MARCUS CORP

Previous wording

Certain matters discussed in this Quarterly Report on Form 10-Q and the accompanying Management’s Discussion and Analysis, are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects future pandemics or epidemics may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (including disruptions in the production of films due to events such as a strike by actors, writers or directors or future pandemics); (3) the effects of theatre industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in our markets; (5) the effects of adverse economic conditions on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (13) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or other incidents of violence in public venues such as hotels and movie theatres; and (14) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders. These…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain matters discussed in this Quarterly Report on Form 10-Q and the accompanying Management’s Discussion and Analysis, are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects future pandemics or epidemics may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (including disruptions in the production of films due to events such as tariffs or a strike by actors, writers or directors or future pandemics); (3) the effects of theatre industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in our markets; (5) the effects of adverse economic conditions on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of tariffs that are implemented or merely threatened on our costs; (12) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (13) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (14) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or other incidents of violence in public venues such as hotels and movie theatres; and (15) a disruption in our business and reputat…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December. Fiscal 2024 is a 52-week year beginning on December 29, 2023 and ending on December 26, 2024. Fiscal 2023 was a 52-week year that began on December 30, 2022 and ended on December 28, 2023.

Current wording

For fiscal 2024 and prior periods, we reported our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December, dividing our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Fiscal 2024 was a 52-week year with 364 operating days, beginning on December 29, 2023 and ending on December 26, 2024.

Previous wording

We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The third quarter of fiscal 2024 consisted of the 13-week period beginning on June 28, 2024 and ended on September 26, 2024. The third quarter of fiscal 2023 consisted of the 13-week period beginning June 30, 2023 and ended on September 28, 2023. Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts. Within this MD&A, amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.

Current wording

Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts. Within this MD&A, amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.

Previous wording

The following table sets forth revenues, operating income, other income (expense), net earnings (loss) and net earnings (loss) per diluted common share for the third quarter and first three quarters of fiscal 2024 and fiscal 2023 (in millions, except for per share and variance percentage data):

Current wording

The following table sets forth revenues, operating loss, other income (expense), net loss and net loss per diluted common share for the first quarter of fiscal 2025 and fiscal 2024 (in millions, except for per share and variance percentage data):

Previous wording

We recognized investment income of $0.8 million and $1.7 million during the third quarter and first three quarters of fiscal 2024, respectively, compared to $0.4 million and $1.1 million during the third quarter and first three quarters of fiscal 2023, respectively. Variations in investment income were due to changes in the value of marketable securities.

Current wording

We recognized investment income of $0.1 million during the first quarter of fiscal 2025, compared to $0.7 million during the first quarter of fiscal 2024. Variations in investment income were due to changes in the value of marketable securities.

Previous wording

Our interest expense totaled $3.1 million and $8.2 million for the third quarter and first three quarters of fiscal 2024, respectively, compared to $2.9 million and $9.0 million for the third quarter and first three quarters of fiscal 2023, respectively. The decrease in interest expense during the first three quarters of fiscal 2024 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

Current wording

Our interest expense totaled $2.8 million for the first quarter of fiscal 2025, compared to $2.5 million for the first quarter of fiscal 2024. The increase in interest expense during the first quarter of fiscal 2025 was primarily due to increased borrowings and higher interest rates, partially offset by a decrease in non-cash amortization of deferred financing costs. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

Previous wording

We reported income tax expense for the third quarter of fiscal 2024 of $5.4 million compared to income tax expense of $5.9 million during the third quarter of fiscal 2023. We reported income tax expense for the first three quarters of fiscal 2024 of $3.8 million compared to income tax expense of $7.1 million during the first three quarters of fiscal 2023. Our fiscal 2024 first three quarters effective income tax rate was (74.9)%, and was negatively impacted by nondeductible debt conversion expense resulting from the Convertible Notes Repurchases and a $1.2 million reduction in deferred tax assets resulting from the related termination of the Capped Call Transactions (combined negative impact of approximately 108 percentage points) and excess compensation subject to deduction limitations. Our fiscal 2023 first three quarters effective income tax rate was 30.5%. We anticipate that our effective income tax rate for fiscal 2024 may be in the (200)% to (210)% range, which includes an estimated negative impact of approximately 240 percentage points from the Convertible Notes Repurchases and termination of the Capped Call Transactions, and excludes any potential changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal 2024 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

