Marcus Corporation Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $852.53m | Revenue (TTM) = $789.80m
Market Cap = $852.53m | Estimated Revenue = $831.20m
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $985.27m | Revenue (TTM) = $789.80m
Enterprise Value = $985.27m | Forward Revenue = $831.20m
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 SBC | in % Revenue
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to revenue.
🧮 How is it calculated?
SBC as % of Revenue = (SBC ÷ Revenue) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of revenue shows how heavily a company relies on equity-based compensation and how significant this form of compensation is relative to the size of the business.
🧮 Calculation
🎯 What does this mean for investors?
- A lower figure is generally positive: Stock-based compensation is relatively small compared with the company's revenue.
- A high figure can indicate greater reliance on stock-based compensation and a higher potential risk of dilution. However, it is also important to consider whether the company offsets dilution through share buybacks.
- The trend over time should also be considered. A high but declining percentage presents a different picture from a persistently high or increasing percentage.
- A single-digit SBC-to-revenue ratio is not unusual among many growth-oriented and technology companies.
📘 SBC as % of FCF
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to free cash flow (FCF).
🧮 How is it calculated?
SBC as % of FCF = (SBC ÷ Free Cash Flow) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of free cash flow shows how significant SBC is relative to the cash generated by the company. Since SBC is non-cash compensation, it is typically not deducted as a cash outflow when calculating FCF.
🧮 Calculation
🎯 What does this mean for investors?
- A lower value is generally favorable. Stock-based compensation is relatively small compared with the company's cash generation.
- A high value means that SBC represents a significant portion of the company's reported free cash flow, even though SBC itself is non-cash.
- The higher the value, the more significant SBC can be as an economic cost to shareholders, particularly when it results in share dilution.
📘 SBC Growth 1Y
📈 What is it?
SBC Growth 1Y shows how much a company's stock-based compensation has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
SBC Growth shows whether stock-based compensation is becoming more or less significant for shareholders. If SBC increases significantly, it can lead to greater shareholder dilution over time. At the same time, SBC is a non-cash expense that reduces earnings on the income statement but is added back in the cash flow statement.
🧮 Calculation
🎯 What does this mean for investors?
- A high positive value is generally negative, as rising SBC can increase the burden on shareholders, particularly through potential dilution.
- What matters is whether the development of SBC is sustainable over the long term. Some level of SBC is common among many growth and technology companies.
📘 Share Count Growth 1Y
📈 What is it?
Share Count Growth 1Y shows how much the number of shares outstanding has increased or decreased over a one-year period.
🧮 How is it calculated?
🏛️ Why is it important?
The number of shares determines how many shares the company's earnings and assets are distributed across. If the share count decreases, existing shareholders' relative ownership increases. If it increases, existing shareholders are diluted. The metric therefore makes dilution and share buybacks directly visible.
🧮 Calculation
🎯 What does this mean for investors?
- A negative value is generally positive, as the number of shares outstanding is decreasing.
- A positive value indicates dilution of existing shareholders.
- A declining share count is not automatically positive: It also matters at what price the shares are repurchased and how the buybacks are financed.
📘 Shareholder Yield
📈 What is it?
Shareholder Yield measures how much capital a company returns to shareholders through dividends and share buybacks, relative to its market capitalization. It goes beyond dividend yield by also including share buybacks.
🧮 How is it calculated?
🏛️ Why is it important?
Dividend yield only tells part of the story. When a company buys back shares and the share count falls, each existing shareholder owns a larger part of the company. When the share count rises, for example through stock-based compensation or new share issuance, existing shareholders are diluted. Shareholder Yield combines both into one metric.
🧮 Calculation
🎯 What does this mean for investors?
- A higher Shareholder Yield indicates more capital being returned to shareholders.
- A negative value means the company issued more new shares than its dividends and buybacks make up for.
- Share buybacks are most beneficial when shares are repurchased at attractive valuations.
- Investors should also consider whether dividends and buybacks are sustainable over time.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Marcus Corporation Stock Analysis
Analyst Opinions
9 Analysts have issued a Marcus Corporation forecast:
Analyst Opinions
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Marcus Corporation Events
Past Events
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OCT
29
Q3 2026 Earnings Call
7 days ago
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JUL
30
Q2 2026 Earnings Call
3 months ago
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APR
30
Q1 2026 Earnings Call
6 months ago
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FEB
26
Q4 2025 Earnings Call
8 months ago
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OCT
31
Q3 2025 Earnings Call
about one year ago
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StocksGuide Free
Marcus Corporation — Q3 2026 Earnings Call
1. Management Discussion
Good morning, everyone, and welcome to Marcus Corporation's Third Quarter 2026 Earnings Conference Call. My name is Jonathan, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded. Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of The Marcus Corporation.
At this time, I would like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Good morning, and welcome to our fiscal 2026 third quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect or other similar words. Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements are only made as of the date of this conference call and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading Forward-Looking Statements in the press release we issued this morning announcing our fiscal 2026 third quarter results and in the Risk Factors section of our fiscal 2025 annual report on Form 10-K, which you can access on the SEC's website. Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure in evaluating our performance and its limitations, a copy of which is available on the Investor Relations page of our website at investors.marcuscorp.com.
All right. With that behind us, let's begin. I'll start this morning by spending a few minutes sharing the results from our third quarter and then discuss our balance sheet, liquidity and capital allocation. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We'll then open up the call for questions.
This morning, we reported another record quarter with results that exceeded our expectations and broke third quarter revenue records in both divisions. In theaters, a strong film slate led by blockbuster hits kept audiences coming to the movies deep into the summer to deliver the highest total revenue for the summer movie season in Marcus Theaters history. In hotels, we continue to see strength in leisure demand during our seasonally busiest quarter that drove record third quarter revenue. The record third quarter revenue in both divisions combined to deliver the highest quarterly revenue for any quarter in company history.
I'll start with a few highlights from our consolidated results for the third quarter of 2026. Consolidated revenues of $238 million were up 13.1% compared to the prior year quarter. Operating income for the quarter was $30.3 million, an increase of $7.6 million or 33% to the prior year quarter. Adjusted EBITDA for the third quarter was $49.1 million, a 21% increase over the third quarter of fiscal 2025. And net earnings for the quarter were $18.8 million or $0.60 per share compared to prior year third quarter net earnings of $13.2 million or $0.42 per share, excluding the impact of a nonrecurring gain on property insurance settlement of $3 million or $0.10 per share net of tax.
Turning to our segment results. I'll begin this morning with our theater division. Third quarter 2026 total revenue of $145 million increased approximately 21% compared to the prior year third quarter, primarily due to the strong performances from Spider-Man: Brand New Day and The Odyssey as well as stronger carryover of films that released in the second quarter compared to last year's carryover. Comparable theater admission revenue for the third quarter increased 21.8% and comparable theater attendance increased 16.8% compared with the third quarter last year.
Based on data from Comscore, U.S. box office receipts increased 27% during the 2026 third quarter compared to U.S. box office receipts during the third quarter of 2025. There are 3 factors that impacted our admissions revenue growth when compared to the reported national box office growth. First, based on our review of box office data, it is important to note that our admissions revenue in the third quarter of 2025 included box office revenues from 2 films with national grosses that were not reported by certain streaming content providers to Comscore. The exclusion of the grosses for these films from the prior year resulted in higher national box office growth and our admission revenue growth rate was negatively impacted by 2.8 percentage points when compared to the national box office growth rate.
Second, during the third quarter of 2026, we made the strategic decision to not play 2 films due to distributor terms, which we believe negatively impacted our admissions revenue growth by approximately 1 percentage point. While these decisions to pass films are never easy, we are committed to achieving competitive market terms for film rent and we were pleased to reach a resolution with the distributor going forward. When adjusting for the impact of these 2 factors, our admissions revenue for the third quarter grew 25.6%, indicating that our admissions revenue performance trailed the industry by approximately 1.4 percentage points.
We believe that our slightly lower box office performance relative to the nation during the third quarter was primarily attributable to an unfavorable film mix that included the #2 film in the quarter, The Odyssey, that played stronger in other parts of the U.S. where we do not have a presence and in premium formats with significantly elevated average ticket prices. Our average admission price increased 4.3% during the third quarter of 2026 compared to last year. Our admission per caps were favorably impacted by strategic pricing changes, a higher percentage of our attendance on PLF screens and a decrease in the percentage of attendance coming on Value Tuesday compared to last year's quarter due to one additional Tuesday that fell in last year's calendar third quarter compared to this year's third quarter.
We also grew our average concession, food and beverage revenues per person at our comparable theaters, which increased by 3.8% during the third quarter of 2026 compared to last year's third quarter and was driven by an increase in movie-themed merchandise sales and menu pricing. Our top 10 films in the quarter represented approximately 80% of the box office compared to 72% for the top 10 films in the third quarter last year. The more concentrated film slate weighted towards blockbuster films compared to the less concentrated slate in the third quarter last year resulted in a less than 1 percentage point increase in overall film cost as a percentage of admission revenues. Finally, theater division adjusted EBITDA during the third quarter of 2026 was $46.3 million and over 46% increase over the prior year quarter, primarily due to the higher attendance volumes.
Turning to our hotels and resorts division. Total revenues before cost reimbursements were $82 million for the third quarter of 2026, a 2% increase compared to the prior year. RevPAR for our owned hotel portfolio increased 2.1% during the third quarter compared to the prior year, which resulted from a 3.3% increase in our average daily rate or ADR, partially offset by an overall occupancy rate decrease of just less than 1 percentage point. Our average occupancy rate for our owned hotels was 77.5% during the third quarter of 2026. For our comparable owned hotels, which excludes the Marc Hotel that opened in early 2026 as a new independent hotel with a new competitive set, RevPAR grew 7.4%.
According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced an increase in RevPAR of 6.2% for the third quarter of 2026 compared to the third quarter last year, indicating that our hotels outperformed their competitive set by 1.2 percentage points. We believe our outperformance resulted primarily from strong transient demand and slightly improved business travel, while we experienced a somewhat softer group demand environment. Group business as a percentage of our total business mix was approximately 39% compared to 43% in the third quarter last year.
When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, the upper upscale segment experienced an increase in RevPAR of 7.8% during the third quarter compared to the third quarter last year, indicating that our hotels underperformed the industry by approximately 5.7%. We believe our underperformance to the industry nationally this quarter primarily relates to transient demand related to major events, particularly the World Cup that occurred in other markets where we do not have a presence as well as softer group demand in our markets. With the softness in group business and events, our banquet and catering operations decreased modestly with food and beverage revenues down 1.4% in the third quarter of 2026 compared to the prior year quarter.
Finally, hotels adjusted EBITDA decreased $600,000 in the third quarter of fiscal 2026 compared to the prior year quarter and was negatively impacted by increased repair and cleanup expenses following severe storm damage at Grand Geneva Resort & Spa, which occurred on July 3, leading into the Independence Day holiday weekend. While our team worked incredibly hard to recover and serve resort guests that weekend, the storm event resulted in operational challenges, cancellations, golf course closures and incremental cleanup and repair expenses.
We expect the damage to the resort to be recovered by property insurance and we expect the event led to an approximately $500,000 negative impact on adjusted EBITDA due to incremental cleanup costs and lost revenue during the holiday weekend. When excluding the impact of the storm, our adjusted EBITDA was essentially flat. In addition, adjusted EBITDA in the third quarter compared to the prior year was also negatively impacted in hotels by adverse property tax assessments and quarterly shifts in timing of annual maintenance projects compared to when those projects occurred in fiscal 2025.
Shifting to cash flow and the balance sheet. Our cash flow from operations was $38.4 million in the third quarter of 2026 compared to cash flow from operations of $39.1 million in the prior year quarter, with a slight decrease in cash flow primarily due to differences in the timing of various working capital payments. Total capital expenditures during the third quarter of 2026 were $10 million compared to $20.9 million in the third quarter of fiscal 2025, with CapEx in the quarter primarily going to maintenance projects in both businesses. Our capital expenditures for the year are progressing as planned and we continue to expect capital expenditures for fiscal 2026 of $45 million to $50 million. The timing of several projects will impact our final capital expenditure number for the year.
We ended the third quarter with approximately $60 million in cash and over $219 million in total liquidity with debt-to-capitalization ratio of 24% and net leverage of 0.8x. We are well positioned with a very strong balance sheet, which, coupled with confidence in our businesses gives us the ability to continue pursuing growth investments while returning capital to shareholders through our quarterly dividend. We will continue to allocate capital with a balanced approach that supports an appropriate level of reinvestment in our existing assets, pursuing shorter-term payback EBITDA-enhancing investments that provide attractive returns and investments in our long-term strategic growth priorities.
With that, I'll now turn the call over to Greg.
Thanks, Chad. Good morning, everyone. As we shared with you on our last quarterly call, the summer was off to a strong start. And with the film slate ahead of us, we saw the potential for our best summer box office in years. What's played out since our last update has been truly historic, breaking many records for both the industry and our company. In our theater division, a robust film slate that appealed to a wide variety of audiences kept moviegoers coming back to our theaters deep into the summer. In our hotels and resorts division, strong leisure travel supported the steady trend of average daily rate and RevPAR growth that we've seen all year.
While there were a few surprises that we had to navigate in the quarter, our team responded and executed well. Today, we are thrilled to report the highest quarterly revenue in our company's history and a quarter in which both of our businesses achieved their highest third quarter revenue ever. I'll start with our theater division. And as this quarter wrapped up the summer moviegoing season, which runs from the first Friday in May through Labor Day, I would like to begin with some perspectives on just how strong this summer was as this is one for the history books.
For the season, with our highest attendance since 2019, Marcus Theatres recorded its highest total revenue in company history with new records for highest box office, concessions, food and beverage and merchandise sales. We also set new records for both per capita admissions revenue and per capita concession merchandise and food and beverage spend for the summer moviegoing season. As an industry, we saw 4 consecutive months from May through August that each topped $1 billion in domestic box office. This sustained performance only happens when we have a deep film slate that gives audiences a reason to return week after week.
In the third quarter, we had a strong carryover of films that opened in the second quarter, combined with 2 blockbuster films in Spider-Man: Brand New Day and The Odyssey that broke opening weekend records and more importantly, held strong week after week deep into the summer. When you combine these massive tentpoles with such a diverse array of counter programming, you get a theatrical ecosystem firing on all cylinders. Beyond the blockbuster films, we also had a more balanced slate that included family films such as Minions & Monsters, Moana and strong carryover from Toy Story 5 that played well in our markets. Horror continues to draw audiences with Resident Evil making a meaningful contribution to the third quarter.
Not only did the top films performed better this quarter than last year, but we had more movies with 32 wide releases compared to 30 in the quarter last year. Chad discussed the puts and takes that made comparisons to the reported national box office growth a bit more challenging this quarter. But when you cut to the noise and look at the numbers on an apples-to-apples basis, there were really 2 things that drove our underperformance to the national box office growth. First, we intentionally passed a couple of smaller films this quarter as we work to achieve competitive film terms with the distributor. While we never like to do this, this was a strategic decision as we are committed to controlling our costs at sustainable levels for the long term. This ability to make decisions for the long term is just another example of the benefits of our strong balance sheet. Others with a short-term focus may not have that option.
Second, the #2 film in the quarter, The Odyssey played stronger in other regions of the country, particularly the West Coast where we do not have a presence. Exhibitors in these markets were also realizing significantly elevated ticket prices, particularly with 70-millimeter showings of the film around the clock. While we achieved solid market share within our markets and also had a couple of 70-millimeter prints of the film, the film did disproportionately well outside of our markets. Conversely, I want to highlight that we did very well with the biggest film of the quarter, Spider-Man: Brand New Day, which played on all of our PLF screens immediately on opening weekend, with PLF showings representing 49% of the box office over the entirety of its run. We believe that on a relative basis, we have the highest percentage of PLF penetration in the industry, allowing us to take advantage of times just like this.
Looking ahead, the fourth quarter is off to a good start with solid domestic box office growth in October and a few positive surprises, including You Can See Everything. The holiday film slate ahead features the highly anticipated Avengers: Doomsday and Dune: Part Three and advanced ticket sales for Avengers: Doomsday are incredibly strong. Beyond these tentpoles, the fourth quarter slate includes several other exciting films, including The Cat in the Hat, Godzilla Minus Zero, Hunger Games: Sunrise on the Reaping, Focker-In-Law, Hexed and Jumanji: Open World.
Looking even further ahead, the 2027 film slate also looks strong with major franchises, including Shrek 5, Star Wars: Starfighter, Minecraft 2, Frozen 3, Sonic the Hedgehog 4, Spider-Man: Beyond the Spider-Verse, Man of Tomorrow, The Legend of Zelda, Avengers: Secret Wars and many more. There are many more great films coming noted in today's earnings release.
In summary, we are thrilled with the year that has taken shape for our theater business. More importantly, this isn't just a post-pandemic recovery anymore. This is a recognition of the importance of the theatrical model to the overall content ecosystem. We see more opportunities ahead of us as we continue to get more film product from new sources and theatrical windows extending out. While this industry has always had some years with huge hits and others with not as many, we see the long-term trends as very positive, and we like where things are headed.
Moving to our hotel and resorts division. You've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance to the competitive sets. Once again, the hotel division achieved record third quarter revenue for the third consecutive year and we were able to successfully navigate a few challenges along the way. There were several notable items in the quarter that I'd like to highlight. At a high level, for our overall portfolio, rooms demand in the quarter remained steady and the overall travel environment appears to remain healthy. However, the dynamics continue to vary by market and there was some shift in our business mix compared with last year's quarter.
In some markets, notably Chicago, we saw strength and higher demand due to an increase in the number of citywide events and convention business that drove very high occupancy and rates. This contrasts with our Milwaukee market, where we saw some softness in group business with a weaker citywide event schedule compared with last year. And in some cases, lower attendance at group events resulted in some group room blocks not selling out. This softness resulted in a decrease in group business as a percentage of our rooms revenue with stronger transient leisure and business travel growing as a percentage of our rooms mix. While this tends to help with average daily rate and total rooms revenue, we did see a decrease in food and beverage revenue tied to the decrease in banquet and catering business for group events.
RevPAR grew at 6 of our 7 comparable hotels during the second quarter compared to the prior year quarter, with both occupancy and average daily rate growing at 5 of our 7 comparable hotels. As Chad mentioned, early in the third quarter, we navigated through the impact of a major severe storm event that hit our Grand Geneva property in July. First, I'm truly grateful that all of our associates and guests were safe and there were no major injuries from the storm, which was truly remarkable in light of the sudden approach of the storm, high winds and debris and damage to the golf course. The July 3 timing of the storm was especially challenging during what is always a busy holiday weekend and I'm incredibly proud of the hard work and dedication of our associates to recover from the storm and continue to serve guests. While we were able to mitigate the revenue impact to the week following the storm, it did create a revenue and expense headwind in the quarter.
Looking ahead, the fourth quarter in hotels is off to a strong start in October and we benefited from the Milwaukee Brewers run to the World Series. As a lifelong Brewers fan, we were excited and proud to host visiting teams and fans, international media and many Brewers VIPs to our hotels during this historic post-season run. Group bookings for the rest of the year look stable with our group room revenue bookings for 2026 or group pace in the year for the year, running approximately 5% of where we were at this time last year. Looking a bit further ahead to 2027, group room pace is running approximately 10% ahead of where we were at this time last year for the next year out. Although this far out, the timing of bookings can vary significantly.
Banquet and catering pace for the remainder of 2026 is running in line with where we were at last year at this time and is running approximately 14% ahead for 2027. Overall, the division had another good quarter and the current state of our hotel business remains stable and on track with our expectations for the year. While transient demand has remained healthy, volatility in key travel costs, including high gas prices and rising airfares have persisted. If market conditions change and we begin to see softness, we are prepared to react and adjust quickly.
