News Press Releases

The Marcus Corporation Reports Third Quarter Fiscal 2016 Results

MCS | October 27, 2016

Marcus Theatres^® achieves record results and again significantly outperforms the industry

The Marcus Corporation (NYSE: MCS) today reported results for the third quarter of fiscal 2016 ended September 29, 2016. In the previous year, the company changed its fiscal year end to the last Thursday in December, and all third quarter and year-to-date fiscal 2016 results are compared to comparable 13-week and 39-week periods ended September 24, 2015.

Third Quarter Fiscal 2016 Highlights

Total revenues for the third quarter of fiscal 2016 were $144,695,000, an 8.1% increase from revenues of $133,894,000 for the comparable period in 2015.
Operating income was $24,683,000 for the third quarter of fiscal 2016, a 24.6% increase from operating income of $19,811,000 for the comparable period in 2015.
Net earnings attributable to The Marcus Corporation were $14,372,000 for the third quarter of fiscal 2016, a 32.2% increase from net earnings attributable to The Marcus Corporation of $10,871,000 for the comparable period in 2015.
Net earnings per diluted common share attributable to The Marcus Corporation were $0.51 for the third quarter of fiscal 2016, a 30.8% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.39 for the comparable prior period in 2015.

First Three Quarters of Fiscal 2016 Highlights

Total revenues for the first three quarters of fiscal 2016 were $405,117,000, a 3.8% increase from revenues of $390,379,000 for the comparable prior period in 2015.
Operating income was $54,290,000 for the first three quarters of fiscal 2016, a 20.5% increase from operating income of $45,046,000 for the comparable prior period in 2015.
Net earnings attributable to The Marcus Corporation were $29,160,000 for the first three quarters of fiscal 2016, a 26.1% increase from net earnings attributable to The Marcus Corporation of $23,125,000 for the comparable period in 2015.
Net earnings per diluted common share attributable to The Marcus Corporation were $1.05 for the first three quarters of fiscal 2016, a 26.5% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.83 for the comparable prior period in 2015.

“This was another excellent quarter for The Marcus Corporation. Marcus Theatres had a record quarter and once again significantly outperformed the industry. Although reduced group business at some of our hotels slightly impacted the third-quarter performance of Marcus Hotels & Resorts, its year-to-date performance remains strong and the division has also outperformed the industry. Both divisions have made solid contributions to our outstanding results for the first three quarters of 2016,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.

Marcus Theatres^®

“Marcus Theatres achieved record results for the third quarter, with an 18.9% increase in revenues and a 47.0% increase in operating income, compared to the same period last year. The division outperformed the change in national box office revenues during the third quarter by 10.5 percentage points, according to Rentrak, compared to the same corresponding weeks in the prior year,” said Marcus.

“The top-performing films for Marcus Theatres in the third quarter were The Secret Life of Pets, Suicide Squad, Finding Dory, Jason Bourne and Star Trek Beyond,” said Rolando B. Rodriguez, president and chief executive officer of Marcus Theatres. “In addition to a solid movie slate, the significant investments we are making in our existing theatres, combined with strong leadership and focused and collaborative execution by our team, are driving our success and ability to continue to outperform the industry.”

“We also recently celebrated the grand opening of the Marcus Country Club Hills Cinema in Country Club Hills, Ill. Since purchasing the property earlier this year, we completed a multimillion-dollar renovation that transformed this 16-screen theatre into a state-of-the-art entertainment complex. The new theatre features DreamLounger^SM luxurious recliner seating in every auditorium and three premium large-format auditoriums including one UltraScreen DLX^® massive-screen experience and two SuperScreen DLX^® auditoriums with oversized screens. Signature food and beverage amenities offered at the new theatre include a Take Five^SM Lounge and our newest food concept, Reel Sizzle^®, inspired by the iconic diners of the 1950s,” said Rodriguez. “The Marcus Country Club Hills Cinema expands our presence in the greater Chicago market to six theatres and 100 screens. We are excited to bring this enhanced moviegoing experience to area residents.”