Current wording

We reported income tax benefit of $7.4 million for both the first quarter of fiscal 2025 and the first quarter of fiscal 2024. Our fiscal 2025 first quarter effective income tax rate was 30.4% compared to our fiscal 2024 first quarter effective income tax rate of 38.3%. The income tax rate in both fiscal 2025 first quarter and fiscal 2024 first quarter was negatively impacted by excess compensation subject to deduction limitations. We anticipate that our effective income tax rate for fiscal 2025 may be in the 28% to 32% range, excluding any potential changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal 2025 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

Previous wording

The following table sets forth revenues, operating income and operating margin for our theatre division for the third quarter and first three quarters of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage and operating margin):

Current wording

The following table sets forth revenues, operating loss and operating margin for our theatre division for the first quarter of fiscal 2025 and fiscal 2024 (in millions, except for variance percentage and operating margin):

Previous wording

Our theatre division revenues and operating income increased with stronger performances from blockbuster films during the third quarter of fiscal 2024, compared to the third quarter of fiscal 2023. During the first three quarters of fiscal 2024, our theatre division revenues and operating income decreased compared to the first three quarters of fiscal 2023, driven by a weaker film slate in the first half of fiscal 2024, partially offset by an increase in film performance in the third quarter. The film slate in the first three quarters of fiscal 2024 was negatively impacted by the content supply chain disruption from the shutdown of movie production during the WGA and SAG-AFTRA labor strikes in 2023, which contributed to a weaker slate of available films, particularly in the first half of fiscal 2024, compared to the first three quarters of fiscal 2023, resulting in decreased theatre attendance.

Current wording

Our theatre division revenues increased with stronger performances from films and also benefited from four additional operating days during the first quarter of fiscal 2025, compared to the first quarter of fiscal 2024. Operating loss increased in the first quarter of fiscal 2025, compared to the first quarter of fiscal 2024, driven by higher film costs and an increase in labor expenses. In the first quarter of fiscal 2024, operating hours and staffing levels were significantly reduced due to a weaker film slate following the WGA and SAG-AFTRA labor strikes in 2023. With an anticipated improvement in the film slate in the first quarter of fiscal 2025, we returned to more normal operating hours and staffing level resulting in higher labor costs, while some films released underperformed expectations. These increases in expenses were partially offset by higher revenue from the additional operating days.

Previous wording

The following table provides a further breakdown of the components of revenues for the theatre division for the third quarter and first three quarters of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage):

Current wording

The following table provides a further breakdown of the components of revenues for the theatre division for the first quarter of fiscal 2025 and fiscal 2024 (in millions, except for variance percentage):

Previous wording

Additional data received and compiled by us from Comscore indicates our admission revenues at comparable theatres during the third quarter and first three quarters of fiscal 2024 represented approximately 3.1% and 3.0%, respectively, of the total admission revenues in the U.S. (commonly referred to as market share in our industry), compared to 2.9% and 3.1% during the third quarter and first three quarters of fiscal 2023, respectively. Our goal is to continue our historical long-term pattern of outperforming the industry, but our ability to do so in any given quarter will likely be partially dependent upon film mix, weather and the competitive landscape in our markets.

Current wording

Additional data received and compiled by us from Comscore indicates our admission revenues at comparable theatres during the first quarter of fiscal 2025 and the first quarter of fiscal 2024 represented approximately 3.0% of the total admission revenues in the U.S. (commonly referred to as market share in our industry), during both periods. Our goal is to continue our historical long-term pattern of outperforming the industry, but our ability to do so in any given quarter will likely be partially dependent upon film mix, pricing strategies, weather and the competitive landscape in our markets.