Finally, I'd like to close with a brief comment on our balance sheet. We continue to remain on track to deliver very strong free cash flow in 2026, and we're building cash on our balance sheet as dry powder for future growth investments. We are disciplined and patient when evaluating growth investments and we continue to look for opportunities to deploy capital to grow both of our businesses with value-accretive investments. Our strong balance sheet allows us to move quickly when we see good opportunities and we have a history of executing when they arise.
And again, I want to add my congratulations for the Milwaukee Brewers, the World Champions, the winners of the World Series last night in Tampa. Not only is it exciting for the city and for everyone involved in the team and it is exciting for our entire community and for our company because it reflects so well on Milwaukee, where we have significant investments. We are in the press around the world and that can't help but be beneficial to our community and to our company.
Before we open up the call for questions, I want to conclude my remarks by saying thank you to all the hard-working associates of The Marcus Corporation. I especially want to thank our associates at Grand Geneva that worked so hard on a holiday weekend to recover from the storm and continue serving our guests with excellence to deliver great hospitality. I don't want to ever take for granted what each and every one of them does to contribute to the success of both of our businesses.
With that, at this time, Chad and I would be happy to open the call up for any questions you may have.
[Operator Instructions] Your first question comes from the line of Eric Wold from Texas Capital Bank.
2. Question Answer
Congrats on the Brewers. A couple of questions, I guess, one on each segment. I guess as you think about the theater segment and kind of the pricing environment, I know it comes up a lot given the consumer environment around kind of the tough economy. How aggressive are you being in this environment in terms of kind of baseline ticket prices, seeing any signs of resistance? And kind of what are your thoughts kind of early into kind of how that could play out over the next few quarters?
You got a hot issue for me, Eric. It is something that we watch very carefully. We -- we've been -- we are at market with our pricing. We watch what the market is doing. But what we want is moviegoing to be a habitual experience. It's a momentum business. It's going back regularly. And for that to happen, it has to be an affordable experience and night out. And it remains so. We not only do we benchmark across -- we look at all the different costs. We look at the costs, what people are charging to go to other movie theaters. We look at what people are charging to go to other out-of-home event-based experiences, which obviously are much higher than going to the movies. But we also watch the price of streaming, which has been going up.
So we're comfortable with where we are. We believe that we also offer ourselves a variety of price points. So we can -- the customer that wants that premium first night experience and a PLF, well, we have no shortage of PLFs, as you know. But yet our Tuesday is extremely and remains extremely robust, where we're offering the value customer value pricing at the concession stand as well as the box office. And so we just -- I would tell you, we're probably not going to lead on raising the prices as high as we can, but we're probably also not going to leave money on the table either.
Got it. Helpful. And then one on the hotel segment. I know you recently completed the major renovations, The Pfister a couple of years ago and The Hilton and then obviously adding the short-haul course to Grand Geneva. You talked about kind of leaving your balance sheet strong to kind of look at other return-generating investments. How much more room do you have do you think in the hotel segment with existing properties to make renovations or changes that would have a decent sized return in terms of small additions or changes you have yet to make at the properties?
Eric, I'll take that one. I mean in terms of balance sheet capacity, we -- as I mentioned on the call, we have a lot of room. And for us, it's really more about finding opportunities that have the right return profile. The hotel business can tend to be fairly capital-intensive. And so we're looking for really special assets when we do something new and acquire an asset. And we're also looking at doing more of the joint venture type of structures as we make new investments so that we can deploy smaller chunks of capital into more opportunities and achieve some diversity in the markets that we participate in. But we have a lot of room to do there.
Our -- as you point out, our core assets, the 3 that we recently renovated are all in really great condition. We're seeing very good uplift from those renovations and the returns are playing out generally in line as we expected. And so we'll be thoughtful as other renovations come up at other properties over the next several years. There's always a cycle. We don't have anything major that's imminent like we just went through. But within the guidance on capex that we provide, there's always some level of refresh that's happening and we're keeping our assets in good condition.
I'd also add specific to the Grand Geneva, that is an asset that we're actually right in the middle of, we're just sort of just beginning planning exercise there to look how to really maximize what we have there. It is a really special asset that we've taken great care of and made investments along the way. And we think there's going to be some opportunity for further really good ROI investments, property that we know in a market that we know with land that we own. It's a pretty good combination. So I think there'll be some -- I think you'll hear more in the future about opportunity we have there as well.
Your next question comes from the line of Patrick Sholl from Barrington Research.
Congrats on the Brewers. Just on the theater segment, could you maybe talk about like the mix of attendees and versus like loyalty members versus people that weren't in the program and like when you get a surge of attendance, I guess, any sort of like success in like onboarding them onto the loyalty program to help like improve maybe your ability to reach them in the future? And just kind of just the broader retraining of the consumer and how any sort of like progress you're kind of seeing on that process with the longer, more established windows?
Yes, I can take the first part of that question just on loyalty and I'll wrap into that our Movie Club subscription program. In the quarter, we did see a pretty meaningful uptick in loyalty members. And I think that happens in any quarter when you have as robust of a slate that brings people out to the theaters who maybe haven't been there in a while. And so that was encouraging to see. We also had an uptick in the percentage of our attendance with Movie Club redemptions. And that's expected. You have customers who are earning credits every month. They may not be going every month. And so when we have a robust slate, you see a higher uptick in those redemptions. And we think that's a good thing.
We're seeing people use the program and it makes it more sticky and they'll stay in the program longer and reduce churn in the program, which has -- our experience has been that we are -- on a net basis, we are I would say, slowly and steadily growing that program. We did not see a giant uptick in sign-ups in the quarter, but it's been more slow and steady progress and that's in line with what we expect and we have continued goals for that next year. Pat, can you repeat the second part of the question?
Yes. So the second part was just on -- I think you guys had talked about kind of retraining the consumer to not wait for it to be -- for a movie to be available on streaming. And just kind of just more about that process with the significant increase in like the number of films in the quarter and just the more solidity in the window.
I just think that's something that's going to take time as we go along and the consumer starts to see -- realize it's not available. The thing that we found the most challenging, I think, of all of the -- it's the -- there's 2 challenges with it. The most is that this idea of film being available at 17 days. And even though it's a premium video-on-demand customer, a transactional video-on-demand customer, it is -- a lot of people just get an e-mail that says available at home. They're not paying attention to when it's available. It just feels like it's at home and they're thinking it's free when it really could be $20, $25 to rent it for a couple of days. And so really the first thing that the industry needed to do and is moving away from that because that's very deleterious. And we've seen data. This is the most interesting thing that I think.
The data that is put out by the groups that do the research for the industry shows the propensity to buy transactional video-on-demand at that price really is about the same at week 2 through week 8. In other words, that customer is a specific customer that is buying in week 2, and that'll be the same customer that's sitting there in week 8. And so our position as an industry has been, look, if that same customer is going to be there, you're impacting a lot of other downstream customers when you put it out there in week 2. And so if you could wait you'll have roughly the same number of transactional sales and yet you will now increase the theatrical box office, which endears to your benefit. So that seems like a win-win for us and I think that the industry is coming around to that and realizing because they're seeing the same research that we see. And that idea of pushing out that transactional window, as you see, has been going on and that's, I think, very helpful.
The next thing is we really need to get the time to -- what we call time to free, which is the time to streaming pushed out as well because that customer is also looking -- and again, we think the trade-off, and I think the data shows the trade-off of being able to have something in a theater that does business, that catches the customer's eye, that ultimately, when it shows up as a tile on your screen, you're trying to pick what you're going to watch streaming is actually a good trade-off to push it off just a little bit -- a little while. And then again, make it a win-win for the entire ecosystem, not just for theatrical, not just for streaming, but to make the pie larger. That works to all of our benefits and that's our goal when we as an industry push for longer windows.
Okay. And if I could just get one question in on the hotel segment. Could you maybe just talk a little bit more about the group pace for 2027? And how -- I guess, how sensitive do you kind of view that being with the elevated kind of travel costs with like higher fuel costs and things like that?
Yes. I mean we're running ahead as we shared in the prepared remarks for next year. A lot of that group business can -- the fluctuations in those -- in pace and bookings is tied to the calendar of events in the markets that we're in. And what really becomes the variable is the attendance at the events. And so it's really tough to know this far out what type of impact continued high travel costs will have on participation in those events. We haven't seen events getting canceled, but it's more how well attended are they. And I just don't know that we have the visibility to make a call on that relationship for 2027.
Your next question is from the line of Drew Crum from B. Riley Securities.
Congratulations on the Brewers. Maybe to start with the theaters division, guys. Just looking at 4Q, what are the kind of primary puts and takes when thinking about your performance and specifically admissions revenue relative to the industry?
Yes. I mean -- so when we look at the composition of the mix of films and think about the big films in the quarter, a couple of things to keep in mind. One, here in October, the industry is up. Our primary markets actually have been impacted somewhat by really 2 things. One is this Brewers run has been on weekends for the home games. And so that actually will have some modest impact on our theater business, while it benefits the hotel business, but it's happening in the smaller part of the quarter. So a net positive for the company, but it will impact our performance relative to the nation somewhat, at least in the month of October.
On mix of films, just a couple of things stand out. Last year, we had Wicked in the fourth quarter did very well on that film. And when I look at the big films in the quarter, this year, we've got a couple of family films in Hexed and Cat in the Hat that, that traditionally family content plays well in our markets. A film like Avengers, we should get our natural share on. And I think Dune tends to play a little bit better on the coast than it does in our part of the country. So those are really the puts and takes. I think regardless, it's going to be a very robust fourth quarter box office and it looks like October up, November likely down year-over-year with December being up pretty meaningfully.
I like to add a little color to Drew some color on that on the October -- the movie slate. Not only is October a quieter month for the industry, it generally doesn't play to our strength because you're going to get a lot more of the Oscar contenders, art film, things like that, which we do okay on, but it's not our bread and butter. And so I think historically, it's less impactful given where we are.
Got it. Okay. And then maybe one more. I know you guys don't provide quarterly guidance, but we can kind of back into what CapEx should be for 4Q. What are the other kind of key swing factors when thinking about your cash flow generation and your ability to grow free cash flow year-on-year in the fourth quarter?
Yes. Good question. On fourth quarter CapEx, there is no doubt there is a lot of -- with the guidance, there is a lot of CapEx to be spent in the fourth quarter. But seasonally, given the timing of our projects and when we try to get things done coming out of the summer season, there is a lot that's going to get done in the fourth quarter. So I do expect that we'll get to the range that we disclosed on CapEx. On the rest of free cash flow, we'll see just normal seasonality in working capital with -- in our negative working capital, which is -- tends to be a source of cash as we ramp up the business at the end of the year in theaters and then there's the big unwind in the first quarter. So those are the puts and takes. And then the -- whatever your outlook is on earnings, that will obviously fall through.
[Operator Instructions] Your next question is from the line of Mike Hickey from StoneX.
Great quarter, guys. Congrats on the Brewers. Awesome. Just curious, you guys both sort of hit on the strength of your balance sheet here and mentioned growth investments. I think you unpacked that a little bit, Greg, on the hotel side. But just sort of curious if you could dig in a little bit on what you're thinking on the -- as much as you can on the theater side, if M&A is becoming more of a possibility, obviously, since the recovery, it really hasn't reset itself, but maybe it's time. And then also how you're thinking about premium amenities. We talk a lot about screens, but I know you've been testing seats as well with D-BOX and sort of curious the early learnings there and maybe some consumer feedback.
Well, we -- as it relates to -- I'll start with M&A. We're starting to hear stuff is out there, but it's not much. It's just such a -- it's such a weird industry in terms of M&A in terms of just when people want to sell, we got to wait for that time. There's not -- it's not like there's this institutional market where people are trading assets all the time. So we stay connected to the industry. We've been in it long enough. We pretty much know most all the players and we're active in industry leadership and industry participation. So should stuff become available, stuff that we will look at. And -- but we will remain disciplined. And if it makes sense, we'll do it. And if it doesn't, we won't. But we will continue to -- how do we get more out of our box. That's the question we ask ourselves every day. That's something we can control. We can't control the M&A market as much, not at all.
But the and so you're right, D-BOX is not -- we're not -- we don't have it going yet. It's just starting to get rolled out. So I can't give you any feedback on that. We've been doing ScreenX. And we're pleased with our initial results from the screen. We had one for a while. We've added 3 more. And so we're pleased with the results. I think the feeling on ScreenX is there's a customer that really likes it. It's not for everybody, but it appeals to -- like for me, I actually personally am a big fan of ScreenX. I love it because one of the things that's very interesting about ScreenX is that the sidewalls and for those who don't know what it is, basically, it's a 3-screen setup where you have a screen in front of you and then 2 screens surrounding you on one on each side. And it goes -- it's not always running. It doesn't run continuously, which is the thing that I like the most about it because my senses can only take so much of salt. And so I like that there's a pause and it's used for when it's perfect.
I mean I saw the Mission Impossible biplane scene and it was just incredible to watch it sort of shoot around the theater. When you mix that with great sound, it's a great experience, I think. And so we have a customer for it and the ones that like it are very enthusiastic about it. And so we -- our biggest question is going to be how do you price it and where else do we go with it. And so we'll continue to figure out how do we get more out of our boxes and things like that to do that. I like D-BOX. The one good thing about the D-BOX and what we like to see is that it gives you sort of a premium format inside of a standard, which gives you great showtime flexibility. One of the challenges we face with premium formats is making sure that we offer in this discussion that we had a little bit earlier about what's the right price to charge somebody. Not every customer wants the PLF experience that most of our business really does come from a standard screen.
And so -- but showtime, the customer makes the decision to go to the movies based on showtime primarily. That is like -- that is generally their first decision. And so offering the showtime is really important in having them in a variety of formats. So when you get D-BOX, you're able to offer a premium experience at the exact same time you're offering a standard experience. And so that's our thesis and we would like to see that play out.
Does the -- how does the family demo, which is really strong for you guys? How does that index to D-BOX? I mean, normally for a more expensive PLF, I think families tend to avoid it. Do families adopt more, I guess, the premium seating than they would the screen?
I don't have the answer to that yet just because we don't have the experience with it yet.
Yes, Mike, we're a few weeks into the test, but that is -- those are exactly the types of things that we're trying to understand and learn about how it will play in our particular circuit.
Okay. Last one from us, guys. When you look at the success of '26, I kind of want to ask you, Greg, what surprised you the most? But I think maybe the question is, what's repeatable? And so you mentioned a lot of it today, whether it's the numbers of the movies, the quality, the windows. I don't know if there's a trade down or an economic consideration. You've mentioned before the youth and certainly, there's been a lot of momentum. But I guess as you look at sort of the attribution to the growth this year, what would you call out? And what do you think is most repeatable in '27? I think whenever you have a breakout success like this, I think the challenge is obviously the durability of it. And so that's sort of part one.
And then part two, when you look at the '27 slate and you mentioned the films, but a lot of family films, Frozen, Shrek, Minecraft, maybe Star Wars, but it really seems like a setup that you guys should index really well on. And I'm guessing just how Hollywood plays the trends. I'm sure we'll have plenty of horror movies too.
What we need is, we need some comedies, need more comedies from Hollywood, but you're right. I think the -- and you're also right in that the -- we never know how things are going to go year-to-year, month-to-month, quarter-to-quarter. This is a very tough industry in that regard to predict. But I think the most interesting thing that I think bodes well for our industry over the long time -- over the long term that is repeatable is the amount of the kids that are back. When we look at the segmentation of who wants to go to the movies, the most -- the audience is the most robust now is the younger audience, which I would like the older audience back. And if we can get some more dramas and comedies and the program sort of the shoulders, so to speak, not necessarily in terms of time, but sort of the idea of the demo, the shoulder demos to get them get the adults off the couch, that would be great.
But having that long-term customer, I think a kid who's young, who started to build that habit of going to the movies and says, I love going to the movies. In the long run, that's great for the business. And again, we're seeing this data, this data that I talked about that we've been exposed to that we see. We saw the -- we usually -- we've seen over time this index of do you want to see this question that they asked in the survey, do you want to see a movie at home? What do you prefer a movie in a theater or at home? And after the pandemic, it flipped in favor of at home, but it started to come back. And this year, they showed -- this last survey, they showed us to it in cohorts.
And what they showed us is the kids, their propensity to see movies in the theater versus seeing the home has flipped back to the old relationship where the theater was preferred over the home. I think that is really comforting great data that should have some durability over time. Will it have its periods of ups and downs over time? Sure. Of course, it will depend on the product, the quality of the product, who is aiding that, who it appeals to. But seeing that propensity, that desire to go at a young age is, I think, very -- is exciting for us.
And then I guess on the summer '27 slate, Greg, I mean, looks pretty good. You must be pretty excited just given the mix of films.
Yes. I always wait to see what shows up and if someone is really looking -- what I'm most looking forward to is whatever is the big surprise and there will be a big surprise. I mean just think about the surprise of the last month with the Elizabeth Holmes movie. How -- all of a sudden, everyone is going to see a 3 hour documentary. Great. I'm looking forward to seeing it.
I think, Mike, just on '27, I mean, I think you're right to point out as it relates to our geographies and the films that play well, '27 looks more favorable and we're encouraged by that. And so we'll -- we think we're well positioned.
At this time, it appears there are no other questions. I'd like to turn the call back over to Mr. Paris for any additional or closing comments.
All right. Well, we'd like to thank you once again for joining us today. We look forward to talking to you next in late February when we release our fiscal 2026 fourth quarter results. Until then, thank you, and have a good day.
This concludes today's call. Thank you for attending. You may now disconnect.
Marcus Corporation — Q2 2026 Earnings Call
1. Management Discussion
Thank you. Good morning, everyone, and welcome to Marcus Corporation's second quarter earnings conference call. My name is Jonathan, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. If at any time during this call you require assistance, please press star zero and an operator will be happy to assist you. reminder, this conference is being recorded. Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer, and Chad Paris, Chief Financial Officer and Treasurer of the Marcus Corporation. time, I'd like to turn the program over to Mr. Parris for his opening remarks. Please go ahead, sir.
Good morning and welcome to our 2026 second quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect, or other similar words. risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements are only made as of the date of this conference call, and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The risks and uncertainties which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading forward-looking statements in the press release we issued this morning announcing our 2026 second quarter results. And in the risk factor section of our fiscal 2025 annual report on form 10 K. which you can access on the SEC's website. Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure, in evaluating our performance and its limitations, a copy of which is available on the investor relations page of our website at investors.marcuscorp.com. All right, with that behind us, let's begin.
I'll start this morning by spending a few minutes sharing the results from our second quarter and discuss our balance sheet and liquidity. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we see ahead. We'll then open up the call for questions. This morning we reported our best second quarter since 2019, and it was a quarter where the intersection of strong demand and both businesses outperforming their respective industries and concepts combined to deliver new post-pandemic second quarter records for consolidated Marcus Corporation revenue and adjusted EBITDA. As we shared on our last call, the second quarter got off to a strong start in our theater division with the Super Mario Galaxy movie creating great momentum heading into a strong slate for the summer movie-going season. Audiences headed to our theaters for one great movie after another to deliver several positive surprises and our strongest second quarter in theaters since the pandemic. In our hotel division, we continue to benefit from strong group business and resilient leisure travel demand that drove overall revenue growth and another quarter of performance against our peers and the industry.
Overall, we are very pleased with the second quarter results we reported this morning. Shifting to the numbers, I'll start with a few highlights from our consolidated results for the second quarter of 2026. Consolidated revenues of $232 million were up 12.5% compared to the prior year quarter, with revenue before cost reimbursements growing in both divisions. Operating income for the quarter was $27 million, more than doubling compared to $13 million in the prior year quarter. Consolidated adjusted EBITDA for the second quarter was 46.2 million, a 43% increase over the second quarter of 2025. And finally, net earnings for the quarter increased 116% to 15.8 million, and net earnings per share increased over 121% and $0.51 per diluted common share, both compared to the prior year second quarter. According to our segment results, I'll begin this morning with our theater division.