Rodriguez said the division will open two additional screens at the Marcus Palace Cinema in Sun Prairie, Wis. during the fourth quarter increasing it to 14 screens and will also complete a major renovation of the Orland Park Cinema in Orland Park, Ill. The Orland Park Cinema will have DreamLounger seating in every auditorium, an UltraScreen DLX auditorium, a Take Five Lounge and a Reel Sizzle. Marcus Theatres will also add a Take Five Lounge and convert three existing screens into SuperScreen DLX auditoriums at other existing theatres during the fourth quarter.

“We currently have two new theatres under construction – a 10-screen theatre in Shakopee, Minn. and our first stand-alone all in-theatre dining location in Greendale, Wis. In addition to adding new theatres and expanding existing theatres, our growth strategy also includes pursuing potential acquisition opportunities that may arise,” said Rodriguez.

“The film slate for the upcoming holiday season has a number of potential hit films in the pipeline. Inferno opens tomorrow, and will be followed by other highly anticipated films opening in the weeks through Christmas. These include Doctor Strange, Trolls, the Harry Potter prequel Fantastic Beasts and Where to Find Them, Moana, Rogue One: A Star Wars Story, Collateral Beauty, La La Land, Sing, Passengers and Assassin’s Creed,” said Rodriguez.

Marcus^® Hotels & Resorts

“Marcus Hotels & Resorts’ revenue per available room (RevPAR) for comparable company-owned properties increased 2.7% in the third quarter and was up 4.6% for the first three quarters of 2016. The majority of the RevPAR increase was due to a higher average daily rate,” said Marcus. He noted that total revenues and operating income for the division were impacted by last year’s sale of the Hotel Phillips in Kansas City, Mo.

“Although reduced group sales in some markets and a resulting decrease in food and beverage revenues had a slight impact on our third quarter results, our year-to-date operating income is up 48.5% over the same period in 2015. This is a direct result of our ongoing focus on managing costs and increasing profitability, while maintaining our high standards for customer service,” said Joseph Khairallah, president of Marcus Hotels & Resorts.

“In addition to our year-to-date improvements in RevPAR and operating income, our properties in total also continued to outperform the competitive set in their markets during both the third quarter and year-to-date 2016. We believe this reflects our ongoing investments in our company-owned properties to maintain and enhance their value, as well as our successful track record as an experienced hotel management company,” said Khairallah.

“The $4.3 million renovation of the Skirvin Hilton Hotel in Oklahoma City was completed during the third quarter and the response from guests has been excellent. We recently began construction on another major project, adding 29 spacious, all-season villas to the Grand Geneva Resort & Spa in Lake Geneva, Wis. This multimillion dollar investment is designed to enhance the resort experience for travelers who want expanded, upscale accommodations and will increase our total units on the Grand Geneva campus to more than 600 when the Villas open next year,” added Khairallah.

Summary

“With a debt-to-capitalization ratio of 38% at the end of the third quarter of fiscal 2016 and substantial availability on our recently renewed $225 million credit facility, we are well positioned to continue to make investments in our existing assets, seek acquisitions and other new-build growth opportunities, and enhance shareholder value through dividends and share repurchases when timing and market conditions are appropriate,” added Marcus.

Conference Call and Webcast

Marcus Corporation management will hold a conference call today, October 27, 2016, at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the third quarter results. Interested parties may listen to the call live on the Internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-574-990-3059 and entering the passcode 90433880. 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, November 3, 2016, by dialing 1-855-859-2056 and entering passcode 90433880. 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 686 screens at 54 locations in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. The company’s lodging division, Marcus^® Hotels & Resorts, owns and/or manages 18 hotels, resorts and other properties in nine states. For more information, please visit the company’s website 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 other incidents of violence in public venues such as hotels and movie theatres. 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
		Sept. 29,			Sept. 24,			Sept. 29,			Sept. 24,
		2016			2015			2016			2015
Revenues:
	Theatre admissions	$	46,859		$	39,125		$	137,783		$	127,515
	Rooms		32,609			33,641			81,984			83,775
	Theatre concessions		30,260			26,027			88,644			82,674
	Food and beverage		17,991			18,679			50,784			51,347
	Other revenues		16,976			16,422			45,922			45,068
Total revenues			144,695			133,894			405,117			390,379