Previous wording

Total theatre attendance for our comparable theatres increased 7.1% during the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023, which was primarily attributable to a stronger film slate, higher box office performance from the top films during the third quarter of fiscal 2024 versus the top films last fiscal year during the third quarter, and an increase in the number of films released during the fiscal 2024 third quarter. During the third quarter of fiscal 2024 there were 30 wide-release films (films showed in over approximately 1,500 theatres in the U.S.) compared to 24 wide-release films during the third quarter of fiscal 2023.

Current wording

Total theatre attendance for our comparable theatres increased 6.9% during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024, which was primarily attributable to an increase in operating days due to the transition of our fiscal quarter as described above, an improved holiday film slate, higher box office performance from the top films during the first quarter of fiscal 2025 versus the top films last fiscal year during the first quarter, and an increase in the number of films released during the fiscal 2025 first quarter compared to the prior year first quarter. On a calendar quarter basis (January 1st through March 31st), total theatre attendance for our comparable theatres decreased 8.0% during the first quarter 2025 compared to the first quarter of 2024.

Previous wording

Our highest grossing films during the fiscal 2024 third quarter included Deadpool & Wolverine, Despicable Me 4, Twisters, Inside Out 2, and Beetlejuice Beetlejuice. Our top five films during our fiscal 2024 third quarter accounted for 66% of our total box office results, compared to 56% (including event cinema in both periods) for the top five films during the third quarter of fiscal 2023, both expressed as a percentage of the total admission revenues for the relevant period. An increased concentration of blockbuster films during a given quarter often has the effect of increasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. As a result of a more concentrated film slate, our overall film cost as a percentage of admission revenues increased during the third quarter of fiscal 2024 compared to the same period in the prior fiscal year.

Current wording

During the first quarter of fiscal 2025 there were 28 wide-release films (films shown in over approximately 1,500 theatres in the U.S.) compared to 24 wide-release films during the first quarter of fiscal 2024. Our highest grossing films during the fiscal 2025 first quarter included Captain America: Brave New World, Mufasa: The Lion King, Sonic the Hedgehog 3, Dog Man, and Moana 2. Three of these films were carryovers from the 2024 holiday season. Our top five films during our fiscal 2025 first quarter accounted for 45% of our total box office results, compared to 41% for the top five films during the first quarter of fiscal 2024, both expressed as a percentage of the total admission revenues for the relevant period. An increased concentration of blockbuster films during a given quarter often has the effect of increasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. As a result of a more concentrated film slate, our overall film cost as a percentage of admission revenues increased during the first quarter of fiscal 2025 compared to the same period in the prior fiscal year.

Previous wording

Our average ticket price increased 2.6% during the third quarter of fiscal 2024, compared to the third quarter of fiscal 2023. During the first three quarters of fiscal 2024, our average ticket price increased 0.9% compared to the first three quarters of fiscal 2023. Our average ticket price during the third quarter of fiscal 2024 was positively impacted by an increased percentage of ticket sales coming from Premium Large Format (PLF) screens and evening showings, partially offset by the negative impact of an increased percentage of our weekly attendance coming from Value Tuesday, and promotional pricing offerings, including a $7 Everyday Matinee for seniors and children that was introduced during the second quarter of fiscal 2024. The overall change in average ticket price favorably impacted our admission revenues of our comparable theatres by $1.5 million and $0.9 million during the third quarter and first three quarters of fiscal 2024 compared to the third quarter and first three quarters of fiscal 2023, respectively.

Current wording

Our average ticket price decreased 5.1% during the first quarter of fiscal 2025, compared to the first quarter of fiscal 2024. Our average ticket price during the first quarter of fiscal 2025 was negatively impacted by an increased percentage of our attendance coming from promotional pricing offerings, including a $7 Everyday Matinee for seniors and children that was introduced during the second quarter of fiscal 2024, an unfavorable ticket mix with an increase in child attendance resulting from an increased number of family films, and a lower percentage of ticket sales for premium large format (PLF) screens. The overall change in average ticket price unfavorably impacted our admission revenues of our comparable theatres by $2.2 million during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.