Second quarter 2026 total revenue of 150.6 million increased 14.4% compared to last year's second quarter. Comparable theater admission revenue for the second quarter increased 16.6% and comparable theater attendance increased 10.9% compared with our fiscal second quarter 2025. According to data received from Comscore and compiled by us to evaluate our second quarter results, U.S. box office receipts increased 11.5% during the 2026 second quarter compared to U.S. box office receipts during the second quarter of 2025, indicating our admissions revenue outperformed the industry approximately five percentage points. We believe that our box office outperformed during the second quarter was primarily attributable to strategic pricing actions as well as favorable films, a favorable film slate that featured a higher mix of films that played well in our Midwestern markets, particularly family films. This contrasts with the second quarter last year when our top markets underperformed the overall increase in the national box office and a quarter that was light on family film product. The average admission price increased 5.2% during the second quarter of 2026 compared to the prior year quarter, primarily due to strategic pricing actions. Our average concession, food and beverage revenues per person at our comparable theaters increased by 2.4% during the second quarter of 2026 compared to last year's second quarter, which was driven by an increase in merchandise sales, pricing and an increase in incidence rate.
Our top five films in the quarter represented approximately 55% of the box office in the second quarter of 2026, compared to 59% for the top five films in last year's quarter. The slightly less concentrated film slate resulted in a less than one percentage point decrease in overall film cost as a percentage of admission revenues compared to last year's second quarter. Finally, Cedar Division adjusted EBITDA during the second quarter of 2026 was $36.3 million, a nearly 37% increase over the prior year quarter. Turning to our hotels and resorts division, total revenues before cost reimbursements were 70.8 million for the second quarter of 2026, a 9.6% increase compared to the prior year. REVPAR for our comparable owned hotels increased 13.9% during the second quarter compared to the prior year, which benefited from an overall occupancy rate increase of 5.9 percentage points and a 4.7% increase in our average daily rate. later ADR. Our average occupancy rate for our owned hotels was 73.2% during the second quarter of 2026. Our occupancy rate increase benefited from the Hilton Milwaukee being fully back in service compared to the second quarter last year when the hotel was under renovation and guest rooms were out of service.
We estimate that the impact of the renovation in the prior year favorably impacted our RevPAR growth by approximately 4.4 percentage points during the second quarter. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced rev par growth of 7.8% for the second quarter of 2026 compared to the second quarter of 2025, indicating that our hotels outperformed their competitive set by 6.1% After adjusting for the prior year impact of the Hilton Milwaukee renovation, we believe our hotel's rev par growth outperformed the competitive set by 1.1 percentage points, which we attribute to continued strength in group business and strong leisure demand. When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, upper upscale segment experienced rev par growth of 5.7% during our second quarter compared to the second quarter of 2025, indicating that our hotels outperformed the industry by 8.2 percentage points and outperformed the industry by approximately 3.9 percentage points when adjusting for the impact of the Hilton Milwaukee renovation. With the steady growth in group business and events, our banquet and catering operations continue to grow with food and beverage revenues up 5.7% in the second quarter of 2026 compared to the prior year. Finally, hotels adjusted EBITDA increased 3.5 million, or just over 31%, in the second quarter of 2026 compared to the prior year quarter, which primarily benefited from our revenue growth and improved operating efficiencies on higher occupancy. Shifting the cash flow and the balance sheet, our cash flow from operations was $54 million in the second quarter of 2026 compared to cash flow from operations of $31.6 million in the prior year quarter, with the increase in cash flow primarily due to higher earnings. Total capital expenditures during the second quarter of quarter of 2026 were 10 million compared to 16.9 million in the second quarter of 2025.
Our capital expenditures during the second quarter were primarily invested in maintenance and ROI projects in both businesses. For the first half of 2026, our capital expenditures the total cost of the program decreased 23 million compared to the first half of fiscal 2025. Given that we are now halfway through the year, our capital investments project planning continues to evolve, and we now expect capital expenditures of $45 to $50 million for 2026. We will continue to update our capital expenditure estimates as the year progresses. As we have discussed since the beginning of the year, we continue to expect our lower capital expenditures to result in a significant increase in free cash flow in 2026. In the second quarter of 2026, we generated $44 million in free cash flow, nearly tripling our free cash flow from the second quarter last year. For the first half of 2026, free cash flow was $22 million, a $65 million increase compared to the first half of fiscal 2025.
We ended the second quarter with approximately $26 million in cash and over $245 million in total liquidity with a debt to capitalization ratio of 25% and net leverage of 1.1 times. With that, I will now turn the call over to Greg. Thanks, Chad. Good morning, everyone. Today, we are thrilled to report a quarter with great financial performance in both of our businesses. In our theater division, our admission revenue growth outperformed the domestic box office, by a strong film slate and a mix of films that played well in our predominantly Midwestern markets. In hotels, momentum built throughout the quarter with strong group bookings and steady leisure demand that delivered a record second quarter for the division with results that exceeded our expectations. Overall, we are very pleased with the results for the quarter and first half of the year, and we entered the third quarter with solid momentum. I'll start with our theater division.
If there is one overarching takeaway from the second quarter, it is this. The theatrical experience is not merely holding steady, it is thriving. When studios deliver compelling, high-quality stories across diverse genres, consumers choose the big screen first, frequently, and with clear enthusiasm. As we shared on our last call, the second quarter got off to a great start with the Super Mario Galaxy movie. and a strong carryover performance from Project Hail Mary. But that was only the beginning. A string of blockbuster successes followed with huge audiences coming out to see Michael, The Devil Wears Prada 2, Obsession, Star Wars, The Mandalorian and Grogu, Backrooms, Scary Movie, and the record-breaking Toy Story 5. The slate was robust and well-balanced with films that hit across a variety of genres with something for everyone. meaningful contributions to the box office coming from multiple titles.
This year, there were nine films that grossed over $100 million in the second quarter, which compares to seven such films last year, five in 2024, and six in 2023. While established IP and SQLs were certainly an important core component to the overall box office, the breakout success of new originals, Obsession, and Backrooms connected with Gen Z and young adult audiences to deliver huge surprise contributions to the box office. The success of small and mid-sized original films played a critical role in diversifying the box office and making the industry less dependent on the success of individual tentpole films. Original cinema serves as the essential lifeblood of the theatrical ecosystem. It is both the birthplace of tomorrow's legacy franchises and the primary engine of creative innovation. Original films like these are an opportunity to engage new demographics, create fresh cultural touchstones and deliver the thrill of discovery that draws audiences out of their homes. Ultimately, a sustainable resilient box office requires strategic balance. leveraging trusted sequels to generate dependable cash flow, while actively nurturing bold original stories that expand the total movie-going audience.
And this quarter, we saw a balance of both. The mix of film genres was also favorable to our circuit, with a higher mix of family and horror films resulting in our circuit achieving above average market share on seven of the top ten movies in the quarter. As Chad discussed, we again outperform the industry in box office growth and we remain focused on providing customers with a variety of price points to both optimize pricing for peak demand periods while offering various promotional programs for value-oriented customers, including Value Tuesday, Everyday Matinee, Marcus Mystery Movie, and Marcus Movie Club. These programs have two goals, providing customers with the right price at the right time based on demand levels and growing attendance through increasing the frequency of movie going. Looking ahead to the third quarter, the streak of hits continued in July with the epic opening of Christopher Nolan's The Odyssey, and pre-sales for this weekend's opening of Spider-Man Brand New Day are very strong. This weekend will be another great example of how our investments in premium large format screens provide a significant operational advantage that continues to to pay dividends for us. Not only do we have a PLF screen at 84% of our theater locations, we actually have multiple PLFs at 75% of those PLF theaters, giving us greater opportunity to capture PLF demand.
In addition, because our PLF screens are almost entirely our proprietary ultra screens and super screens, We have the scheduling flexibility and PLF film selection to maximize the box office. The remainder of the summer includes Super Troopers 3, Insidious, Out of the Further, End of Oak Street, and Practical Magic 2. We are looking forward to an exciting fall and holiday film slate with Digger, Verity, The Social Reckoning, Clayface, Focker and Law, Hexed, Avengers Doomsday, and Dune Part 3, just to name a few. Looking even further ahead, the 2027 film slate also looks strong with major franchises including Shrek 5, Star Wars Starfighter, Minecraft 2, Frozen 3, Sonic the Hedgehog 4, Spider-Man Beyond the Spider-Verse, Man of Tomorrow, The Legend of Zelda, Legend of Zelda, Avengers Secret Wars and many more. There are many more great films coming noted in today's earnings release. In summary, with a great slate of films and audiences once again are showing that the best way to see the hottest movies of the summer is on the big screen. We are on pace for the best summer box office in years.
Moving to our hotel and resorts division, you've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance to our comp sets in the industry. We set new records for revenue and adjusted EBITDA for any fiscal second quarter in the Division's history, which we believe speaks to the quality of our hotel assets and the great execution by our team. We are happy to report that the summer season is off to a good start and we saw growth at most of the properties in our portfolio. Revpar grew at six of our seven comparable hotels during the second quarter compared to the prior year quarter, with both occupancy and average daily rates growing at five of our seven comparable hotels. While the dynamics in each market vary, during the second quarter we generally saw continued strength in group business and a more resilient higher income consumer that has continued to support steady transient leisure demand in our portfolio of upper upscale hotels and resorts. Combination of strong group bookings at higher rates at our newly renovated assets, along with stronger transient leisure demand, drove average daily rate growth, which increased 4.7% overall. Our rate growth has benefited from our ability to command higher rates at our hotels with newly renovated room product, including the Pfister, Grand Geneva Resort and Spa in Hilton, Milwaukee, with these three properties achieving a nearly 9% average increase in ADR over the second quarter of 2025.
Group business during the quarter continues to grow. The bookings continue to look solid with our group room revenue bookings for 2026, our group pace in the year for the year, running approximately 3% ahead of where we were at this time last year. Looking a bit further ahead to 2027, group room pace is running approximately 9% ahead of where we were at this time last year for the next year out. Although, this far out, the timing of bookings can vary significantly. Banquet and catering pace is running similarly ahead for the remainder of 2026 and 2027. As we previewed earlier in the year, we opened We Nip, our new 11-hole short golf course at the Grand Geneva Resort and Spa with a ribbon-cutting ceremony in May. First, I would like to congratulate our entire Grand Geneva team for their successful opening of our new course.
In particular, I'd like to thank Skip Harless, Ryan Brown, and our entire golf operations team. team for all the hard work over the last two years that went into getting the course into great shape for the opening. The first few months of play, WeNip has enjoyed an overwhelmingly positive reception from golfers and golf critics alike, with customers looking for distinctive experiential destinations. This added amenity aligns with industry trends, and we expect the short course to enhance the overall appeal of the resort to both leisure customers and group customers looking to mix in another social activity with conferences. training events and outings. We are already well on our way booking group events and outings on the WENIP for 2027 as event planners see and get to play the course for the first time this summer. Golf has long been an important part of the guest experience at Grand Geneva and it continues to be an area of growth. During the second quarter, the number of rounds played on our 218-hole courses, the Brute and Highlands grew over 11% and greens fees grew 21% with increases in group outings and higher weekend leisure demand driving our growth. Overall, the division had a very good quarter, and the current state of our hotel business remains stable and on track with our expectations for the year.
While transient demand has remained healthy, I want to again acknowledge that there continues to be volatility in key travel costs, including gas prices and airfare. If market conditions change and we begin to see softness, we are prepared to react and adjust quickly. Finally, I would like to briefly comment on capital allocation. As Chad discussed, our free cash flow for the year has significantly improved, which is due to a reduction in CapEx to a more normal level following several years of significant reinvestment in our hotel business. It is also due to our revenue and earnings growth. We continue to look for opportunities to deploy capital. to grow both of our businesses with value of creative investments. We have a strong balance sheet that allows us to move quickly when we see good opportunities to acquire quality assets.
And we have a history of executing when they arise. To the extent that we don't see attractive investments that are actionable, we expect to return excess capital to shareholders through our long-standing dividend or share repurchases. Before we open the call up for questions, I want to once again thank all the people that work so hard every single day making our ordinary days extraordinary for our guests. We talk a lot about the investments that we make in our businesses, but we can never lose sight of the fact that our people are our most important asset, and they proved that once again this quarter. With that, at this time, Chad and I would be happy to open the call up for any questions you may have.
We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Mike Hickey at StoneX. Your line is open. Please go ahead.
2. Question Answer
Hey, Greg, Chad, congrats guys on a record quarter. Pretty incredible performance. I guess the first question, Greg, obviously, obsession and backroom is very topical here, a huge breakout for you and the industry, especially with younger audiences. Are you seeing a broader return of younger moviegoers and audiences? if some of that demand into more frequent attendance, whether through loyalty or other avenues. And also curious if either film index materially better at markets than it did nationally.
What you're seeing is actually not new. We've been following the data. pretty closely as an industry as to which demographics have been returning to the theaters. And we're seeing really positive signs out of the younger demographic. They really, Obsessions in Backrooms has highlighted it, but it's not new. We, for the last year or so, been noting that that customer has been coming back at levels that we haven't that are really you know like back to back to old times in a way and you know we there's a great stat that they track and that is you know where would you prefer to see a movie at home or in a theater and that demographic is back to preferring to see a movie in the theaters. Which, you know, I like having the younger demographic that's coming back and saying that's where they want to see it because that's got the longest runway for a customer base. So it's not new, I'd say everyone's seeing it now and the good news is when things work. they get copied.
So we're going to, I think that that, when you ask how we're going to get those customers to be more frequent, I think we're going to see, you know, more, more attempts to provide movies that are going to continue to attract that customer out of Hollywood. That's the way it works. So, and then we continue to use, you know, our programs, whether it's, or our movie club, little frequency, you know, we all, we've got all that in our mystery movie. We've actually over, our mystery movie overlaps with, with, with, with our movie club, because if you're in the movie club, you get to come to the mystery movie, it's included. So we're trying to lever all those programs. As I think you are aware, I shouldn't admit this publicly, but I, because most of the people on this call don't see our social media probably, but I think you know I have a pretty, the Marcus Theater has a pretty active social media account and they use me, And boy, we get some real traction. And that group is, and I promise you, none of my contemporaries see my social media posts, fortunately.
Like, just on just on sharing those on those films for for our circuit. You know, it's on those particular two. It's a little bit mixed. We were in line with our normal share on obsessions, but meaningfully above normal market share for backrooms. So, you know, So it's a space and a demographic where we do well in. Nice.
color. On theater margins, looks like for the quarter, incremental EBITDA flow through is about 52%. I guess looking forward here, is that the right framework, Chad, to be modeling future box office growth? And sort of what are the biggest drivers of, I guess, levers of leverage here moving forward for you?.
Yes, I mean, the way that I look at it over time, because I think if you look at any given quarter, it can move around a little bit, call it, you know, plus or minus two or three points. But I always think of it as the incremental dollar falls through in that business to EBITDA at about 50 percent in a quarter. Quarter like this where you get the benefits of the additional operating leverage from higher attendance. We were a little bit above that and and so you know we benefit in those kinds of quarters in the seasonally slower periods of the year. or when we have a negative surprise at the box office, you know, execution there can be a little bit tougher, but generally on average, about 50% is how to think about it.
I think it also depends on the cadence because you know what happened one of the things we bump into is when things get slow and we do a floor to man this to man the theaters and so you know if you have like one pop but a bunch of slow weeks that's more challenging than a better cadence and we just had a better cadence too.
Maybe squeeze one quick one wild card obviously Spider Man coming out this weekend that seems like a film that would do exceptional on your network just curious what you guys are seeing in terms of the advanced man for that film.
Spider-Man's opening? Yes. That's a rumor. Yes.
I heard about, yes, it's very positive, and even better. Again, the thing that I like the most is I was looking at the review score, and it's very high. And so, you know, when you mix enthusiasm with a great movie, or perceptually a great movie, that's, I mean, just look what happened with The Odyssey. I mean, it's just...
That's just wild what's happened with that. I think on Spider-Man, particularly this weekend, Mike, the other thing for our circuit that I think we will benefit from and that Greg started to allude to in his comments is we have a lot of flexibility on our PLF screens. And so with our locations with multiples, we can play, Spider-Man and we can play Odyssey and we can get the showtimes right to optimize for demand on the two films. And I think that'll help our performance on Spider-Man.
Awesome. Thanks, guys. Best of luck. Your next question is from the line of Patrick Scholl at Barrington Research. Your line is now open. Please go ahead.
Hi, thanks for taking the question. With the outperformance of the industry in the quarter, I was wondering if you could provide maybe a little bit little bit of an update on how you see like your overall market share uh it maybe just in your markets uh since the since the pandemic or just yes just overall market share in the theater segment.
Yes, I mean, our market share in our markets, has been good. We were immediately coming out of the pandemic. We were quite a bit ahead. And we've seen some normalization of that over time, but still quite strong. And on a national basis, our market share is a touch below where it was, but we've also optimized store footprint and gotten out of some locations that generated some box office, but really didn't contribute to the bottom line. Okay. I think we're comfortable with where we're at. And we've been, as you know, Pat, we've been optimizing price here quite a bit in the last year.
That's been a big driver of our, our admission revenue per cap growth, and I think we should expect to see that certainly moderate in the second half of the year as we anniversary some of those changes that we made mid-year last year. But I still think you're looking at sort of low, low single digit type of inflationary growth, but don't expect additional changes that would drive any meaningful changes in market share.
near term. David Okay. And then just in terms of the potential M&A opportunity, you know, just with the longer tail of operators, I guess my understanding is that the lease structures could be kind of a gating factor for the attractiveness of acquisitions. As kind of the long recovery from the pandemic, is that like enabled some, you know, I guess, rationalization and some of those leaf structures to make a broader pool of potential M&A targets, or maybe just a little bit more commentary on that opportunity?.
Yes, I think it's a on the specific issue of you leases and how onerous those might be as you look at. acquisition targets, you know, at times that can be very challenging depending upon the volume that's going through any specific location. It's a high operating leverage business, and so you need a critical mass of attendance to make buildings work. And with attendance where it is today relative to pre-pandemic, in some locations that's certainly more challenging. It's very much a, I would say, a location by location analysis, it depends. It's facts and circumstances specific to the location. Our focus in M&A is around quality in a number of different dimensions, but markets, growth profiles, locations within the markets. And we think about all of those things as we look at M&A and hopefully there will be some new, some additional M&A opportunities.
I mean, that's true in both of our businesses, in hotels as well.
Yes, I mean, I think a commonality in both our businesses is that we obviously want to grow our businesses. And we've exhibited that over time for years, the desire and the ability to grow the businesses. The one advantage we have is that it's not imperative. We will continue to focus on it, and we will make really, We will be disciplined and make disciplined investments. And if the opportunity is there, we, of course, will do our best to capitalize on it. But I think the good news is it's a business that where scale is not really helpful, but it's not.
but it's not seismical to put it that way. Okay. And then just on the hotel side, was there any sort of benefit from, I guess, the locations of the World Cup events in terms of where consumers decided to go for leisure travel just in terms of like your markets which i think were largely absent of that but yes that that might have played into how consumer spending or was it just more macro.
I think more macro. It was not World Cup for us. Yes, I think I can just confirm, Pat, it didn't really help us in the hotel business one way or the other, just because we weren't participating in markets that had big economic activity from hosting those events. Okay.
Okay, thank you. Your next question comes from the line of Drew Crum at B. Reilly Securities. Your line is now open. Please go ahead.
Okay, thanks. Hey, guys, good morning. So I think entering the year, your expectations for RevPAR growth were more modest, but both Based on the strength you saw in 2Q and now up, I think, 15% year-to-date, has your annual outlook changed? And if so, how do you see RevPAR shaking out for 2026?.
