Marcus Corporation (the) · NYSE:MCS
Marcus Corporation (the) — Q3 2023 Earnings Presentation
45 slides from Marcus Corporation (the)'s earnings presentation, Nov 1, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION NOVEMBER 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 presentation 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 bef
Slide 4: A Leader in Lodging and Entertainment
A Leader in Lodging and Entertainment Founded in 1935 and headquartered in Milwaukee, Wisconsin LTM by Division 37% 33% 30% Revenues* Operating Adjusted Income EBITDA 63% 67% • Fourth largest U.S. exhibitor 70% • 993 screens at 79 locations in 17 states Fiscal 2019 by Division(1) – Pre-Pandemic 12%
Slide 5: Company Overview
Company Overview LTM Revenues: LTM Adjusted EBITDA: $731.0M (1) $107.0M LTM Adj. Market Cap: EBITDA Margin: ~$485.3M (as of 11/15/2023) 14.6%(1) Since 1993 (1) Adjusted EBITDA is a Non-GAAP measurement equal to operating income plus depreciation and amortization, impairment charges, non-cash share-b
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 Chairman, Senior Executive Vice Chief Financial Officer & President, Marcus President, Marcus Chief Information Chief Human President and Chief President
Slide 8: Significant Improvement Over Prior Year
Significant Improvement Over Prior Year Revenues Operating Income Net Earnings (Loss) Adjusted EBITDA (in millions) (in millions) (in millions) (in millions) $600 $568.0 $35 $32.8 $100 $20 $90.5 $514.4 $500 $30 $16.2 $80 $25 $68.5 $15 $400 $20.9 $12.2 $60 $20 $300 $42.3 $10 $15 $208.8 $40 $183.7 $11
Slide 9: 88-Year History of Prudent Balance Sheet and Liquidity Management
88-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 • $68.6 million of net cash flow from operations 50% Debt/Capitalization % Net Debt to Adjusted EBITDA Ratio 10 in first three quarters of fiscal year 2023 9 • $256.7 million in cash and revolving c
Slide 11: Increasing Dividend; Long History of Returning Capital to Shareholders
Increasing Dividend; Long History of Returning Capital to Shareholders Annual Cash Dividends • Reinstated $0.05 quarterly cash dividend Q3 2022; increasing quarterly $0.7 cash dividend to $0.07 in Q3 2023 $0.64 $0.60 $0.6 • Annual cash dividend was $0.68 prior to $0.50 suspension on 4/29/20 (3-year
Slide 12: Unique Real Estate Ownership Profile
Unique Real Estate Ownership Profile In addition to our owned hotels, unlike most of our peers, we own the underlying real estate for the majority of our theatres • Real estate ownership enables us to 100% quickly react to changing theatre trends • Reduces our monthly fixed lease 39% payments 75% •
Slide 13: Marcus Theatres
Marcus Theatres 13
Slide 14: Leading U.S. Theatre Exhibitor
Leading U.S. Theatre Exhibitor Marcus Theatres by Location(1) 993 screens at ND 2 Fourth 79 locations in MN 7 WI NY 1 largest 20 PA 17 states(1) IA NE 4 5 OH 7 U.S. exhibitor IL 2 CO VA MO 8 KY 1 1 9 1 AR 1 GA TX LA 3 3 3 Added 36 Acquisition of Movie Marcus Theatres by Screen(1) theatres, 425 Taver
Slide 15: Domestic Attendance & Box Office (Pre-Pandemic)
Domestic Attendance & Box Office (Pre-Pandemic) 14 3 Box Office Revenue 12 Box office Revenue in recession years 2.5 Attendence 10 2 US Box Office ($bn) Admissions (bn) 8 1.5 6 1 4 0.5 2 0 0 Source: National Association of Theatre Owners 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 90% 83
Slide 17: Created Industry-Leading Theatre Guest Experience
Created Industry-Leading Theatre Guest Experience Invested ~$594 Million in New and Existing Assets Over the Last Decade Recliner Food and PLF Screens Acquisitions New Theatres Seating Beverage • 84% of company- • 82% of company- • 66% of first-run • ~60% of existing • BistroPlex in-theatre owned th
Slide 18: Current Plans
Current Plans Maximize Assets in a Post- Re-invent Out-of-Home Strategic Growth Pandemic World Entertainment Experience • Expand industry leading amenities – PLF’s, • Build new theatres. • Test MovieFlex subscription program to F&B concepts. encourage more frequent movie going. • Assume new manageme
Slide 19: Blockbuster Film Slate
Blockbuster Film Slate • Third quarter of fiscal 2023 results benefitted from the box office phenomenon ‘Barbenheimer,’ along with the surprise hit, Sound of Freedom • Fourth quarter of fiscal 2023 is off to a strong start with Taylor Swift: The Eras Tour producing the highest box office concert fi
Slide 20: Remaining 2023 Film Slate
Remaining 2023 Film Slate* November 2023 December 2023 The Marvels Renaissance: A Film by Beyoncé Journey to Bethlehem Godzilla Minus One The Holdovers Wonka Next Goal Wins Christmas With The Chosen Trolls Band Together Aquaman and the Lost Kingdom Hunger Games: The Ballad of Migration Songbirds and
