv
Slide 29: A Growing Footprint
A Growing Footprint Marcus Hotels Locations •Branded and independent first-class hotels •Nearly 60 years of hotel management experience • 4,800+ Rooms Managed • 330,000+ Square Feet of Meeting & Event Space • 50+ Restaurants, Bars, Lounges & Other F&B Outlets • 17 Managed Properties • 3 Luxurious Sp
Slide 30: A Leader in Our Markets and Industry
A Leader in Our Markets and Industry •Consistently outperforming our competitive sets Marcus Owned Market Share(1) •Expertise in management, 140.0 development, historic 135.9 135.0 renovations, asset 130.0 repositioning and F&B 125.0 •Operational excellence – 120.0 122.1 115.0 111.6 113.1 consistent
Slide 31: Industry Performance
Industry Performance (1) 31 (1) Occupancy represents the percentage of av ailable rooms sold during a specif ied time period. Occupancy is calculated by div iding the number of rooms sold by rooms av ailable.
Slide 32: Current Plans
Current Plans Operational Excellence and Portfolio Management Strategic Growth Financial Discipline • Reinvest in hotels to maintain and enhance their • Acquire hotel properties as investment fund value sponsor or joint venture partner • Leverage strong leisure demand to drive ADR • Elevate branding
Slide 33: Outlook
Outlook • Division reported significant recovery in fiscal 2022 resulting in record Adjusted EBITDA • Economic environment will impact future RevPAR trends; hotel revenues have historically tracked closely with GDP • Increasing mix of group business is driving F&B revenues; fiscal 2023 group booking
Slide 34: Shareholder Value Creation
Shareholder Value Creation
Slide 35: Disciplined Historical Capital Allocation Strategy
Disciplined Historical Capital Allocation Strategy •Opportunistically allocated over $925 million in capital from June 2013 to December 2019 2% 2% 3% 12% 9% 22% M&A Operations Theatre Cap Ex 9% 12% Hotel Cap Ex Asset Sales Net Debt Proceeds Capital Net Debt Repayments Stock Issuance Capital Dividend
Slide 36: Long-Term Value Maximization
Long-Term Value Maximization Theatre Expansion Hotel Expansion Reinvesting in Existing Assets • Acquisitions • Joint Ventures • Hotel & Theatre Renovations • New Builds • Management Contracts • New Amenities & Features • Creation of a Fund • F&B Innovations • DreamLoungers, UltraScreen DLX, SuperScr
Slide 37: Financial Performance
Financial Performance 37
Slide 38: Historical Financial Performance
Historical Financial Performance Revenues Operating Income Adjusted EBITDA (5) (in millions) (in millions) (in millions) Operating Income % of Revenues Adjusted EBITDA Adjusted EBITDA Margin % $900 $820.9 $100 $83.2 25% $200 40% $800 68.2 $707.1 $155.2 $677.4 $160 $149.4 $700 $50 11.8% 8.3% 0% 30% $
Slide 39: Historical Results by Segment
Historical Results by Segment (in millions) Revenues (in millions) (1) Operating Income (in millions) 2016-19 $800 CAGR $200 $227 1.8% $13 $12 $10 $600 $100 $221 $227 $269 $80 $89 $77 $(6) $19 $400 $0 $(28) $187 $8 $556 19.2% $(121) $200 $401 $446 $408 -$100 $105 $271 $(44) $133 -$200 $0 2017 2018 2
Slide 40: Appendix
APPENDIX
Slide 41: Fourth Quarter and Full Year 2022 Financial Highlights
Fourth Quarter and Full Year 2022 Financial Highlights Fourth Quarter and Full Year 2022 Financial Highlights (In thousands, except per share data) 13 Weeks Ended 52 Weeks Ended Dec. 29, Dec. 30, Dec. 29, Dec. 30, 2022 2021 2022 2021 Total revenues $ 162,947 $ 169,048 $ 677,394 $ 458,244 Operating i
Slide 42: Fourth Quarter and Full Year 2022 Financial Highlights
Fourth Quarter and Full Year 2022 Financial Highlights Reconciliation of Net Earnings (loss) to Adjusted EBITDA (Unaudited) (In thousands) 13 Weeks Ended 52 Weeks Ended Dec. 29, Dec. 30, Dec. 29, Dec. 30, 2022 2021 2022 2021 Net earnings (loss) attributable to The Marcus Corporation $ (9,319) $ 6,44
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Hotel net earnings to Hotel EBITDA - Skirvin Hilton (unaudited) (in thousands) Sale price $ 36,750 Avoided capital expenditures 14,000 $ 50,750 LTM FY2019 Nov. 2022 Hotel net income (loss) $ 470 $ (78) Add (deduct): Interest expense 1,063 1,041 Income tax ex
Slide 44: Investor Presentation March 2023
INVESTOR PRESENTATION MARCH 2023
Marcus Corporation (The) — Q4 2022 Earnings Presentation on 6ix