Yes, thanks for the question, Drew. I don't think we see really a change in the view for the full year. Our guide was industry growth, low single digits. And I think that's still where our view is with some opportunity for our assets to outperform their markets because of the investments that we've made in the quality of the assets. I would, I would just say it's a bit, it's a bit lumpy. It can be from week to week. We see, see pockets of real strength and then some, some software pockets as well.
And on average this quarter, it obviously was a really nice result. But, um. visibility is fairly short in that business and it is very much tied to what the economy does at a GDP level. And so our view is unchanged and we'll see how the rest of the year plays out. I think we were looking at a stat yesterday that I think is a good statement.
at and that is, what's our booking pace? How much have we booked for the rest of the year? And remember, the margin of dollars are very profitable, so I'm going to couch that with that. But 80% of our business is already already on the books. So it's not like we have huge gaps. It's not like we're really back end loaded. So that's, which I feel comfortable with. But then again, as I said, and as Chad pointed out, it can be week to week shorter booking windows and those last dollars are very profitable. Or not. And just to clarify, the 80% is within the group segment.
Just the group segment and the training.
the end part of the business is you know very very shortly time yes got it okay uh and then you know i guess separately you know there's been some movement and effort to extend theatrical windows you know curious if you believe the industry has seen any lift and specifically if you saw any benefit across your circuit in 2q and in the early 3q or if it's too early.
Well, you know, look, we are, I think, just as the discussion is not helpful where everyone's talking about, oh, we're going to shorten the windows and they're really short, you're right, there's been a lot of discussion about that. the extension of the window and we have to continue to talk about it it needs to be not just a broad how long is the window it's how long is that transactional window because because that got way too short. But we also have to make sure that we maintain an adequate streaming window, that there is a adequate period of time. And it doesn't just benefit us, it benefits the distributors, the creators as well, because again, have windows selling the same thing to the same person over and over again well the tighter you make those windows the less like you likely you are to have those multiple sales and if you're going to invest in the content man I would think you would want as many kicks the can as you can get and sell it as many times as you can get And fortunately, their marketing has become a lot more efficient. They're talking directly to the consumer when they're streaming, when they're transactional, they talk directly to the consumer. So in the old days, it's, we gotta have multiple marketing campaigns. And yes, you've gotta market. You can't not market your film. But it is different, and I actually think that the that the setting is more conducive to a longer window than it had been historically given, the ability to reach the consumers directly.
And so if they want to maximize the revenue from their content, you know, But everything old is new again, right? It's let's go back to the old days.
to the understanding how to do that. It benefits us and it benefits them. Drew, on the quarter on that question, I mean, it's great to see our studio partners and distributor partners implement longer windows. It's tough to tell or see this early on, you know, they see that coming through the results. Just like when, as the windows shorten, it it didn't all hit overnight. I think it is going to take some time and a year or longer to retrain customers on how long it will be before product is in the home and recondition customers. But it's absolutely a net positive.
even further add to it too I do think it's important where it will matter the most actually in a way and again we talk about marginal customers because they're the most profitable but the most patient audiences are the older audiences and you know if they that customer will wait for free or even the perception that it's free. And as we've seen in the numbers, the kids are off the couch, they wanna get out, they wanna be with other humans. But I don't think that should just be restricted to just young people. It's probably good for older people to get off the couch and stop sitting at home going nuts. good to get out and be with people but you need to have a window that that customer says you know what I'm going to have to wait I'd like to go see it now and then I'll watch it again because I want to watch the Odyssey again. A few times. Okay. All right.
Makes sense. Appreciate the thoughts, guys. Yes, thanks. Thanks, Drew.
There are no further questions at this time. We have reached the end of the Q&A session.
I will now turn the call back to Mr. Parris for closing remarks. All right, well, once again, thank you everyone for joining us today. And we look forward to talking to you again in late October when we release our third quarter results. Until then, have a great summer.
This concludes today's call. Thank you for attending. You may now disconnect.
This live transcript is auto-generated without human intervention or review.
[Call has ended.]
Marcus Corporation — Q1 2026 Earnings Call
1. Management Discussion
Good morning, everyone, and welcome to Marcus Corporation's First Quarter Earnings Conference Call. My name is Ellie, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded.
Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of Marcus Corporation.
At this time, I'd now like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Good morning, and welcome to our 2026 First Quarter Conference Call.
I need to begin by stating that we plan to make a number of forward-looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect or other similar words. Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements are only made as of the date of this conference call, and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading Forward-Looking Statements in the press release we issued this morning announcing our 2026 first quarter results and in the Risk Factors section of our annual report on Form 10-K, which you can access on the SEC's website.
Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure in evaluating our performance and its limitations, a copy of which is available on the Investor Relations page of our website at investors.marcuscorp.com.
All right. Let's begin. This morning, I'll start by spending a few minutes sharing the results from our first quarter with you and discuss our balance sheet and liquidity. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We'll then open up the call for questions.
I'll begin with an important reminder about our fiscal calendar that impacted our first quarter year-over-year comparisons. The first quarter of fiscal 2025 was the first quarter of transition to a calendar fiscal year and included 5 days at the beginning of the quarter during the week between the Christmas and New Year's holidays at the end of calendar 2024 that are significant days in our theater division. In fiscal 2026 and going forward, the first quarter began on January 1. And as a result, our first quarter results faced the headwind of having 5 fewer operating days when compared to the first quarter of fiscal 2025. Going forward, our year-over-year quarterly comparisons will now be aligned ending on traditional calendar quarters.
On the call today, I'll provide the as-reported year-over-year changes in our results as well as the growth on a comparable calendar quarter basis, excluding the impact of the extra days in the prior year to provide an apples-to-apples comparison. As you would expect, our growth for the comparable calendar quarter is even stronger than our as-reported results.
We are very pleased to report that we were able to overcome this headwind to deliver another quarter of solid execution and results with both divisions growing year-over-year revenue and an overall increase in adjusted EBITDA. In theaters, a significantly better first quarter film slate with improved product supply and better carryover of holiday films drove significant attendance and revenue growth, leading to our overall improved results. In our hotel division, we continued to see year-over-year improvement in RevPAR and occupancy as we benefited from our renovated hotel assets being fully operational.
Shifting to the numbers, I'll start with a few highlights from our consolidated results for the first quarter of 2026. Consolidated revenues of $154.4 million increased $5.6 million or 3.8% compared to the prior year quarter, with revenue growth in both divisions. The 5 fewer operating days negatively impacted consolidated revenue growth by $15.3 million.
On a comparable calendar quarter basis, excluding this impact, consolidated revenues increased $20.9 million or 15.6%. Operating loss for the quarter was $19.3 million, an improvement of $1.2 million compared to the prior year first quarter. Consolidated adjusted EBITDA for the first quarter was $2.6 million, an increase of $2.9 million over the first quarter of fiscal 2025. The year-over-year improvements in both operating loss and adjusted EBITDA were negatively impacted by $5.3 million due to the fewer operating days. On a comparable calendar quarter basis, adjusted EBITDA grew $8.2 million.
Turning to our segment results. I'll start with our theater division. First quarter 2026 total revenue of $92.9 million increased $5.6 million or 6.4% compared to the prior year first quarter. The 5 fewer operating days negatively impacted theaters revenue growth by $12.2 million. On a comparable calendar quarter basis, excluding this impact, theaters revenues increased $17.8 million or 23.6%. For our fiscal first quarter 2026, comparable theater admission revenue increased 9.8% and comparable theater attendance increased 1.9% compared with our fiscal first quarter 2025.
On a calendar quarter basis, first quarter 2026 comparable theater admission revenue increased 29% and comparable theater attendance increased 19.1% compared to the prior year first calendar quarter.
When using our comparable fiscal days, according to data received from Comscore and compiled by us to evaluate our 2026 first quarter results, U.S. box office receipts increased 5% during our 2026 first quarter compared to box office receipts during our fiscal 2025 first quarter, indicating our theaters outperformed the industry by approximately 4.8 percentage points.
On a straight calendar quarter basis, we also outperformed the U.S. box office by 7.6 percentage points. We believe our outperformance is primarily attributed to our strategic pricing actions as well as a favorable film slate that featured several titles appealing to family audiences, our genre where our circuit typically performs very well.
Average admission price increased 7.8% during the first quarter of 2026 compared to last year, benefiting from strategic ticket price optimization actions, an increased percentage of ticket sales from PLF screens and a favorable daypart ticket mix.
Our average concession food and beverage revenues per person at our comparable theaters increased by 2.4% during the first quarter of 2026 compared to last year's first quarter, which was primarily due to increases in movie theme merchandise sales and incidence rate as well as inflationary price changes.
Our top 10 films in the quarter represented approximately 62% of the box office in the first quarter of 2026 compared to approximately 66% for the top 10 films in the first quarter last year, with film costs as a percentage of admission revenues effectively flat for the first quarter compared to the prior year.
Theater division adjusted EBITDA during the first quarter of 2026 was $8 million, an increase of $4.3 million. The year-over-year increase in adjusted EBITDA was negatively impacted by $5 million due to the fewer operating days. And on a comparable calendar quarter basis, theater division adjusted EBITDA increased $9.3 million.
Turning to our hotels and resorts division. Revenues were $61.4 million for the first quarter of 2026, up $100,000 compared to the prior year. Total revenue before cost reimbursements at our 7 owned hotels decreased $600,000 or 1.1% compared to the first quarter of fiscal 2025. The 5 fewer operating days negatively impacted hotels revenue growth by approximately $3.1 million. On a comparable calendar quarter basis, excluding this impact, hotels revenue before cost reimbursements increased $2.5 million or 5.1%.
RevPAR for our comparable owned hotels grew 13.7% during the first quarter compared to the prior year, which resulted from an overall occupancy rate increase of 8.9 percentage points, partially offset by a 3.4% decrease in our average daily rate or ADR. Our average 2026 first quarter occupancy rate for our owned hotels was 59.2%. Our occupancy rate increase benefited from the Hilton Milwaukee being fully back in service compared to the first quarter last year when the hotel was under renovation and guest rooms were out of service. We estimate that the impact of the renovation in the prior year favorably impacted our RevPAR growth by approximately 4 percentage points during the first quarter.
According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced a decrease in RevPAR of 2.9% during the fiscal first quarter of 2026 compared to the first quarter of fiscal 2025, indicating that our hotels outperformed their competitive set by 16.6 percentage points. After adjusting for the prior year impact of the Hilton Milwaukee renovation, we believe our hotels RevPAR growth outperformed the competitive sets by 11.5 percentage points, which we attribute to continued strength in group business as well as generally strong performance from our renovated assets.
When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, the upper upscale segment experienced an increase in RevPAR of 3.9% during our first quarter compared to the first quarter of fiscal 2025, indicating that our hotels outperformed the industry by 9.8 percentage points and by 5.8 percentage points when adjusting for the estimated prior year impact of the renovation.
Food and beverage revenues decreased 2.1% in the first quarter of 2026 compared to the prior year and were negatively impacted by the decrease in operating days. Hotels other revenues decreased by $1.4 million or 9.2%, primarily due to a weaker ski season at Grand Geneva Resort & Spa and the impact of fees generated from an all hotel group buyout at one of our condo hotel properties in the first quarter of fiscal 2025, an event that doesn't happen every year and did not recur in the first quarter of 2026.
Finally, hotels adjusted EBITDA decreased $1.3 million in the first quarter of 2026 compared to the prior year quarter, primarily due to a $400,000 impact from the 5 fewer operating days, lower other revenues resulting from the weaker ski season and the nonrepeating group buyout in the prior year, which included high-margin rooms and banquet and catering business and higher benefits costs.
Shifting to cash flow and the balance sheet. Our cash flow from operations was a use of cash of $15.2 million in the first quarter of 2026 compared to cash used by operations of $35.3 million in the prior year quarter, with the increase in cash used primarily due to favorable timing of payments and accounts payable, higher EBITDA and a onetime benefit of $3 million from the sale of historic tax credits related to the Hilton Milwaukee renovation. As a reminder, our cash flow from operations in the first quarter is historically impacted by seasonal changes in working capital resulting from the slowdown in our business following the peak holiday season and by the timing of various year-end accounts payable and compensation payments.
Total capital expenditures during the first quarter of 2026 were $6.6 million, a $16.4 million decrease compared to the first quarter of fiscal 2025. Our capital expenditures during the first quarter were primarily invested in maintenance and ROI projects in both businesses. Our capital investments and projects have progressed as planned, and we continue to expect capital expenditures for 2026 of $50 million to $55 million, and we will update our capital expenditure estimates throughout the year.
As we discussed last quarter, we continue to expect this decrease in capital expenditures to result in a significant increase in free cash flow in 2026. And this played out as expected in the first quarter with a $36.5 million improvement in free cash flow compared to the prior year.
Our balance sheet remains strong, and we ended the first quarter with over $11 million in cash and over $194 million in total liquidity with a debt-to-capitalization ratio of 28% and net leverage of 1.7x. Our strong balance sheet and confidence in our businesses gives us the ability to continue investing in our businesses and pursuing growth while returning capital to shareholders through our quarterly dividend and opportunistic share repurchases.
During the first quarter, we repurchased approximately 87,000 shares of our common stock for $1.3 million in cash. We will continue to allocate capital with a balanced approach that supports our strategic priorities while pursuing investments that provide the most attractive long-term returns to shareholders.
With that, I will now turn the call over to Greg.
Thanks, Chad. Good morning, everyone. We entered the year with a plan for projected growth in both of our businesses. In theaters, we expected a stronger film slate in 2026, coupled with improvements in per capita sales to drive growth in the theater division. In hotels, we expected our recently renovated properties to drive outperformance within our competitive sets after several years of significant investment in an overall stable macroeconomic environment. We're happy to report that the first quarter generally played out a little better than we expected with strong outperformance in both divisions. Theaters led the growth and improvement in our results on a better-than-expected box office and hotels continue to grow RevPAR and revenue with outperformance being driven by our renovated hotels.
As Chad discussed, we were able to overcome the headwind from having fewer operating days in the quarter, which was no small feat considering the week of the year that those days fell in the first quarter last year. With the normal seasonal headwinds in our hotel business, the first quarter is always challenging. So it's incredibly helpful when we're able to get off to a good start as we did this quarter. The first quarter that we are reporting today continues to make year-over-year progress, and we're pleased to be sharing these results with you.
I'll start with the theater division. Our theater division got off to a much stronger start than last year and what a difference a year makes. A stronger film slate drove significantly higher attendance for the comparable quarter with a combination of solid carryover performances from several holiday films, successful original family films in Hoppers and Goat and a major tentpole in Project Hail Mary that delivered blockbuster results, all contributing to deliver the best first quarter in the U.S. box office since the pandemic. This quarter was a great reminder of what is possible with better product supply when there are several things working at once. It also demonstrates that audiences will come out whenever there are good movies, not just during the peak summer and holiday periods, and the industry needs to continue to fill in the slate across the calendar. The first quarter national box office was up over 21%, and there is still a lot more opportunity for further growth with additional products in the future.
As Chad discussed, we continued to realize strong per capita growth during the quarter with average ticket prices benefiting from our ongoing price optimization efforts and continued growth in merchandise sales, which are included in our concession revenues. Last quarter, I shared several initiatives we are executing this year to drive per capita sales growth. As an update, we have now completed our rollout of tap-to-pay terminals to all ticketing and food and beverage points of sale, both in-store and our mobile wallets for our digital purchasing channels.
This week, we will complete the rollout of in-seat QR code mobile food and beverage ordering to all 20 of our dine-in theaters, which we believe makes food ordering faster and easier for customers. Looking ahead, we continue to work redesigning a best-in-class food and beverage digital purchase experience in our mobile web and app for all theater locations that we expect to roll out in time for the holidays later this year.
A couple of weeks ago, we were with our theater team at CinemaCon, and once again, our studio partners, film directors and talent all continue to reaffirm the importance of theatrical exhibition and our critical role to the overall movie and media ecosystem. After years of experimentation and discussion around the length of the exclusive theatrical window, I believe we have reached an inflection point and recognition by studios and distributors that a longer theatrical window enhances the overall performance of films across the ecosystem, and we applaud the significant announcements from major studios, including Universal, Sony and Paramount, extending or committing to minimum exclusive theatrical windows. While the industry has more work to do on windows and improving product supply, we are heading in the right direction.
Second, we got a closer look at the film slate for the rest of the year and into 2027, and we remain very optimistic about the coming attractions. The momentum from the first quarter continued into April with the blockbuster success of Super Mario Galaxy movie and last weekend's record opening of Michael, getting the second quarter off to a solid start. We kicked off the summer movie season this week with the opening of The Devil Wears Prada 2, which will be followed by a number of big titles, including Mortal Combat 2, Star Wars: The Mandalorian and Grogu, Super Girl, The Odyssey and Spider-Man: Brand New Day. I am particularly excited for the widely appealing family features such as Toy Story 5, Minions & Monsters and Moana.
The fall and holiday film slate is also exciting with Avengers, Doomsday, Dune: Part Three and Jumanji: Open World, just to name a few. There are many more great films coming noted in today's earnings release. Looking even further ahead, the 2027 film slate also looks strong with major franchises, including Shrek 5, Star Wars: Starfighter, Minecraft 2, Frozen 3, The Batman Part II, Sonic the Hedgehog 4, Spider-Man: Beyond the Spider-Verse, Man of Tomorrow, The Legend of Zelda, Avengers: Secret Wars and many more.
We are excited about the momentum that is building in theaters and the film slate ahead in the coming years, and we remain very positive and optimistic about the long-term future for the industry and our theater business.
Moving to our hotel and resorts division. You've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance to our competitive sets and upper upscale hotels nationally. We have made significant investments in several of our hotels over the last 3 years, and we continue to see customer demand for newly renovated room product and freshly redesigned meeting and event spaces. These amenities allow us to drive strong rates and outperform within our markets, and our sales teams have done a great job capitalizing on this opportunity.
As we've discussed in past years, there is significant seasonality in our hotel business given that most of our company-owned hotels are located in the Midwest. We often lose money in this division during the winter months as was the case this year with adjusted EBITDA that was slightly negative. In addition to having fewer days in the quarter, there were headwinds from a few items in the first quarter of fiscal 2025, including Milwaukee hosting the men's NCAA basketball tournament, an all-school -- I'm sorry, an all hotel group buyout at one of our condo hotels last year and favorable weather for ski season that did not recur this year in the first quarter. This is the nature of event-driven group rooms business. And while we did not see these events repeat this year, these are similar events will likely return in the coming years.
There were a few notable items in the quarter I would like to highlight. While average daily rates decreased around 3% in the first quarter, this was not unexpected and was primarily driven by 2 factors. First, all of the Hilton Milwaukee rooms are back in service, resulting in less rate pressure with more room supply. This contrast to last year when we were able to create some rate compression in the Milwaukee market with the reduced available room count due to renovation.
And second, at Grand Geneva, the weaker ski season resulted in weekend transient demand that was softer and resulted in lower rates compared to last year. The decrease in rates was more than offset by the significant increase in occupancy from the Hilton Milwaukee rooms back in service, resulting in overall RevPAR growth of 13.7%.
Group bookings remain stable with our group room revenue bookings for 2026 or group pace in the year for the year, running approximately 5% ahead of where we were at this time last year. Looking a bit further ahead to 2027, group room pace is running in line with where we were at this time last year for the next year out. Although this far out, the timing of bookings can vary significantly. Banquet and catering space for the remainder of 2026 is running in line with where we were at this time last year.
As our hotel division heads into the busier spring and summer travel months, we believe we are well positioned to win in our markets. While transient demand has remained healthy, it is important to acknowledge there continues to be an elevated level of economic uncertainty with recent volatility in key travel costs, including gas prices and airfare. If market conditions change and we begin to see softness, we are prepared to react and adjust quickly.
Before we open the call up for questions, I want to once again thank all the people that work so hard every single day, making our ordinary days extraordinary for our guests. We talk a lot about the investments that we make in our businesses, but we can never lose sight of the fact that our people are our most important asset, and they proved that once again this quarter.