Previous wording

Our average concession revenues per person increased by 7.9% and 3.7% during the third quarter and first three quarters of fiscal 2024 compared to the third quarter and first three quarters of fiscal 2023, respectively, due to market pricing adjustments, as well an increase in the number of concessions, food and beverage transactions per ticket sold, or our “hit rate”. During the second quarter of fiscal 2024, we made changes to our Value Tuesday promotion for our MMR loyalty members, discontinuing the prior promotion that offered a 20% discount on all concessions, food and non-alcoholic beverages and reintroducing a free complimentary-sized popcorn, which has been well received by guests. The overall increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $4.3 million and $4.6 million during the third quarter and first three quarters of fiscal 2024 compared to the third quarter and first three quarters of fiscal 2023, respectively.

Current wording

Our average concession revenues per person increased by 2.9% during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024, due to market pricing adjustments. During the second quarter of fiscal 2024, we made changes to our Value Tuesday promotion for our Magical Movie Rewards (MMR) loyalty members, discontinuing the prior promotion that offered a 20% discount on all concessions, food and non-alcoholic beverages and reintroducing a free complimentary-sized popcorn, which has been well received by guests. The overall increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $1.1 million during the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.

Previous wording

Late during the first quarter of fiscal 2024, we made changes to the criteria for waiving internet surcharge ticket fees for our MMR members, resulting in an increase in ticketing fees per person during the third quarter of fiscal 2024. Other revenues during the first three quarters of fiscal 2024 increased by $3.6 million compared to the first three quarters of fiscal 2023 due to an increase in internet surcharge ticketing fees per person, partially offset by the impact of overall decreased attendance on internet surcharge ticketing fees and preshow and in-app advertising revenue during the first three quarters of fiscal 2024.

Current wording

Other revenues during the first quarter of fiscal 2025 increased by $1.6 million compared to the first quarter of fiscal 2024 due to the impact of increased attendance on internet surcharge ticketing fees and preshow and in-app advertising revenue. Late during the first quarter of fiscal 2024, we made changes to the criteria for waiving internet surcharge ticket fees for our MMR members, resulting in an increase in ticketing fees per person during most of the first quarter of fiscal 2025.

Previous wording

We ended the third quarter of fiscal 2024 with a total of 981 company-owned screens in 78 theatres and 14 managed screens at one theatre, compared to 993 company-owned screens in 79 theatres at the end of the third quarter of fiscal 2023. We made decisions to close several underperforming theatres during fiscal 2023 and fiscal 2024, including one of our owned theatres in the first quarter of fiscal 2023, two owned theatres in the second quarter of fiscal 2023, two owned theatres and one leased theatre in the third quarter of fiscal 2023, and one leased theatre in the second quarter of fiscal 2024. During the third quarter of fiscal 2024, we added one theatre that we manage for the owner of a lifestyle shopping center.

Current wording

We ended the first quarter of fiscal 2025 with a total of 971 company-owned screens in 77 theatres and 14 managed screens at one theatre, compared to 993 company-owned screens in 79 theatres at the end of the first quarter of fiscal 2024. We made decisions to close underperforming theatres during fiscal 2024 and fiscal 2025, including one leased theatre in the second quarter of fiscal 2024, and one leased Movie Tavern theatre in the first quarter of fiscal 2025. During the third quarter of fiscal 2024, we added one theatre that we manage for the owner of a lifestyle shopping center.