Costs and expenses:
	Theatre operations		39,579			35,169			118,048			111,097
	Rooms		10,608			11,155			30,409			32,064
	Theatre concessions		8,611			7,700			24,440			23,052
	Food and beverage		14,498			14,612			41,797			42,447
	Advertising and marketing		5,540			6,152			16,033			17,310
	Administrative		15,702			14,011			45,638			42,824
	Depreciation and amortization		10,474			10,342			31,025			29,931
	Rent		2,051			2,209			6,277			6,517
	Property taxes		4,168			3,885			12,306			11,365
	Other operating expenses		8,781			8,848			24,854			25,807
	Impairment charge		-			-			-			2,919
Total costs and expenses			120,012			114,083			350,827			345,333

Operating income			24,683			19,811			54,290			45,046

Other income (expense):
	Investment income		8			10			25			205
	Interest expense		(2,127	)		(2,496	)		(6,993	)		(7,390	)
	Gain (loss) on disposition of property, equipment and other assets		239			183			(478	)		(564	)
	Equity earnings (losses) from unconsolidated joint ventures, net		161			2			270			(121	)
			(1,719	)		(2,301	)		(7,176	)		(7,870	)

Earnings before income taxes			22,964			17,510			47,114			37,176
Income taxes			8,712			6,798			18,236			14,504
Net earnings			14,252			10,712			28,878			22,672
Net loss attributable to noncontrolling interests			(120	)		(159	)		(282	)		(453	)
Net earnings attributable to The Marcus Corporation		$	14,372		$	10,871		$	29,160		$	23,125

Net earnings per common share attributable to
	The Marcus Corporation - diluted	$	0.51		$	0.39		$	1.05		$	0.83

Weighted ave. shares outstanding - diluted			28,001			27,898			27,865			27,841


THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)

		(Unaudited)		(Audited)
		Sept. 29,		Dec. 31,
		2016		2015
Assets:

	Cash and cash equivalents	$	11,410	$	24,691
	Accounts and notes receivable		15,456		13,366
	Refundable income taxes		3,878		-
	Deferred income taxes		2,508		2,807
	Other current assets		8,082		7,041
	Property and equipment, net		691,689		670,702
	Other assets		83,695		88,901

Total Assets		$	816,718	$	807,508

Liabilities and Shareholders' Equity:

	Accounts payable	$	20,215	$	28,737
	Income taxes		-		3,490
	Taxes other than income taxes		14,621		17,303
	Other current liabilities		49,944		55,500
	Current portion of capital lease obligation		5,452		5,181
	Current maturities of long-term debt		36,314		18,292
	Capital lease obligation		11,103		15,192
	Long-term debt		196,587		207,376
	Deferred income taxes		52,373		46,212
	Deferred compensation and other		45,041		44,527
	Equity		385,068		365,698

Total Liabilities and Shareholders' Equity		$	816,718	$	807,508


THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)

				Hotels/		Corporate
		Theatres		Resorts		Items			Total

	13 Weeks Ended September 29, 2016
	Revenues	$	81,921	$	62,613	$	161		$	144,695
	Operating income (loss)		18,095		10,614		(4,026	)		24,683
	Depreciation and amortization		6,228		4,158		88			10,474

	13 Weeks Ended September 24, 2015
	Revenues	$	68,919	$	64,839	$	136		$	133,894
	Operating income (loss)		12,309		11,266		(3,764	)		19,811
	Depreciation and amortization		5,696		4,554		92			10,342

	39 Weeks Ended September 29, 2016
	Revenues	$	238,837	$	165,880	$	400		$	405,117
	Operating income (loss)		51,530		15,073		(12,313	)		54,290
	Depreciation and amortization		18,175		12,582		268			31,025

	39 Weeks Ended September 24, 2015
	Revenues	$	221,358	$	168,606	$	415		$	390,379
	Operating income (loss)		44,835		10,150		(9,939	)		45,046
	Depreciation and amortization		16,272		13,386		273			29,931


	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.