With that, at this time, Chad and I'd be happy to open the call up for any questions you may have.
[Operator Instructions] Your first question comes from the line of Drew Crum of B. Riley Securities.
2. Question Answer
Greg, you provided an update in your preamble on the various initiatives you've rolled out or plan to launch over the course of the year to drive concession revenue. Any early learnings or observations you can share just the overall receptivity on the part of your patrons to these?
And maybe for Chad, is the 2% cap rate reported in 1Q a good quarterly run rate to think of as you progress through the year?
I'll go first with the question on what we're seeing. We see a number of things. One is the QR codes are being very well accepted, and we're happy with how that's going. That makes for a better experience for everybody. If nothing else, we get better customer service because it's really interesting. One of the things that could happen is if you order and you don't sit in the right seat and your food is delivered to the seat that you ordered it to, you don't get your product and then everybody is unhappy. And so we were seeing better efficiency, if nothing else, with people going to their seat and they -- because the QR code is linked to their seat. So the food arrives, it arrives hot and it just makes the whole operation much better. So that's very helpful.
The other thing that we've seen, and I don't have a number to give you yet, but I think we talked about before, one of the -- I talked about how we're really working to develop a best-in-class food and beverage experience for our customers' ordering experience digitally because we know that basket sizes are larger when people order digitally. And primarily that comes from that never missing on whether it's an upsell.
If you've got 10 people deep in a concession line, you're just trying to get through a Friday night, you may not be -- you may not always try to upsell that medium soda to a large. But digital, that never misses. And we have a whole -- I think we can't do even live. It's a last chicken saw, last time offer, we call it. So before you check out, oh, do you want a popcorn with that soda? Do you want whatever it might be with that, a dessert with your food? And so we're able to do that suggestive selling and upselling much better digitally. So we feel with that and then making the whole experience more frictionless for the customer, we're going to have an opportunity to increase our concession sales.
Yes, Drew, on the concessions per cap increase, we said last quarter, we're trying to get to low single digits. We were at 2.4% in the quarter. I think that kind of 2% to 3% range is probably about right. And in terms of the way we're getting there, we're trying to get to that 3% with just inflationary pricing and growing another point or so with the results of some of the initiatives that Greg has just talked about by increasing incidents and by increasing basket size. So that's -- I think that's a reasonable number for purposes of modeling.
Got it. Okay. Very helpful. And then just one follow-up on the hotels business. Can you address the divergence between rooms and food and beverage revenue? I think you mentioned there were fewer operating days that impacted the food and beverage figure. But was there anything else that drove the divergence between the 2?
There was. The one item that sticks out aside from the days difference which some of those days come between the holidays and we actually do get a fair amount of F&B business in that period. But the all group hotel buyout that we had in one of our properties that I mentioned in my remarks, actually had a very heavy F&B component. That's a piece of business that we don't get every year. We had it last year. We had it 3 years earlier. It's on its own cycle. And so that had a heavier F&B impact than we normally would have had.
Your next question comes from the line of Mike Hickey of StoneX.
Chad, congrats guys on a great 1Q. Just a few. First on windows, Greg, good to hear from you that you're excited. I think last year, there were some big plans, but I think we felt stuck too on windows moving anywhere positive. So just curious how impactful you think this new windows is sort of when you think the consumers' behavior might change and maybe the future of windows because it seems like this year at CinemaCon, there were a few studios talking maybe even longer windows.
Yes. Look, I'd start with -- what's the word in the financial community, the trend is your friend. I'd say that the trend is our friend here. This is -- but it didn't just happen overnight. I credit Michael O'Leary at the Cinema United but really starting to really raise the issue publicly a year ago at CinemaCon and say, this is really important. So this is not something that happened overnight. It's an education. It's an understanding. It's the evidence that we see on the importance of a window.
And let's be very clear, studios control the window and the studios are not doing -- it just not charity, the theater business. They know that a help of theatrical business is good for the overall ecosystem, and it maximizes the value of their product. That whole concept that we've talked about many times, windowing, selling the same thing to the same person over and over again.
Well, if you match those windows too tight together, you lose that second or third or fourth sale. But if you create some space, not only do you get people who pay more -- remember, the other concept of windowing is important is a high -- that you start with your highest per capita set of eyeballs. And to the extent that you trade somebody paying $12, $15, whatever it might be, to putting 5 people in the room splitting $20, it's a much better deal to catch those per capita eyeballs and nothing else, and then you get that second sale on top of it or that third sale when somebody consumes it in a transactional video-on-demand or a streaming video-on-demand environment.
And so I thought that -- and the other thing, too, is you don't have people saying, well, I'll just wait for it at home. And we've been very clear to say that, that very short 17-day window is one of the contributor -- was one of the contributors to this idea that because people don't -- they're not paying enough attention. They just hear at home now. They don't know that it's $20. They get something in their e-mail saying, "Hey, get it now." It doesn't say it's -- and they maybe don't pay enough attention. It just feels like it's coming so fast. So stretching that out, continuing to educate the customer that stretched out is really important. And Universal who just recently made the announcement that they are going to move back from their pandemic era experimentation and go to a standard -- go to 45 days, I thought was unbelievably important and signals that, and you've got Tom Rothman of Sony saying it's theatrical is important and for theatrical to be healthy, it has to have a window.
And so as Stephen Spielberg said 45 days is a good start, but how about 60 or more? And I would presently say an easy way to explain that, I think, is my mantra should be 2 and 5. That's 2 and 5, 2 months for transactional, 5 months for streaming video-on-demand. So I'm for the 2 in 5 model. Very simple to understand for everybody. And I think it will be good for theatrical and what's good for theatrical will be good for the overall ecosystem.
Right. Obviously, on the concession side, you've really been doing some cool tech and it looks like you're getting progress there. Curious on the seating side, if you see any sort of innovation or enhancements you could do on seating. And also curious about the Infinity vision. It looks like sort of a mixed reception from operators on Disney certification.
Well, the -- on the -- let's start with the seating. Any new seating stuff that you -- there's de box, there's things like that, that can be experimented with. There's things we can do. I don't think there's anything huge that we're going to be able to do. We've had others experiment with just charging more for premium seats, and I don't know that, that went so well. But on the -- so I don't -- so there'll be on the margins, maybe a little bit here and there, but nothing sharing. I mean the recliner investment we made was so significant. And for us, it's great. We made ours with 2,000, let's call it, $15. So that I think has been very helpful for us.
On the Disney thing, I'm not familiar with the exact details of it, although look, the ability to brand PLFs, it's very interesting if you think about it, I think the -- taking out IMAX out of the PLF. IMAX is a PLF. But taking IMAX out, I think that the footprint of PLFs in the country is double IMAX in size. And so, in any given weekend, the ability to unify that marketing effort, I understand why Disney is trying to do what they're trying to do. Now whether they'll be the ones to do it, I don't know. But there's power -- when you speak with one voice, you speak louder. Everyone getting together to speak with one voice is much more effective. And so I see -- I understand what they're trying to do, whether that's the model that works, I don't know, but I'm not against the idea. And so that's my feeling on that.
Nice. Last question on free cash flow. Obviously, it looks like you're inflecting this year. Just curious, Chad, your confidence there. Obviously, that's really resonating with investors. So post 1Q, after a strong quarter, I'm guessing you're more enthusiastic, but I love to hear from you and then how you're thinking about carrying that into '27.
Yes. Mike, I think we feel really good about it because we control the CapEx spend. We've got a $30 million planned decrease with our current guide on CapEx. And so that alone will provide a meaningful uplift and that if the business is flat, and we don't expect the business to be flat. And getting off to a really good start in Q1 certainly helps. So 3 quarters to go, but in terms of confidence, I feel good.
I want to just build -- I want to add one thing, Mike, on your question about premium large format, and that is one thing that's not lose sight of and that is still 80% of our business is regular traditional screens. And that's a customer that we -- theatrical has always been known as the least expensive form of out-of-home entertainment. It's a cheap date, so to speak. And I think we always have to remember that. And I think in our theater, specific to our platform, we have probably the highest incidence of PLF in the industry. And yet we also have a very robust discount program with our Tuesday program and our Marcus Movie Club. And I like to think about it as we've talked about this before, learnings from our hotel business, the right price for the right customer at the right time. And so our averages look sort of in line, but I think that our -- we offer a real wide breadth of opportunity for our customers.
Your next question comes from the line of Eric Wold of Texas Capital Securities.
A couple of questions. I guess first on the hotel and resorts division, now that you've completed the renovation of Hilton Milwaukee, maybe talk about the level of rate hikes that your rate increases or that you're looking to kind of push through that you have pushed through at that property maybe around both kind of group and leisure travel and how that compares to kind of what you're able to push through following a Pfister renovation a couple of years ago?
Yes, I can take that one. So we absolutely have seen uplift from both group events that we're able to win and book into renovated properties. We're winning that business, and we're getting an uplift in transient rates that's driving growth in ADR at those properties.
As a general rule, Eric, I would say we're in the range of 10% to 15% on rates after we do make rooms renovations like this. And that's across our experience on the 3 major renovated properties, the Pfister, Grand Geneva and now Hilton Milwaukee. But there's no doubt you -- once the customer knows that room product has been refreshed and you are the desired asset in the market to stay at, you get to take share and you're commanding premium rates to do so.
Got it. And have you seen any reaction from others in the market on their pricing when you've taken rate changes? Or are they kind of playing catch up a little bit given the lack of remodel?
I can start and then Greg can add his thoughts. I mean, I think at the end of the day, it's a perceived value on the quality of the product and the customer is making a choice on what experience they want to have. And it's a dynamic pricing business. We're continuously adjusting prices based on where we see that demand. And I think others in the market are doing the same. And so we're able to capture a premium because there is demand for the renovated product. I would believe that others are hurting from that loss of demand, and they're adjusting prices to try to capture volume.
The other thing too that could happen is, it may not look on its face as if the rates are going up as much because it can also be a mix of business thing, too, that you may not see like just looking at the rates. And so our rates do go up, and you can't see it specifically in like a [ Star ] report because they don't divulge the specific hotels rates. But you can see that our rates are improving because we're moving out lower-rated business out of a hotel like the Hilton where we have so many rooms, and we're able to move that business -- that lower-rated business out.
Got it. And then just the last question, kind of a follow-up on the free cash flow question from earlier, given kind of the understanding there's kind of a relative lack of transaction activity in both the exhibition and hotel segments, I guess how aggressive would you be willing to be on share repurchases as that cash flow grows? Do you feel you need to build up a war chest in case transaction activity picks up? Or are you kind of really comfortable where your leverage is and possibly leveraging up for the right opportunity?
Yes. I think we tend to have a very balanced approach. We're opportunistic when we see really attractive opportunities to buy back shares. We've leaned in and we've done that. But we are trying to maintain some dry powder to give us the ability to go and move quickly, which I think is one of our advantages in M&A. And we have seen across both businesses, some activity. And so far, nothing has resulted in deals, but we're trying to maintain a balance.
[Operator Instructions] Your next question comes from the line of Patrick Sholl of Barrington Research.
I was just wondering if you could maybe talk about how you're evaluating the leased footprint of your theaters and maybe just in general, kind of with the box office expectations for 2026 and 2027, how you kind of evaluate the overall screen base both within markets, but also kind of the industry overall?
Well, I'll take the first part of that question on our footprint and Greg can layer on about the industry. I mean, portfolio management is an ongoing part of our operating process, really. We're constantly looking at the store level performance of all of our locations, both our owned real estate, which is a little over 60% of our theater screens, even higher percentage of our cash flow in that business. And then our lease locations as well. And as leases mature, that gives you the opportunity to reevaluate investments in those properties and renegotiate terms, which tends to be necessary because many of the leases were negotiated on a pre-pandemic box office. And so that's an ongoing process. Historically, we've had a preference to own real estate, but we've certainly done M&A where often you're looking at acquiring leases as part of the deal. So it's more about what's the actual financial performance, whether it's after rent or after a return on our invested capital in the real estate is how we look at it.
Overall, it is -- we've talked about this before, there's a lot of leases that are very expensive compared to the level of business, which leaves me the point of there's been -- we talked earlier about windows and the 2 factors that really will be very helpful to getting the business in a good place, and that is in a better place. And that is, one, it would be to have windows extend. And the other is getting enough product in the pipeline and enough product on the shelves. Right now, we've got some room on the shelves. And so to the extent that we can get a full year's calendar's worth of films that will drive more sales and then those leases will start to look better. Otherwise, people will be trying to figure out what to do with some of the space in their theaters to some of the bigger ones. We've been -- we are different. We've been very conservative about how big we build our theaters for the most part. And so we don't see that as much.
Okay. And then maybe just on concessions. To the extent that like the film slate is a healthy contributor to incidents or on the merchandise side, I guess when you look at the upcoming film slate or maybe just sort of like the broader expansion of that film slate, as the film slate kind of like broadens out, do you think it would be similarly supportive of concession per cap? Or do you think that could -- as it maybe expands out, would that be a headwind? Or is that probably just too soon to tell?
And your question, Pat, is specifically around merchandise?
Broader concession activity.
It all depends on the mix of films. The right mix of films will drive better per cap. That really is what it comes down to in any given year. And I think -- but over time, that does tend to even itself out. I don't think there's anything that would -- more films wouldn't drive down per cap.
And then because merchandise is a component of our concessions and food and beverage per cap, merchandise tends to lend itself to more event-driven type of product. And so in any given period, when we've got a heavy mix of big event films, we are seeing more merchandise sales that provide some uplift in those periods, which gets back to Greg's point on product mix being part of this.
At this time, it appears that there are no other questions. I'd now like to turn the call back to Mr. Paris for any additional or closing remarks.
We'd like to thank you once again for joining us today. We look forward to talking to you again in early August when we release our 2026 second quarter results. Until then, thank you, and have a good day.
That concludes today's call. You may now disconnect. Goodbye.
Marcus Corporation — Q4 2025 Earnings Call
1. Management Discussion
Good morning, everyone, and welcome to Marcus Corporation's fourth quarter earnings conference call. My name is Drew, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded.
Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of Marcus Corporation.
At this time, I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Thank you, Drew. Good morning, and welcome to our fiscal 2025 fourth quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect, or other similar words. Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements are only made as of the date of this conference call, and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading Forward-Looking Statements in the press release we issued this morning announcing our fourth quarter results and in the Risk Factors section of our annual report on Form 10-K, which you can access on the SEC's website. Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure in evaluating our performance and its limitations, a copy of which is available on the Investor Relations page of our website at investors.marcuscorp.com.
All right. With that behind us, this morning, I'll start by spending a few minutes sharing the results from our fourth quarter and the full year, and discuss our balance sheet, liquidity, and capital allocation. And then I'll turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we see ahead for 2026. We'll then open up the call for questions.
This morning, we reported a quarter of solid execution and results, with both divisions delivering year-over-year revenue and earnings growth and outperforming their industries. In theaters, a film slate that featured a favorable film mix, coupled with strong per cap growth drove meaningfully improved market share. In hotels, our renovated properties were winning in their markets, attracting increased leisure demand at higher rates that drove our RevPAR outperformance, capping a record revenue and EBITDA year for the division.
Turning to the numbers and starting with a few highlights from our consolidated results for the fourth quarter of fiscal 2025. We generated consolidated revenues of $193.5 million, a 2.8% increase compared to the fourth quarter last year, with revenue growth in both divisions. Our fourth quarter operating income of $1.7 million was negatively impacted by $5.2 million of noncash impairment charges in the Theater division, which are excluded from adjusted EBITDA. Excluding the charges, our fourth quarter operating income was $6.9 million, growing 5.2% compared to operating income of $6.6 million in the fourth quarter of fiscal 2024, excluding impairment charges and nonrecurring expenses in the prior year. We delivered $26.8 million of consolidated adjusted EBITDA, a 3.6% increase over the prior year fourth quarter.
There is one unusual item in the fourth quarter below operating income that impacted our net earnings and earnings per share that I'd like to highlight. Our fourth quarter and full year income tax benefit includes an approximately $7.6 million or $0.24 per share benefit from federal and state historic tax credits earned related to the completion of the Hilton Milwaukee renovation. The impact of the credits is excluded from our adjusted EBITDA operating results.
For the full year fiscal 2025, consolidated revenues increased just over 3% from the prior year with revenue growth in both divisions. Consolidated operating income for the year was $17.1 million. Excluding the fourth quarter theaters impairment charges, full year operating income was $22.2 million compared to operating income of $25.9 million in fiscal '24, excluding impairments and nonrecurring expenses in the prior year. Finally, adjusted EBITDA for the full year decreased 3.1% to $99.3 million.
Turning to our segment results. I'll start with theaters. Our fourth quarter fiscal 2025 total revenue of $123.8 million increased 2.2% compared to the prior year fourth quarter. It is important to note the shift in our fiscal calendar favorably impacted our revenue and attendance comparisons over the prior year periods. Our fiscal year ended on December 31st this year compared to December 26 in fiscal 2024, resulting in 5 additional days in our fiscal fourth quarter during the busy week between the holidays compared to the prior year, while removing 4 days in late September, when business is slower and resulting in 1 net additional operating day for the quarter.
The shift in our fiscal calendar and additional days between the holidays had a 6.8 percentage point favorable impact on admissions revenue growth and a 6.4 percentage point favorable impact on attendance growth compared with the prior year fourth quarter. Comparable theater admission revenue increased 6.1% over the fourth quarter of 2024, with a more favorable mix of family films that played well in our markets. On a calendar quarter basis in both periods, comparable theater admission revenues decreased 0.7%. Comparable theater attendance decreased 5.7% in the fourth quarter of fiscal 2025 compared with the prior year fiscal fourth quarter, while on a calendar quarter basis in both periods, comparable theater attendance decreased 12.1%.
Average admission price increased 12.7% during the fourth quarter of fiscal 2025 compared to last year and was positively impacted by strategic ticket price optimization actions implemented during peak demand periods, changes to promotions during the holiday periods and a higher mix of 3D tickets. According to data received from comScore and compiled by us to evaluate our fiscal 2025 fourth quarter results using our comparable fiscal weeks, U.S. box office receipts decreased 1.5% during our fiscal 2025 fourth quarter compared to U.S. box office receipts in the fourth quarter of 2024, indicating our theaters lead the industry, outperforming by approximately 7.6 percentage points.
We believe our outperformance is primarily attributed to our strategic pricing actions as well as a favorable film slate that featured multiple titles appealing to family audiences, a genre where our circuit typically performs well.
Per capita concession food and beverage revenues increased by 7.2% during the fourth quarter of fiscal 2025, compared to last year's fourth quarter, which was driven by increases in incidence rate, higher merchandise sales, and concessions pricing changes.
Our top 10 films in the quarter represented approximately 70% of the box office in the fourth quarter of fiscal 2025 compared to approximately 75% for the top 10 films in the fourth quarter last year, with a slightly less concentrated film slate resulting in less than 1 percentage point decrease in overall film cost as a percentage of admission revenues for the fourth quarter. For the full year, film cost as a percentage of admission revenues was flat compared to fiscal 2024. On the higher revenues, Theater division adjusted EBITDA was $24.1 million, a just under 2 percentage point increase compared to the prior year quarter.
Turning to our Hotels and Resorts division. The fourth quarter capped another record year for division revenue and adjusted EBITDA. Revenues before cost reimbursements were $60.4 million for the fourth quarter of fiscal 2025, a 5% increase compared to the prior year. The shift in our fiscal calendar and net 1 additional operating day in the quarter had an insignificant impact on the Hotel division revenues and results.
RevPAR for our owned hotels grew 3.5% during the fourth quarter compared to the prior year, growing at 3 of our 7 owned hotels. The RevPAR increase was driven by a 1.2 percentage point decrease in our occupancy rate compared to the fourth quarter of fiscal 2024, with our average occupancy rate for our owned hotels at 60.2% during the fourth quarter fiscal 2025. Average daily rates grew 5.6% during the fourth quarter compared to the prior year quarter as our newly renovated hotels continue to attract demand and drive higher rates.