Slide 21: 2024 Film Slate Includes Highly Anticipated Films
2024 Film Slate Includes Highly Anticipated Films* 2024 Films Night Swim The Beekeeper Mean Girls The Book of Clarence Argylle Bob Marley: One Love Madame Web The Fall Guy Kung Fu Panda 4 Cabrini Dune: Part Two Ghostbuster: Frozen Empire Mickey 17 Godzilla x Kong: The New Empire Furiosa Kingdom of t
Slide 22: First Three Quarters of Fiscal 2023 Highlights
First Three Quarters of Fiscal 2023 Highlights • Revenue, operating income and Adjusted EBITDA improved significantly in the third quarter and first three quarters of fiscal 2023 compared to prior year • Attendance grew 15.6% at comparable same store theatres during the third quarter of fiscal 2023
Slide 23: Outlook
Outlook • Customers across all ages and audience types have shown strong demand for moviegoing experience • Strong demand for blockbuster films, small and mid-sized films as well as alternative programming, like concert films • Expect theatrical exhibition to remain an important component of studios
Slide 24: Marcus Hotels & Resorts
Marcus Hotels & Resorts 24
Slide 25: Diverse Portfolio
Diverse Portfolio 7 company majority-owned properties; manage 8 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: A Strategic Footprint
A Strategic Footprint Marcus Hotels Locations • Branded and independent first-class hotels • Nearly 60 years of hotel management experience • 4,400+ Rooms Managed • 330,000+ Square Feet of Meeting & Event Space • 40+ Restaurants, Bars, Lounges & Other F&B Outlets • 15 Managed Properties • 3 Luxuriou
Slide 29: 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 135.0 135.9 renovations, asset 130.0 repositioning and F&B 125.0 120.0 • Operational excellence – 115.0 110.4 122.1 113.1 consist
Slide 30: Industry Performance
Industry Performance 30 U.S. hotel RevPAR continues to grow AE STR (2 Coser US, KPI % change YoY, Jan 2023 - Sep 2023 x Jan23Feb23—Mar23 Apts May28 = um28 ul upDS Sep Rate is maintaining last year’s trend, and some Total US, monthly ADR, 2019, 2022, 2023 ore MF cosar 3170 2019 2022 eem2023 $380 ~~,
Slide 31: 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 32: First Three Quarters of Fiscal 2023 Highlights
First Three Quarters of Fiscal 2023 Highlights • Revenues before cost reimbursements increased 4.1% in the third quarter and 7.0% for the first three quarters of fiscal 2023 compared to the prior year periods (excluding the impact from the sale of The Skirvin Hilton) • RevPAR increased at six of sev
Slide 33: Outlook
Outlook • Economic environment will impact future RevPAR trends; hotel revenues have historically tracked closely with GDP • Leisure demand remains healthy with an increasing mix of group business driving F&B revenues • Hotel supply growth will likely be limited – favorable for existing hotels • Sev
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 Capital Dividends Stock Issuan
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 —
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 $731.0 $68.2 $707.1 $677.4 11.8% $160 $149.4 $155.2 $700 $50 30.0 0
Slide 39: Historical Results by Segment
Historical Results by Segment (in millions) Revenues(1) (in millions) Operating Income (Loss) (in millions) $800 $100 $12 $10 $16 $227 $89 $77 $6 $19 $600 $227 $273 $0 $(28) $236 $8 $33 $400 $168 $(121) $556 -$100 $200 $446 $88 $408 $457 $(44) $271 $0 $132 -$200 2018 2019 2020 2021 2022 Q3 2023 2018
Slide 40: Appendix
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Slide 41: Q3 and First Three Quarters of 2023 Financial Highlights
Q3 and First Three Quarters of 2023 Financial Highlights Q3 and First Three Quarters of 2023 Financial Highlights (In thousands, except per share data) 13 Weeks Ended 39 Weeks Ended Sept. 28, Sept. 29, Sept. 28, Sept. 29, 2023 2022 2023 2022 Total revenues $ 208,766 $ 183,650 $ 568,049 $ 514,447 Ope
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Net earnings (loss) to Adjusted EBITDA (Unaudited) (In thousands) 13 Weeks Ended 39 Weeks Ended Sept. 28, Sept. 29, Sept. 28, Sept. 29, 2023 2022 2023 2022 Net earnings (loss) attributable to The Marcus Corporation $ 12,234 $ 3,289 $ 16,234 $ (2,653) Add (de
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Operating income (loss) to Adjusted EBITDA by Reportable Segment (Unaudited) (In thousands) 13 Weeks Ended Sept. 28, 2023 39 Weeks Ended Sept. 28, 2023 Hotels & Corp. Hotels & Corp. Theatres Resorts Items Total Theatres Resorts Items Total Operating income (
Slide 44: 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 45: Investor Presentation
INVESTOR PRESENTATION NOVEMBER 2023
Marcus Corporation (The) — Q3 2023 Earnings Presentation on 6ix