Our properties continue to perform well against the industry as a whole. Based on data from STR, when comparing our RevPAR results to comparable upper upscale hotels throughout the U.S., the upper upscale segment experienced an increase in RevPAR of 0.8% during the fourth quarter compared to the fourth quarter of fiscal 2024, indicating that our hotels outperformed the industry by 2.7 percentage points. Comparable competitive hotels in our markets experienced a RevPAR decrease of 2% for the fourth quarter of fiscal 2025 compared to the fourth quarter of fiscal 2024, indicating that our hotels outperformed their competitive set by 5.5 percentage points.
We believe our outperformance versus the competitive set is primarily due to strong demand for our renovated hotels as well as a heavier mix of transient leisure demand at higher rates.
Group demand remained generally steady during the fourth quarter of 2025, with group rooms representing 35% of our total room mix in the fourth quarter of fiscal 2025 compared to 36% of our room mix in the fourth quarter last year. Our group mix in the fourth quarter of 2024 benefited from group business related to the election with our group mix in the fourth quarter of 2025, reverting to more typical levels. Finally, Hotel's fourth quarter adjusted EBITDA was $7.3 million, an increase of 3.4% compared to the prior year quarter, driven primarily by higher revenues.
Shifting to cash flow and the balance sheet. Our cash flow from operations was $48.8 million in the fourth quarter of fiscal 2025 compared to $52.6 million in the prior year quarter, with the decrease in cash flow from operations due to unfavorable working capital changes related to the timing of payments relative to our fiscal year-end. For the full year, cash flow from operations was $84.2 million compared to just under $104 million in fiscal 2024, which was also impacted by unfavorable timing of working capital payments at the end of fiscal 2025, compared to favorable timing of working capital payments at the end of fiscal '24.
Total capital expenditures during the fourth quarter of fiscal 2025 were $22.4 million compared to $25.4 million in the fourth quarter of fiscal '24, which was primarily comprised of Hilton Milwaukee renovation project payments and maintenance projects in both businesses. Total capital expenditures for fiscal 2025 were $83.2 million compared to $79.2 million in fiscal 2024.
During the fourth quarter, we repurchased approximately 118,000 shares of our common stock for $1.8 million in cash. This brings our share repurchases for 2025 to just over 1.1 million shares for approximately $18 million in cash, or approximately 3.6% of our outstanding shares at the beginning of the year. Our cumulative buybacks since resuming share repurchases in the third quarter of 2024 are now over 1.8 million shares, or approximately 5.7% of our outstanding share count when we began, returning nearly $28 million in capital to shareholders. In total, over the last 2 years, we have returned over $45 million in capital to shareholders through share repurchases and dividends paid during fiscal 2024 and 2025.
Our balance sheet remains well positioned as we head into 2026. We ended the fourth quarter with over $23 million in cash and over $230 million in total liquidity, with a debt-to-capitalization ratio of 26% and 1.5x net leverage.
As we look forward, I'd like to provide an overview of our current capital allocation priorities for 2026. While we will continue to invest in maintaining our portfolio of high-quality assets in both of our businesses, we expect a meaningful step down in capital expenditures in 2026, as we move past the heavy reinvestment cycle of the last few years in our Hotel division. In fiscal 2026, we expect to continue to make maintenance and ROI investments in hotels, as well as investments in maintaining and enhancing the customer experience in theaters. For fiscal 2026, we expect total capital expenditures of $50 million to $55 million based on our current portfolio of assets, with approximately $25 million to $30 million in hotels and $20 million to $25 million in theaters. The timing of our planned capital projects may impact our actual capital expenditures during fiscal 2026, and we will continue to provide updates as the year progresses.
We expect this decrease in capital expenditures to result in a significant increase in free cash flow in 2026, which will be allocated to opportunistic growth investments and returning capital to shareholders. While we often don't control the timing or availability of deals, we continue to actively search for opportunities to deploy capital to grow our businesses, and we are disciplined in our approach.
We remain committed to returning capital to shareholders. In fiscal 2025, we returned $27 million or approximately 32% of our cash from operations to shareholders through our quarterly dividend and share repurchases. We plan to grow the dividend over time and opportunistically repurchase shares when we generate cash in excess of our near-term ability to reinvest or deploy for strategic growth.
With that, I will now turn the call over to Greg.
Thanks, Chad. Good morning, everyone. With Chad covering many of the details of the quarter, I'd like to start today by reflecting a bit on the year. As is often the case with our 2 divisions, the story of the year was a bit mixed. We delivered another record year in our Hotel division while successfully executing on some very big projects that we expect to have long-term returns.
In theaters, while the box office came up short of expectations for the year, audiences continue to come out and have strong demand for the theatrical experience when we have periods of steady product supply. Because of the hits-driven nature of the business, the difference between a decent year and what would have been considered a great success was essentially 1 or 2 films that didn't hit as expected.
For our company specifically, our fourth quarter results were quite strong with both businesses outperforming their industries. In theaters, a diverse film slate with family content that played well in our markets helped us achieve strong market share. In hotels, strong leisure demand, particularly at our recently renovated assets helped us end the year on a high note. More importantly, we exit the year with good momentum. And as we look ahead to 2026, we're encouraged by the growth opportunities that we see ahead.
I'll start today with our Theater division. Chad went over the numbers for the quarter with you, including our strong per cap growth for both concessions, food and beverage as well as average ticket price that drove our outperformance for the quarter.
Overall, the fourth quarter film slate featured a diverse mix of films across genres that appeal to wide ranges of audiences that was particularly appealing to families, which played well in our Midwestern markets. We achieved above-average market share for 7 of the top 10 films in the quarter, with particularly strong share from Wicked: For Good, Zootopia 2, Avatar: Fire and Ash, Blackphone 2, and The Housemaid. Second-tier films beyond the top 10 also made important contributions to the overall box office with midsized films like Regretting You, One Battle After Another, Marty Supreme, and Song Sung Blue delivering compelling stories that audiences wanted to experience on the big screen, not sitting at home on their couch.
The well-rounded holiday slate offered something for everyone, and it is a great example of when our industry is at its best. While we had great blockbuster films like Avatar and Wicked that drew big crowds, the box office was so much more than the tent poles, with multiple films working at once that appeal to different types of audiences. Our market share was also strong with several movies in the second tier of films, including double our normal market share for the Milwaukee-based hometown favorite story, Song Sung Blue.
While the overall industry box office was softer than anticipated, we continue to believe this is largely a function of product supply and individual film performance. October was impacted by softer carryover from September releases than we saw last year, as well as a few titles that didn't hit as we hoped. The November slate had one less tentpole film over the Thanksgiving holiday compared to 2024, when the box office included Wicked, Moana 2, and Gladiator 2. And we had a more robust film slate in December, we again saw audiences come out as we would expect. This dynamic continues to illustrate the importance of maintaining consistent and steady product supply that is balanced throughout the year to support the momentum of moviegoing.
As Chad discussed, we saw strong per capita growth during the quarter with average ticket prices benefiting from our ongoing price optimization efforts. As we've discussed throughout 2025, this has been an evolving effort to strike the right balance between capturing price during peak demand periods, as we did during the busy holiday periods in the fourth quarter, and maximizing attendance by having various price points for different types of customers. In addition to optimizing price, we are focused on other opportunities to grow per capita sales. And during the quarter, we made progress testing several initiatives that we believe will be drivers of per cap growth in 2026.
First, during the fourth quarter, we began rolling out a new queuing line system that consolidates multiple concession lines into a single line that then is served by multiple concession attendants. The single line moves faster, improving customer perception, and the queue is lined with merchandise displays that enhance product visibility and are proving effective at increasing per capita candy and merchandise sales. We deployed the new queuing process and displays at 14 test locations in the fourth quarter, and we anticipate continuing to roll these out to additional locations in the first half of this year.
Second, we continue to focus on improving the customer experience by looking at every step in the customer journey. For a significant majority of our customers, their first interaction with us is the digital ticket purchase. And while we've offered web and mobile app-based ticketing for many years, we saw an opportunity to improve this purchase experience. We have completely redesigned our digital ticketing experience to make the purchasing experience as easy, fast and frictionless as possible. In November, we launched a new digital ticketing experience for mobile web browsers and our mobile app, followed by the launch of an entirely newly designed marcustheatres.com website in early February. The new site simplifies finding the movie, theater and showtimes that work for customers while speeding up the process of seat selection and payments. We're very encouraged by the early feedback from customers, and we are well positioned for the ramp-up in business as we head into spring and summer movie season.
Third, we are working on improving the digital ordering experience for our best-in-class menu of expanded food and beverage options. Again, the goal here is simple. We're going to make the ordering process as easy and frictionless as possible. We know from experience that when customers order concessions, food and beverage on our mobile app, they buy more as they are consistently presented with upsell and cross-sell offers. We're working to significantly improve our mobile web ordering experience for those customers who want a fast digital ordering experience but haven't yet downloaded our app.
In December, we began testing in-seat QR code, food and beverage ordering for delivery to seats at 2 of our dine-in Movie Tavern locations, and expanded this test to 3 more locations in January. The QR code ordering is simple and fast with integrated digital wallet payment options that significantly speed up the transaction process. The early results have shown encouraging growth in F&B per caps at these locations, and we are in the process of rolling out QR code ordering to all our 20 Movie Tavern and dine-in theaters. This will be followed by a redesigned food and beverage digital purchase experience in our mobile web and app for all locations later this year.
For those customers who prefer the more traditional purchase experience, the box office, concession stand and our bars and restaurants, we began rolling out new tap-to-pay terminals in the fourth quarter, and we expect to have the rollout complete at all points of sale by the end of the first quarter.
We expect these investments in technology will not only make the purchasing process easier for our customers and enhance per caps, but we expect to gain additional data and insight into our customers and their preferences through the new payment technology we are integrating across our various sales channels. We expect to leverage these insights to better tailor our communications and marketing with more customized offers that highlight coming events of interest.
We believe it's very important to have programs that promote and incentivize repeat moviegoing, and we've created several with this goal in mind, including Marcus Passports, Marcus Mystery Movie, and Marcus Movie Club. These programs can also have the added benefit of bringing customers out to see a broader range of small and midsized films in addition to the blockbuster films, which we believe supports a healthier overall exhibition ecosystem.
While these programs offer a lower ticket price in the short term, we believe they are important drivers of long-term future attendance. In November, we reached the 1-year anniversary of Marcus Movie Club, our subscription program that offers monthly or annual memberships with several great benefits for customers, including a 20% food and beverage discount, access to additional companion tickets for $9.99 and waive digital ticketing convenience fees.
After our first year of Movie Club, we added free Marcus Mystery movies as a new benefit for members, and we continue to look for ways to drive membership and usage of the program. Approximately, 38% of members have selected the annual membership, which we believe supports our long-term goal of driving repeat moviegoing. Marcus Movie Club is one of several programs that promote and incentivize repeat moviegoing, including Marcus Passports, Marcus Mystery Movie and our loyalty program, Marcus Magical Movie Rewards, which now has 6.9 million members.
As we look ahead, we are very excited by a 2026 movie slate that includes several potentially very strong titles, including Spider-Man: Brand New Day, the Super Mario Galaxy Movie, Moana, Jumanji 3, Toy Story 5, Minions and Monsters, The Odyssey, The Mandalorian and Grogu, Dune Messiah -- I'll get that right, and Avengers: Doomsday, just to name a few. There are many more great films coming noted in today's earnings release. The current slate has a stronger mix of tent-pole films and the grossing potential of 2026 franchises is greater based on their historical predecessor box office performances.
Looking even further ahead, the early look at the 2027 film slate also looks strong with major franchises, including Shrek 5, Star Wars: Starfighter, Minecraft 2, Frozen 3, the Batman Part II, Sonic the Hedgehog 4, Spider-Man: Beyond the Spider-Verse, The Legend of Zelda, Avengers: Secret Wars, and many more. We are excited about the momentum that is building in theaters and the film slate ahead in the coming years, and we remain very positive and optimistic about the long-term future for the industry and our theater business.
Moving to our Hotel and Resorts division. You've seen the segment numbers, and Chad shared the highlights of our performance metrics for the quarter, including our outperformance to the comp sets and upper upscale hotels nationally. So I'll focus my comments on the year overall and looking ahead.
We're pleased to report that after another strong quarter to end the year, our hotels team delivered another record-breaking revenue and adjusted EBITDA year in fiscal 2025. This is quite the achievement given that we are comparing against a record fiscal 2024 that benefited from the Republican National Convention and election-related business that did not recur in 2025. It's even more impressive considering that we also completed the largest hotel renovation project in our history at the Hilton Milwaukee, which disrupted operations and negatively impacted results with a significant number of rooms at the hotel out of service during the first half of the year. Even with the negative impact of the renovation, our RevPAR growth outperformed our competitive set for the year by 1.2 percentage points, and we really saw an inflection point once we completed the renovation as we outperformed the competitive sets by over 5 percentage points in the second half of the year.
The demand environment was mixed in 2025, with group demand generally remaining strong, particularly at our properties that play well to group business. Leisure demand was mixed across our portfolio in 2025 compared to last year, with some markets seeing softest while others were positive. Demand remains strongest at the upper end of the market. Thus, our upper upscale properties are performing well in an environment where consumers continue to gravitate toward premium experiences.
The Hilton Milwaukee renovation wrapped up in the fourth quarter with the lobby and lounge, marking the end of a renovation that updated 554 guestrooms, ballrooms, meeting space and public common spaces. It looks fantastic, and it is a convention center hotel that Milwaukee can be proud of.
While we have made significant capital investments in our hotels over the last few years, we have also been disciplined with the returns required for these projects. Hilton Milwaukee is a good example of our approach as we chose not to renovate the 175-room west wing of the hotel and remove the rooms from the Hilton system at the end of December. In mid-January, we reopened the west wing as the Marc Hotel, an independent select service hotel connected to the Baird Center via skywalk. The rebranding and repositioning to create a new hotel with a different type of product allows us to continue to operate with minimal capital investment.
As Chad discussed, the heavy part of the capital investment cycle that we've been going through the last few years is now behind us. We are winning in our key markets with our newly renovated room product and meeting space, and we've been able to capitalize on that opportunity.
As we look ahead to 2026, we're very excited to open our new 11-hole short golf course at the Grand Geneva, known as Wee Nip. We completed the construction and the growing phase of the course in the late season last year and play will begin this spring. We believe the course will allow us to capitalize on a growing segment of golf with a great complementary option to our 2 existing 18-hole courses on the resort, the Brute and the Highlands. With customers looking for distinctive experiential destinations, this added amenity aligns with industry trends, and we expect the short course to enhance the overall appeal of the resort to both leisure customers and group customers looking to mix in and other social activity with conferences, training events and outings.
As we look ahead, our outlook for 2026 remains positive with our expectations for low single-digit RevPAR growth, led by modest growth in group business and steady leisure and business travel. Group bookings remain healthy with our group room revenue bookings for fiscal 2026, or group pace in the year for the year, running approximately 3% ahead of where we were at this time last year. Looking a bit further out to 2027, group room pace is slightly behind where we were at this time last year for the next year out, although this far out, the timing of bookings can vary significantly. Banquet and catering pace for 2026 and 2027 is ahead of where we were at this time last year. Based on the current demand environment and our future bookings, our outlook for 2026 remains positive.
We are excited about the opportunities for future growth in the hotels business, and I would like to congratulate Michael Evans and our Hotels and Resorts team for delivering a great and record year.
I'd like to once again express my appreciation for our dedicated associates at The Marcus Corporation. Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all that they do every day. They are our most important asset. So on behalf of our Board of Directors and our entire executive team, thank you to all of our associates.
With that, at this time, Chad and I would be happy to open the call up for any questions you may have.
[Operator Instructions] We'll go to Eric Wold from Texas Capital Securities.
2. Question Answer
I guess first question on the Theater segment. There was a lot of kind of shifts in kind of the pricing strategy. Last May, you started lapping some of the headwinds. It sounds like you kind of implemented a few more things in the holiday period. Maybe give us a sense of what we should expect throughout 2026, maybe in terms of cadence based on the programs currently in place, kind of what you'll come up against this May and kind of how that should play out throughout the year?
Yes, in terms of the cadence through the year, really our key -- it's going to be the anniversarying of our price changes that we made midyear in 2025. I don't see big changes to our programs prospectively. Again, we're trying to be very thoughtful about customer sensitivity to price changes, and we do want to continue to drive attendance. So it's really, I would say, through the first 2 quarters, the year-over-year benefit that we're going to see of the actions that really didn't start to show up until late June in 2025. And then as we look forward, it's really going to be more about driving per caps in that business on the F&B side, and that's where our focus is going to be.
Then on the hotel side, there was a comment in the quarter about seeing increased leisure demand and higher ADR as the renovations have come to fruition last year. Maybe give us a sense of kind of what you're seeing in terms of bookings on leisure versus your business travel group kind of in this year? And if you expect to see more of a shift back to leisure with that, especially given the comments you made around group pace in '27. I know it's early, but should we see more of a shift back to leisure in your mind? And if that is the case, kind of what do you see as the implications of that?
So let me start with the very last part of your question on group pace. You may recall at the beginning of '25, we were seeing very significant increases in group pace early in the year and then that flattened out a bit, and we ended the year with growth that was kind of mid-single digits, but we started the year much higher than that. And so we had a huge step-up early in the year last year, which is, I think, in part why our pace for '26 is, right at the moment, low single digit and because we had a big step-up last year. And when you're looking as far out as '27, timing of when those events get booked really can vary from year-to-year. And so I wouldn't read too much into what we're seeing right now for '27. It's still pretty early.
Group overall remains healthy. And as we've said a few times over the last few months or a few quarters, our renovated properties are winning really well with groups.
What we have seen, at least in the fourth quarter is we're also doing a really nice job even in the slow season capturing strong leisure demand. And we did that here in the fourth quarter around the weekends. Upper upscale continues to perform really well with the premium products performing better than the lower end of the market. And our properties play well to that type of customer. So I think it's going to be one where even in a flat overall demand environment in leisure, we can capture share nicely.
The good thing about our properties that we've talked about before is that they play in both group and leisure. That is the nature of our properties. I've called them special assets before. And if you look at them, they're located and they're designed -- so if we see softening in one area, we can start to be more aggressive in another if we see improved demand there. And you see it play out year after year.
Our next question comes from Mike Hickey from StoneX.
Greg, Chad, congrats guys on a great 4Q with outperform. Greg, your '26 setup here sounds very encouraging, both on the hotel side, just given the level of investment and pacing here on group theater side, slate looks exceptional. It seems like it will meet your demo really well. Do you see sort of a, step-up is a big word, but at least relative to your '25 growth on the top line, do you think you can exceed that? And how much leverage should we expect on sort of a mid-single-digit type growth and free cash flow conversion? And I've got a follow-up.
Well, hopes be eternal in the theater business. I mean it's certainly, as you said, on paper it looks good. And it looks like it plays to our markets, and it looks -- and we talked about. In '25, we didn't have one blockbuster over $500 million. That is a challenge. And it looks like the potential for these is better. It's an art form. We don't know how it's going to turn out. But we're prepared to capitalize and maximize on whatever comes our way, and it's on the top line and the bottom line.
We're very focused on, as you know, our pricing strategies and making sure that our prices are market appropriate and that we're offering the right product to the right customer. We have a very significant PLF footprint. It's probably the -- on a relative basis, we have the highest penetration of PLFs in the industry. So when those customers are there, we're going to be able to capture them. And yet we've got lots of programs for the customers that don't want to spend as much. We've got -- our Tuesday program remains very robust.
A big push for us this year is going to be our Movie Club, as we continue to really -- if you are in our theaters now, you will be -- if you don't join the club, you're not paying attention. I mean there's just -- we're really working hard to build that base of business. It reminds me a lot of the hotel business where you sometimes fill a hotel with a base of customers to sort of shrink the size of your hotel. And I think others in the industry who've seen a significant buildup in membership on the theater side enjoy that benefit of a continued income stream. So we're very focused on that as well.
Then on the hotel side, I think that we'll continue to see the benefits of all the investment we've made in these properties. They look so good. And so that's going to -- and that line in Milwaukee as our convention center continues to perform better than we opened a few years ago, that will dovetail nicely. And then we should see good performance as long as the economy stays solid, we'll be in good shape. As you know, hotels are very GDP dependent.
Yes, Mike, I'll take the last. The only thing I'd add on the film mix is I do think that the family slate that we see ahead for '26 should benefit a circuit like ours in the markets that we're in. In the summer of '25, we didn't really have a family animated film that hit. And we saw the power of that over the holidays with Zootopia. As we look at the slate for the summer '26, I do think that's a net positive for Marcus Theatres.
In terms of contribution and leverage on the incremental revenue, historically, the theater business contributes at around 50% on the contribution margin line historically to EBITDA. And with our step down in CapEx this year, I think our free cash flow conversion on that is going to be very strong.
I guess on M&A, you said actively searching. I don't know if I've heard that from you before. Are you sort of a little bit more aggressive, I guess, now looking at M&A? And I guess, specifically, maybe some -- regardless of that, maybe some color there because I wonder with the Warner Bros deal hanging here, Greg, if that sort ices theater deals or not.
Then on the hotel side, I'm not sure how active the market is, but I don't think it's been great. So just curious where you're focusing your attention and you see the biggest opportunity, whether it's theaters, hotels or maybe another area that could be complementary to your overall business today?
That's a very good point. Yes, you're right. Look, I'll sort of work the hotels -- I think everybody knows the hotel transaction market has been pretty slow just across the entire industry. And so we have to be -- just because it goes back to this cap rates got elevated as interest rates went up. But people were doing well enough to know there was no -- they weren't forced sale. The economy is strong enough. So it basically gave people the ability to continue to -- I wouldn't even say pretend and extend because there's no pretending. I mean, they just -- the businesses are okay. But if you wrote a pro forma, so much of these pro formas when you have these investors, not necessarily us, we're not looking at it like this, but a lot of private equity investors with a 5-year hold and they write a cap rate. And if cap rates are 100 to 200 basis points higher, it messes up the returns pretty significantly. And so they can wait or at least they're going to try and wait. So it's a waiting game. So that's really slowed up that market a fair amount.
So we can look for other ways to grow that business and other ways to drive some revenue there, which we do in adjacencies. And on the theater side, yes, again, there's not a lot of transaction activity and very little transaction activity you're seeing. So we'll look at anything that would come our way if we think it makes sense.
A big challenge a lot of these guys have are very expensive leases. And so a lot of that needs to be figured out. But on the -- but then you bring up a very interesting point, which we talk about, which is, okay, well, what other adjacencies can we have? We've worked through these huge capital investments that we've had to go through. And so now when we have free cash flow, we're looking at someone -- you'll ask them, what are you going to do? Well, if we can find good investments, we'd like to make them.
It's very tax efficient to not pay the capital out if we can keep it invested within the company for our investors. That's a great -- that can be a great return. And if we can, then we will distribute cash as we've talked about as the levers we can pull, whether it's buying back stock or dividends.
Our next question comes from Drew Crum from B. Riley Securities.
I wanted to ask about the occupancy rate. It was down year-on-year in 4Q. Was that election related in the year ago period? Was it the closing of the west wing of the Hilton Milwaukee or was it something else? And would you anticipate that rebounding in 2026?
Drew, yes, I'd start with occupancy in the fourth quarter last year did get a benefit from a bunch of group business related to the election and a number of visits that we had in Milwaukee in our key market. And so that definitely provided a tailwind last year.
I do think in some of our markets this year, there's clearly some softness. And so it is very much a mix story that is market-specific and at times even property specific. But it's not an obvious softening trend in our markets where we're at, and we're outperforming the softness generally because of the quality of the assets and the investments that we've made. So I think the way to think about it is we should look to outperform what our markets do even if we see some of the softness.
Then Mike's last question focused on M&A. Given the opportunity to review the portfolio in the past, you guys have made selective divestitures. Any updates there? Any comments you can give us in terms of how you're thinking about that?
Look, we're always looking at our assets. And we have -- we come at it from a very strong real estate mentality. And these assets, one of the things that's important, as you know, as you saw in the last few years is that as sort of bubble came across of investment, we have to look and decide, okay, is the investment going to be a good investment for us. And if we don't think the investment is the right investment for us, we can then divest ourselves of the asset, and that will happen occasionally.
We don't have any major divestitures planned right at this minute. But if something makes sense or the markets get very hot, we're always looking at that and saying, okay, what is the right long-term choice for these assets for our company.
Drew, we tend to immediately think about hotels in that context. But we own a lot of theater real estate and portfolio management is an ongoing process that we're continuously looking at the performance of individual theater locations and highest and best use for the real estate. And so I would just suggest that store management will continue to be part of a potential source of making changes, and we could add some locations, too. But in the past, we have monetized noncore real estate in our theater business.
We might take investment and change some of the uses on some of our theater sites, and we can make investments to do that, too. Again, we view ourselves -- one of our hidden assets is our real estate, and we view it -- we've come at this for decades from a real estate perspective. And we may make investments on our properties and that would maximize the highest and best use of that real estate.
Our next question is from Patrick Sholl from Barrington Research.
Just maybe another question around like capital allocation and M&A. Could you maybe sort of discuss some of the, I guess, differences in underwriting or opportunities in like expansion, whether organic or M&A and like maybe the differences in underwriting just additional new builds versus the -- I know you talked about the difficulty with some of the leases and potential M&A. But just any sort of update on those competing priorities?
I mean, we're -- in the theater business, the challenge on M&A, and we have looked at a number of things in the last year plus and done a fair amount of work on different opportunities. And the challenge consistently has been the leases at some of these locations. And the number of locations in a theater circuit that work and don't work when you look at a circuit overall, that mix of locations that don't work has made it very hard to get deals done if you're going to have to assume the lease. And so it really requires a more of a ground game in looking and doing onesie, twosie type deals where you're picking up individual theaters in that space. And that's really how we look at the underwriting is at a more granular level than in the past.
New builds, we think about it. We think about attractive markets. But right now, I think with the product supply challenges, it's just tough to get the math to work on new construction. And so we're going to keep looking at it. But at the moment, it's not something I think you're going to see us do a lot of in the near term.
Then on concessions, you had mentioned the QR ordering is helping to increase incidents. I was wondering what other components of the per cap trends in the quarter? What other -- what else contributed to the per cap trends in the quarter or if that -- yes, like between pricing or mix and things like that?
Yes. So in the fourth quarter, the QR code ordering actually had a really small impact. I think that's more of a 2026 benefit. We were doing a handful of test locations late in the quarter. But at those test locations, we are really encouraged by what we're seeing. And I think that that's going to be a meaningful piece of our per cap uplift for our dine-in theaters in the coming year. In the fourth quarter, specifically, it was mostly incidence rate and capturing more customers.
It was some of the queuing line benefit that Greg talked about and getting the basket size to grow with customers that are going to the concession stand. We've seen some traction with that, which is really encouraging. And there was a little bit of price, but price wasn't really the primary component of what we saw in the fourth quarter. And I think there was some benefit certainly in a holiday quarter of people making events of going out to the movies and just generally spending more. And I think that's encouraging to see the health of the consumer that we saw or continue to see in the fourth quarter.
At this time, it appears there are no other questions. I'd like to turn the call back to Mr. Paris for any additional or closing comments.
Thanks, Drew. We would like to thank everybody for joining us today, and we look forward to talking to you once again in May when we release our first quarter 2026 results. Until then, thank you, and have a great day.
That concludes today's call. You may disconnect your line at any time.
Marcus Corporation — Q3 2025 Earnings Call
1. Management Discussion
Good morning, everyone, and welcome to Marcus Corporation's Third Quarter Earnings Conference Call. My name is Lydia, and I will be your operator today. [Operator Instructions] As a reminder, this conference is being recorded.
Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of Marcus Corporation. At this time, I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Good morning, and welcome to our fiscal 2025 third quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect or other similar words. Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements are only made as of the date of this conference call, and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading forward-looking Statements in the press release we issued this morning announcing our third quarter results, and in the Risk Factors section of our fiscal 2024 annual report on Form 10-K, which you can access on the SEC's website.
Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure in evaluating our performance and its limitations a copy of which is available on the Investor Relations page of our website at investors.markuscorp.com.
All right. With that behind us, let's begin. I'll start this morning by spending a few minutes sharing the results from our third quarter and then discuss our balance sheet, liquidity and capital allocation. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We'll then open up the call for questions. This morning, we reported a quarter with solid results overall despite somewhat mixed results in our divisions relative to our expectations.
In hotels, we exceeded our expectations and were able to overcome a very challenging prior year comparison to deliver revenue growth and outperform our competitive sets. In theaters, we saw a less concentrated film slate with several films that performed well relative to our own expectations, but the slight lacked a major breakthrough of tent pole that we've seen in the third quarter the last couple of years.
During our seasonally busiest quarter, our teams in both businesses remain focused on serving our guests with excellence to deliver memorable experiences. I'll start with a few highlights from our consolidated results for the third quarter of 2025. Consolidated revenues of $210 million were down 9.7% compared to the prior year quarter. Operating income for the quarter was $22.7 million a decrease of $10.1 million compared to the prior year quarter. Consolidated adjusted EBITDA for the third quarter was $40.4 million, a decrease of $11.9 million compared to the third quarter of fiscal 2024.
Net earnings for the quarter were $16.2 million or $0.52 per share and were favorably impacted by a nonrecurring gain on a property insurance settlement of $3 million or $0.10 per share net of tax. Excluding the impact of the gain net earnings for the third quarter were $13.2 million or $0.42 per share compared to prior year third quarter net earnings of $24.8 million or $0.78 per share excluding the impacts of our convertible debt repurchases last year. The change in our fiscal year-end quarters had an immaterial impact on our third quarter results with 1 additional operating day during the quarter in fiscal 2025 compared to last year.
Turning to our segment results. I'll begin this morning with our theater division. Third quarter fiscal 2025 total revenue of $119.9 million decreased approximately 16% compared to the prior year third quarter, primarily due to weaker performances from the top films in the quarter compared to the top films in the quarter last year and less carryover of films that released in the second quarter compared to last year's carryover. Comparable cedar admission revenue for the third quarter decreased 15.8% and comparable theater attendance decreased 18.7% compared with our fiscal third quarter 2024.
While our market share in the third quarter of 2025 was in line with our historical third quarter share, including our third quarter share in 2023, this year's film mix did not help us. Notably, the film slate did not include a family animated film in the top 5 movies of the quarter, a genre that our circuit typically outperforms in. When using our comparable fiscal days, U.S. box office receipts decreased 12% during our fiscal 2025 third quarter compared to U.S. box office receipts during our fiscal third quarter last year, indicating our admissions revenue performance trailed the industry by 3.8 percentage points.
We believe that our lower box office performance relative to the nation during the third quarter, was primarily attributable to our strong performance in the third quarter last year when our circuit outperformed the national box office growth by nearly 6 percentage points. As you may recall, a year ago, our third quarter 2024 box office results benefited from a favorable film mix in which we achieved above our historical average market share for each of our top 6 movies in the quarter, including several films such as Insight out, Despicable Me 4 and TWSTRS where we significantly outperformed our typical share.
Our admissions revenues did benefit from several pricing changes that we discussed with you last quarter, with average admission price increasing 3.6% during the third quarter of fiscal 2025 compared to last year. Our admission per caps were favorably impacted by strategic pricing changes, including adjustments to our everyday [indiscernible] program and pricing surcharges on select high-demand summer blockbuster films.
In addition, admission per caps were also favorably impacted by a higher percentage of our attendance on PLF screens compared to last year's quarter. We also grew our average concession food and beverage revenues per person at our comparable theaters, which increased by 2.1% during the third quarter of fiscal 2025 compared to last year's third quarter, and was driven by an increase in merchandise sales and pricing.
Our top 10 films in the quarter represented approximately 72% of the box office in the third quarter of fiscal 2025, compared to 83% for the top 10 films in the third quarter last year. The less concentrated film slate featuring fewer blockbuster films compared to the more concentrated slate in the third quarter last year, resulted in an approximately 3 percentage point decrease in overall film cost as a percentage of admission revenues.
Finally, Theater Division adjusted EBITDA during the third quarter of fiscal 2025 was $22.1 million, a 33% decrease over the prior year quarter, primarily due to the lower attendance volumes.
Turning to our Hotels and Resorts division. Total revenues before cost reimbursements were $80.3 million for the third quarter of fiscal 2025, a 1.7% increase compared to the prior year. RevPAR for our comparable owned hotels decreased 1.5% during the third quarter compared to the prior year, which resulted from an overall occupancy rate increase of 1.7 percentage points offset by a 3.6% decrease in our average daily rate, or ADR. Our average occupancy rate for our owned hotels was 78.4% during the third quarter of 2025.
As you may recall, our third quarter 2024 results benefited from the Republican National Convention and its significant impact on the results at our 3 Milwaukee hotels, resulting in approximately $3.3 million of incremental revenue. The R&C primarily had the effect of increasing average daily rates. And when we adjust out that onetime impact, we achieved some very impressive rate and RevPAR growth. When excluding the impact of the R&C on our 3 Milwaukee hotels from last year's results, our average daily rate during the third quarter of 2025 grew approximately 5% compared to the prior year quarter, and RevPAR grew approximately 7.5%.
According to data received from Smith Travel Research, Comparable competitive hotels in our markets experienced a decrease in RevPAR of 6.7% for the third quarter of 2025 compared to the third quarter of fiscal '24, indicating that our hotels outperformed the competitive set by 5.2 percentage points. We believe our outperformance resulted primarily from strong sales results with our group customer segment as well as a strong summer season at Grand Geneva Resort & Spa and higher results from the recently renovated properties in our portfolio.
When comparing our RevPAR results to the to comparable upper upscale hotels throughout the U.S. The upper upscale segment experienced a decrease in RevPAR of 1.3% during our third quarter compared to the third quarter of fiscal '24, indicating that our hotels performed generally in line with the industry despite the growth headwind from the prior year R&C impact, and they outperformed the industry by nearly 9 percentage points when adjusting for the estimated impact of the R&C on our RevPAR growth.
With the strong growth in group business and events, our banquet and catering operations continued to grow with food and beverage revenues up 8.3% in the third quarter of fiscal '25 compared to the prior year, which includes the impact of the headwind from prior year R&C related banquet and catering events.
Finally, hotels adjusted EBITDA was essentially flat in the third quarter of fiscal 2025 compared to the prior year quarter, which we believe was a significant achievement given the changes in our revenue mix, with a decrease in high rate, high-margin rooms revenue in the prior year due to the R&C and the increase in comparatively lower margin food and beverage revenue.
Shifting to cash flow and the balance sheet. Our cash flow from operations was $39.1 million in the third quarter of fiscal 2025 compared to cash flow from operations of $30.5 million in the prior year quarter, with the increase in cash flow primarily due to differences in the timing of various working capital payments. Total capital expenditures during the third quarter of fiscal 2025 were $20.9 million compared to $18.5 million in the third quarter of fiscal 2024. A large portion of our capital expenditures during the third quarter were invested in the Hilton Milwaukee renovation, with the balance going to maintenance projects in both businesses.
Our capital investments and renovations projects have progressed as planned, and we now expect capital expenditures for fiscal 2025 of $75 million to $85 million. The timing of several projects will impact our final capital expenditure number for the year.
Looking ahead, as we get past the heavy part of the reinvestment cycle that we are in this year with our current hotel portfolio, we see a meaningful step down in capital expenditures in 2026. Our preliminary expectation is for approximately $50 million to $55 million of capital expenditures in 2026 with this range subject to adjustment for the final timing of payments for our 2025 projects. We ended the third quarter with approximately $7 million in cash and over $214 million in total liquidity with a debt-to-capitalization ratio of 26% and net leverage of 1.7x.
Finally, in today's earnings release, we announced that during the third quarter, we repurchased approximately 600,000 shares of our common stock for $9.1 million in cash. This brings our share repurchases this year to just over 1 million shares or approximately 3.2% of our outstanding shares at the beginning of the year. Our cumulative buyback since resuming share repurchases in the third quarter of 2024 are now over 1.7 million shares or approximately 5.3% of our outstanding share count when we begin returning nearly $26 million in capital to shareholders.
Our strong balance sheet and confidence in our business gives us the ability to continue pursuing growth investments while returning capital to shareholders through our quarterly dividend and opportunistic share repurchases. We will continue to allocate capital with a balanced approach that supports our strategic priorities while pursuing investments that provide the most attractive returns to shareholders. Greg will further discuss our capital allocation approach and today's announcement of an increase in our share repurchase authorization.
And with that, I will now turn the call over to Greg.
Thanks, Chad. Good morning, everyone. When we were together last quarter, we shared that our summer was off to a solid start in both of our businesses. In theaters, a more diverse film slate was bringing out audiences for a series of solid performances. In hotels, we were gaining momentum as we entered the third quarter, and we're well positioned with several newly remodeled properties in our portfolio. As the rest of the third quarter played out, we saw some divergence between the results of our 2 divisions.
In theaters, we saw a late summer movie season that included several films that performed well and met our own expectations, but it lacked a runaway hit blockbuster film that we've had the last couple of years, and the film mix was challenging for our markets. In hotels, our team executed exceptionally well, capitalizing on both group and leisure demand and delivered a quarter that outperformed our competitors in the nation, overcoming a very difficult comparison to our record third quarter results last year.
As I will discuss today, while the overall result was a mixed quarter compared to our own expectations, there were many positives that we think will benefit us in the long term.
I'll start with our theater division. In a quarter where there has been much industry discussion about a national box office that was down nearly 12%. I'd like to step back for a moment with some perspective and start with a few things that we thought were positive.
First of all, we have good product supply with 32 wide releases in the third quarter this year compared to 29 last year. The film slate was less concentrated, and many of the smaller and midsized pictures actually performed better on average than they performed last year. When you get past the top 6 movies in the quarter, the average box office gross per film for the next 14 films in the top 20 was up over 11%. We believe this illustrates that there is an important role for small and midsized films in theatrical in contrary to some of the narrative of the trade press audiences want to come out to see these movies and theaters.
Second, there were several films that outperformed expectations. James Gun Superman opened to $125 million domestically achieving over $350 million in box office during its domestic run and grossing over $600 million globally. More importantly, the success of this DC franchise film sets up a promising outlook for future sequels with more DC adventures on the horizon. Zac Kreger's Horii weapons crossed $100 million in domestic box office in just 2 weeks and its way to over $150 million for the run. [ Condrin, last rights ] Smash box office records with both the highest domestic and global opening for Ahorafilm going on to become the highest grossing film in the Condrin series. Demesier Infinity Castle broke the anime record with a $70 million domestic opening and has continued to play strong to become the highest grossing international movie ever in the U.S. with a domestic run now of over $132 million.
These were all great results for these films, and they illustrate the audience appeal for a wide range of content across genres. So where did the summer box office come up short compared to last year? We think it ultimately comes down to a couple of simple factors. First, we didn't have a breakout smash hit this year that was the musty film of the summer, as we've seen in the last 2 years, the #1 film in the third quarter last year, was Deadpool in Wolverine. And in 2023, it was Barbie with both films grossing approximately $630 million domestically in the quarter.
As I discussed earlier, the #1 film in the quarter this year, Superman was a great success for many reasons, but at $350 million, its gross was approximately $280 million lower. We've been in this industry for a long time, and this dynamic with varying levels of box office hits from year-to-year isn't new. It's just the nature of our business. Second, in the third quarter, the summer box office was lighter on family films, a genre or we typically outperform.
Last year, our top 5 films in the third quarter included Despicable Me 4 and number two, and Inside Out 2 is the #5 bill, which was the second quarter release that carried over and held strong into the third quarter. This contributed $183 million to the third quarter domestic box office. This year's third quarter did not have a family animated film on the top 5 and didn't benefit from carryover of family films released in Q2. Again, this isn't really a new phenomenon, but it did create a tough comparison to last year, particularly for our circuit, which historically has outperformed on family films.
Chad discussed the factors we believe are impacting our box office growth relative to the nation and while we underperformed the nation by just under 4 percentage points. This was primarily due to our strong outperformance last -- in last year's third quarter, coupled with a film mix this year that didn't include many family films. I'm pleased to share that we continue to make progress on optimizing prices to capture premium during peak periods and maintain the right balance of value-oriented options for more price-sensitive customers during lower demand periods.
As expected, our admission per caps improved during the third quarter as we implemented blockbuster pricing on high-demand films and continue to adjust pricing for our everyday [indiscernible] program. We expect continued growth in our admission per caps for the next several quarters. We're looking forward to an exciting fall and holiday film slate with wicket for Good, Zootopia 2, Five9 at Freddies 2, the SpongeBob movie search for Square pants and Avatar Fire & Ash, just to name a few.
Advanced ticket sales of who got for good have been strong and are currently trending over 3x ahead of presales for last year's wicket. As we look ahead to next year, the 2026 film slate features major franchises, including Spider-Man, Brand New Day, the Super Mario Galaxy movie, Moana Jumanji 3, Moana, Jumanji 3, 2 different bets, to Story 5, Megameno, Mandalorian and Gogo, Dune, Masaya and Avengers, Dooms Day just to name a few. There are many more great films coming noted in today's earnings release, the 2026 film slate continues to fill in and the early indication is that while there are a similar number of franchise films in 2026 compared to this year, the grossing potential of 2026 franchise is greater based on the historical predecessor box office performances.
The 2026 slate currently includes 4 films where the predecessor earned over $500 million at the domestic box office compared to only 1 such films in 2025.
Moving to our Hotels and Resorts division. You've seen the segment numbers, and Chad shared some additional detail on the performance metrics, including our outperformance to the competitive sets. We expected this quarter to be a challenging comparison to last year for the hotel division, given the significant impact the RNC had in our Milwaukee hotels in the third quarter last year. And I'm thrilled to share that our team met the challenge and delivered absolute growth to overcome a tough comp. The R&C was an extraordinary period -- extraordinary event for our largest market, and we back out the R&C impact from our prior year results, our core business performed very well. In particular, 2 of our newly renovated properties, Grand Geneva Resort & Spa and Fister hotel benefited from our investments in renovations and great execution by our teams to deliver outstanding results this quarter.
There were several notable items in the quarter that I'd like to highlight. Average daily rates during the quarter were generally strong, with rate growth at 4 of our 7 hotels when adjusted for the prior year R&C impact. We have been successful in achieving higher rates at our hotels with newly renovated room product, including the Fister, Grande never Resort and Spa, Hilton, Milwaukee. Occupancy remains strong with occupancy growth at 6 of our 7 hotels the combination of strong ADR and occupancy growth resulted in our properties once again outperforming their competitive sets with impressive RevPAR growth of 7.5% when adjusted for the prior year impact of the R&C.
Group business during the quarter was stable. And as we approach the end of the year, our group room revenue bookings for full year fiscal 2025 or group pace in the year for the year are running slightly behind where we were at this time last year, which includes the R&C Group business last year. Even more encouraging. Group room pace for 2026 is running approximately 14% ahead of where we were at this time last year, for the next year out with banquet and catering revenues similarly running ahead of last year's pace. The current state of our hotel business remains stable and consistent with our view last quarter.
While some markets have seen some more significant leisure softening, our owned portfolio has generally performed well. Leisure transient demand remains soft in some markets around the country. But our hotel portfolio has not seen significant signs of softening or significant cancellations of group business. We believe our upper upscale positioning, drive to market locations and a broad segmentation lessening our exposure to any 1 type of customer. we'll see less volatility if further economic soften occurs. There remains an increased level of economic uncertainty compared to where we were a year ago.
And if we begin to see softness, we are prepared to react and adjust quickly. Our operations team is continuously focused on labor efficiency, and we've developed a strong track record of successfully managing through a changing demand environment.
Finally, I'd like to close with our views on capital allocation and returning capital to shareholders. For the last couple of years, we've made significant reinvestments in our assets. And as Chad discussed, we expect to move past this heavy CapEx cycle next year as we shift back to a more typical maintenance and ROI CapEx mix. We're seeing great results from our renovated properties, and we believe these investments will continue to have attractive long-term returns. On the growth front, we continue to look for opportunities to deploy capital to grow both of our businesses with value-accretive investments.
We have confidence in our businesses and a strong balance sheet that allows us to move quickly when we see good opportunities. And we have a history of executing when they arise. To the extent that we don't see attractive investments that are actionable, we expect to return excess capital to shareholders through share repurchases or dividends. As Chad described in greater detail, we repurchased over 5% of our outstanding shares through opportunistic share repurchases since we began repurchasing shares in the third quarter of 2024.
Between cash dividends and share repurchases, we have returned over $25 million or approximately $0.80 per share to shareholders in the last 4 quarters. This morning, we announced that our Board of Directors has approved a 4 million share increase in our current repurchase authorization, bringing our current share repurchase authorization to 4.7 million shares in the absence of growth investments with attractive returns, we will continue to use this authorization to opportunistically repurchase shares and return capital to shareholders. And this new authorization will give us the flexibility to move quickly as opportunities arise.
Throughout our company's history, we've taken a balanced approach of investing in long-term growth opportunities while returning capital to shareholders, and you should expect us to continue to do both going forward. It won't be all of one or the other. We continue to pursue growth opportunities in both of our businesses, and we're generally opportunistic investing where we see value and attractive returns, whether it be in new deals or in buying back our stock as we've done recently.
Finally, tomorrow marks an important milestone in our history. On November 1, 1935, my grandfather, Ben Mark, was founded, but became the Marcus Corporation with the purchase of a single screen boy theater in Ripon, Wisconsin. During the month of November, we will celebrate the company's 90th anniversary, and our theme for the year has been the spirit of entrepreneurship. One of the guiding principles that my grandfather and Dad instilled in all of us in our company's future will be built on that same entrepreneurial legacy.
We are called on to push change and evolve because as we know, from our 90 years of history, the only constant has changed. I'm excited to celebrate our 90th anniversary with our associates who, by the way, my grandfather taught us, our most important asset. As we both recognize our achievements and look ahead to a future that will continue the legacy of these great businesses for many years to come.
Before we open up the call for questions, I want to conclude my remarks by saying thank you to all the hard-working associates of the Marcus Corporation. I don't want to ever take for [indiscernible] what each and every one of them does to contribute to the success of both of our businesses. Thank you.
With that, at this time, Chad and I would be happy to open the call up for any questions you may have.
[Operator Instructions] Our first question today comes from Eric Wold with Texas Capital.
2. Question Answer
A couple of questions. You mentioned -- on the hotel side, you mentioned that you had rate growth in 4 of the 7 hotels in the quarter. I guess for the other 3, is that something that was more of a short-term issue? Is that something that's kind of been more than 1 quarter where you haven't had rate growth at those 3 hotels something that's we think more of a competitive issue in those markets. I don't want to lean on that too much, but I just want to get a bit more of a -- something that's been short term or something that's been more than a quarter. And is that something you think that's more of a competitive issue or something that may require an investment as you look in the next couple of years.
Thanks, Eric. Yes, I mean, the 3 hotels where we didn't see ADR growth, I would say there are more market dynamics. Two of them have been persistent market dynamics that are more generated by supply in the market. And in the third, it really was just a little bit of softening very recently in demand. But I don't know, 2 of the 3, I don't see significant CapEx investments. We have 1 of those 3 that we're going to be doing some small refreshes too, but nothing anywhere near what we've done at the 3 major properties over the last few years. I would describe it as a more normal course refresh that is embedded in our $50 million to $55 million of CapEx that we expect for next year.
Got it. And on that $50 million to $55 million, that considered including refreshes, is that considered, I guess, more of a maintenance CapEx number kind of going forward? Anything that would be kind of unusual in that number?
It's not 100% maintenance. There is some ROI that we're doing in that, and we've done some of that this year in the theater business, and there'll be some of that again as we look forward in both of the businesses. There's always some of those types of activities, but it is primarily maintenance and ROI capital.
Got it. And then just last question. And you touch on this a little bit with the capital return comments. With the increased share repurchases this year and the new buyback authorization, should M&A -- I know obviously, you had some increased free cash flow with the reduced CapEx next year and presumably going forward. But should M&A opportunities come up on either the hotel or the exhibition side.
Can you talk a little bit about your comfort taking on leverage to the balance sheet? And kind of what's kind of your comfort level on leverage ratio, and then also, should the equity get back to a more, whatever, in your mind, be a more appropriate valuation would you use equity for M&A in the future? Or is that, in your view, the more appropriate way to go about that?
Yes. On the first part of your question on M&A, I think if we have something that's actionable, we will move on it. We have been allocating a lot of capital to share repurchases lately. And at the current leverage at 1.7x we're very comfortable, and we actually have a target leverage that's a bit above that, closer to 2.25% to 2.5%. So we have some capacity to do that. And if we found the right type of M&A opportunity, we have some flexibility and can flex up a bit and then bring ourselves back down to somewhere in that target level, but very comfortable with where we're operating right now, and there's actually some room to do a bit more and continue to invest.
As for whether we -- the -- taking out more leverage and doing things. We have that balance sheet capacity, as Chad pointed out, Would we use equity? Yes, I mean, look, we have a history, if you look and you know this, Eric, if you go back, when we think there's -- when we think that we the opportunity to return capital to shareholders through stock repurchases make sense, we do that.
When we have -- when we believe the stock is at a price where we think it's appropriate to use it as capital, we do that as well. And so it will just depend on market conditions. We are not a company that just says, well, we programmatically buy stock, no matter what the price is, we're going to sell stock to grow just to raise equity. We will do it based on where we think the price is and whether it makes sense.
And just to be clear, at the current levels, obviously, we're in the market and we were repurchasing shares during the quarter. And so that's the level that we're at right now, you wouldn't see us issue equity at the current share price to go do M&A.
Our next question comes from Patrick Sholl with Barrington Research.
Just curious on concessions. Just with the current macro environment, have you seen any change in how consumers are like just consumer uptake or I guess, hesitate with regard to price increases and the ability to offset inflationary pressures there?
Pat. No, we haven't really seen a lot to speak of over the summer and changes in consumer buying patterns. The hit rate and the basket sizes have been pretty consistent. We've moved through inflationary-type price increases. Nothing overly aggressive as we've seen in our per caps. And there's actually been more propensity for our customers to buy merchandise associated with concession purchases. That's been a nice part of the uplift. But nothing that we've seen that would tell you there's a change going on in the willingness to buy concessions.
Okay. And then maybe just a question on the M&A market. Just kind of with the, I guess, softening macro environment in hotels and maybe some stability in the film slate. I'm just kind of curious how you're seeing like the various macro factors kind of affecting the M&A market in those 2 segments?
It feels like there's some more trends. I mean look, if you look at a macro level and you back up, the market is still very, very sluggish in terms of transaction volume. But it's -- if I -- how do the feel right this minute, it's starting to feel like there's some more stuff happening. I don't think we're seeing so much selling pressure from anyone feeling the pressure to sell from performance standpoint yet, I think you get people who just own things too long, and that's their issue. The thing I think we bumped -- and by the way, if interest rates as they come down, that will help because, again, I think one of the bigger challenges that we bump into is if you wrote a pro forma to buy an asset and you had a negative cap that's significantly below where cap rates are now, you're going to -- and you don't have to sell, you're going to hold on to can.
And so since the economy has held up, we're not seeing people feeling pressure on forced sales. You're seeing people where now they're starting to say, well, okay, I'm going to make the reinvestment in the next cycle, because we've got -- because PIPs are coming up on people going to -- am I going to want to reload that, and that's probably where we're seeing some opportunity it's more along that. We're not feeling that as you might be alluding to some economic pressure as the economy slows down.
Our next question comes from Drew Crum with Riley Securities.
So I think you talked about expectations for admission per cap growth over the next few quarters. Does that incorporate or contemplate any further changes to your pricing strategy? And if so, what are those? And any early learnings from the pricing increases you took at the beginning of 3Q?
Drew, yes, the -- it does not contemplate a lot of significant changes prospectively beyond what we did in the third quarter, it's more the annualization benefit and tailwind that we'll get from, frankly, flipping from a headwind on some of the discount programs that we've been comping for the last year to now moving to some strategic pricing moves that have increased pricing and that becomes a tailwind.
During the third quarter, we had blockbuster pricing on a number of films that our pricing approach and that evolved a bit throughout the quarter in terms of the length of period that we had blockbuster pricing on and every day [indiscernible] evolved a bit during the quarter. But I think we've hit a level that makes sense. Pricing, as we talked about last quarter, continues to be an area where the industry has done various experimenting. And so we'll continue to watch what others are doing. But in what we did in the third quarter, it is having the effect that we expected it would.
Got it. Okay. And then you guys discussed the composition of the fleet in 3Q having a negative impact on your state admissions. As you look at 4Q, how are you viewing mix? Is it a positive for your circuit negative or too tough to tell?
Yes, I'll start first and let Greg add on his thoughts. I mean I think it's a little bit tough to tell. It's easy to forget that we had a [indiscernible] film in the fourth quarter last year, and we don't have something quite like that. We do have a couple of family films here coming up in the quarter. And we have an Avatar, which we didn't have last year. So there are several puts and takes. It's frankly tough to tell on mix.
It's so hard. It is really hard to tell. We've never. Again, a got to top got Wick, that will play this should play good in our markets. SpongeBob, I'm a fan. So -- but we'll have to see how it goes.
[Operator Instructions] We'll move to our next question from Mike Hickey with Benchmark.
Greg, a I guess first, Greg, obviously, I heard your prepared comments on '26 for both your segments, sounded pretty bullish actually encouraging. Just would love to get sort of your off-script thoughts great on the growth opportunity you see from Cedars and hotels and any catalysts or major drivers. Obviously, you list a lot of films that sounds encouraging. Maybe something that's very relevant to your demo.
And on the hotel side, I don't know if the mark, it seems like a really interesting project that you guys are doing [indiscernible] catalyst or any other initiatives you thing to move the needle for you guys across your 2 segments in 26. I've got a couple of follow-ups.
Sure. Look, on the theater side, Mike, I'm not -- I tend to hate to try to predict how things are going to go. It's I always go down to let's just count the number of films, and that will give us a range. And then I don't know what -- and then in some years, it's going to be better or some years in some periods, it will be not as good. I mean I keep reminding myself, oh, yes, Memorial Day this year was the biggest Memorial Day on the history of the movie business and then summer slowed down. So you just don't know. But I thought it was a really interesting data point. look and say, well, look at the number of franchise films next year pretty much like this year, I think maybe on less.
But if you look back at the historical grossing of what the franchise zones that are coming around this time certainly more robust than we had in '25. So I'm not going to ignore that stat. Now go to bed, feeling good about that, but again, always hard to predict. On the hotel side, look, we've made a lot of investments that should continue to bear fruit for us, which is great. There's that old saying that both smells and new cells.
And so that's very good for us, and we should see that. I don't want to overplay the Mark thing. The Mark was done opportunistically, frankly. We have -- we've been very disciplined about the amount of investment we want to put into the here into the Milwaukee [indiscernible]. And in we were -- we had made the decision that we weren't going to renovate the entire property. We were going to actually close 176 keys. And we looked at it -- but we worked on a close immediately, and we had demand for the rooms.
And so while there's demand for the rooms, we're not going to actually make much of an investment in it. We're just going to separated out from the Hilton system basically that will run as an independent. And it's a wait if it's there, what's -- there's well, let's get some cash flow off the ball there, but always figure out where it's going. And if the city and the community decides they want to go in a certain direction because it will involve all of them that -- any further investment to tell, frankly, is going to require a subsidy. And if that's going to happen, then we're all ears. If not, that will become a different use. But while it's waiting let's warehouse it and get some cash flow from it.
Mike, I just want to add 1 comment on the '26 slate in terms of fuel mix. The one thing that does stand out is when you look at family content next year and you look at the franchises, we have Maria Brothers, we have a Toy Story, we have Minions movie, we have Moana, we have a Jumanji. I think the family mix comparatively to '25 is very helpful for our circuit.
Next. Then I guess given that you guys seem optimistic on growth, how should we think about the bottom line here, EBITDA growth potential operating leverage and free cash flow conversion? I know that's come up a lot, when you think about, I guess, catalyst to your valuation. I think free cash flow in '26 would probably stand out is the largest.
Yes. No doubt. I mean just by virtue of the CapEx coming down, our free cash flow is going to grow significantly next year. And then I think as the -- the highest leverage is in the theater business. And so if you assume the hotel business kind of continue steady as you go as it has with a stable economy, if you believe the '26 slate will grow, our operating leverage in theaters has historically contributed around 50% to the bottom line and top line growth.
So we continue to focus on managing our cost structure and getting better at managing these buildings when you're in the troughs of the content supply, that's really critical to holding that type of contribution margin because the peaks and valleys have been pronounced the last couple of years. But yes, the EBITDA should flow through with what the top -- if the top line grows, as you would expect for the slate.
Last question. Obviously, recent news that Mark is retiring sad to hear that 55 years, you never hear that sort of tenure of the company, so congrats to him. Just curious on the transition plan, and if this could also be a potential catalyst for maybe a change in strategy and how you manage your theater asset?
Well, we are -- we're in the middle of a search for the new leader. We're looking at internal and an external candidates. We have both. And the -- with the new leader, look, the idea is that we hopefully will see new ideas and new approaches. And yes, look, we're celebrating our 90th anniversary. I don't think that we're going to see like -- we're going to wake up with a wholesale change as to how we approach the business. But I like to get of new ideas and bringing out new approaches. And we will -- and we're always trying to do new things to figure out what will work. And most of it doesn't. But every 1 in a while, you find 1 and we have well run with it. I can't say It's like the surprise movie. I never know what it's going to hit, but there always is money.
Thanks, Mike.
Thank you. At this time, it appears there are no other questions. So I'd like to turn the call back to Mr. Paris for any additional or closing comments.
We'd like to thank everybody for joining us today, and we look forward to talking to you once again in late February when we release our fourth quarter results until then. Thank you, and have a good day.
This concludes today's call. You may disconnect your line at any time.
Financial data from Marcus Corporation
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 790 790 |
2%
2%
100%
|
|
| - Direct Costs | 479 479 |
1%
1%
61%
|
|
| Gross Profit | 311 311 |
3%
3%
39%
|
|
| - Selling and Administrative Expenses | 162 162 |
2%
2%
20%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 108 108 |
9%
9%
14%
|
|
| - Depreciation and Amortization | 70 70 |
1%
1%
9%
|
|
| EBIT (Operating Income) EBIT | 38 38 |
35%
35%
5%
|
|
| Net Profit | 23 23 |
53%
53%
3%
|
|
In millions USD.
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Marcus Corporation Stock News
Company Profile
Marcus Corp. engages in operating movie theatres, hotels, and resorts. It operates through the following business segments: Theatres and Hotels & Resorts. The Theatres segment includes multiscreen motion picture theatres and a family entertainment center. The Hotels & Resorts segment owns and operates full service hotels and resorts. The company was founded by Ben Marcus on November 1, 1935 and is headquartered in Milwaukee, WI.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Marcus |
| Employees | 2,349 |
| Founded | 1935 |
| Website | www.marcuscorp.com |