Previous wording

The following table sets forth revenues, operating income and operating margin for our hotels and resorts division for the third quarter and first three quarters of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage and operating margin):

Current wording

The following table sets forth revenues, operating loss and operating margin for our hotels and resorts division for the first quarter of fiscal 2025 and fiscal 2024 (in millions, except for variance percentage and operating margin):

Previous wording

The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the third quarter and first three quarters of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage):

Current wording

The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the first quarter of fiscal 2025 and fiscal 2024 (in millions, except for variance percentage):

Previous wording

The following table sets forth certain operating statistics for the third quarter and first three quarters of fiscal 2024 and fiscal 2023, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for comparable company-owned properties:

Current wording

The following table sets forth certain operating statistics for the first quarter of fiscal 2025 and fiscal 2024, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for comparable company-owned properties:

Previous wording

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2024 third quarter and first three quarters results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increase in RevPAR of 1.4% during our fiscal 2024 third quarter compared to the same period during fiscal 2023, leading us to believe we outperformed the industry during the fiscal 2024 third quarter by approximately 8.4 percentage points. During the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023, comparable “upper upscale” hotels experienced an increase in RevPAR of 2.1%, leading us to believe we outperformed the industry during the first three quarters of fiscal 2024 by 4.9 percentage points. We believe our outperformance during the third quarter and first three quarters of fiscal 2024 results primarily from our strong performance in the group customer segment, incremental revenue from the RNC, as well as improved revenue management and rate optimization resulting in higher occupancy growth compared to the rest of the industry.

Current wording

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2025 first quarter results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increase in RevPAR of 2.8% during our fiscal 2025 first quarter compared to our fiscal 2024 first quarter, leading us to believe we underperformed the industry during the fiscal 2025 first quarter by approximately 1.7 percentage points. We believe our underperformance during the first quarter of fiscal 2025 results primarily from the unfavorable impact of the Hilton Milwaukee renovation and group displacement as a result of the reduced capacity. We estimate that the Hilton Milwaukee renovation negatively impacted our RevPAR growth by approximately 3.7 percentage points.

Previous wording

Data received from Smith Travel Research for our various “competitive sets”—hotels identified in our specific markets that we deem to be competitors to our hotels—indicates that these hotels experienced an increase in RevPAR of 12.4% during our fiscal 2024 third quarter, again compared to the same period in fiscal 2023. Therefore, we underperformed our competitive sets during the third quarter of fiscal 2024 by approximately 2.6 percentage points. During the first three quarters of fiscal 2024 compared to the first three quarters of fiscal 2023, hotels in our competitive sets experienced an increase in RevPAR of 7.6%, indicating that we underperformed our competitive set hotels by approximately 0.6 percentage points. We believe our underperformance to our competitive sets during the third quarter and first three quarters of fiscal 2024 results from our mix of RNC business and airline crew business compared to our competitive sets, as well as new hotel room supply within one of our markets.

Current wording

Data received from Smith Travel Research for our various “competitive sets”—hotels identified in our specific markets that we deem to be competitors to our hotels—indicates that these hotels experienced an increase in RevPAR of 6.7% during our fiscal 2025 first quarter, again compared to our fiscal 2024 first quarter. Therefore, we underperformed our competitive sets during the first quarter of fiscal 2025 by approximately 5.6 percentage points. We believe the underperformance to our competitive sets during the first quarter of fiscal 2025 results primarily from group displacement at the Hilton Milwaukee while under renovation which we believe unfavorably impacted our RevPAR growth by approximately 3.7 percentage points while favorably impacting competitive hotels RevPAR growth by 1.0 percentage point. After adjusting for the estimated impact of the Milwaukee Hilton renovation, we believe our hotels underperformed their competitive sets during the first quarter of fiscal 2025 by approximately 0.9 percentage points. We believe this underperformance was driven largely by new hotel room supply within one of our markets.

Previous wording

Looking to future periods, overall occupancy in the U.S. is expected to continue to slowly increase. In the near term, we expect leisure travel demand to continue to normalize to long-term historical demand levels, and we expect our group business to remain strong. Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as children return to school and the weather turns colder in our primarily Midwestern markets. We expect gradual increases in business travel as corporate training events, meetings, and conferences return and office occupancy increases. As of the date of this report, our group room revenue bookings for the remainder of fiscal 2024 - commonly referred to in the hotels and resorts industry as “group pace” - is running approximately 11% ahead of where we were at the same time last year. Group room revenue bookings for fiscal 2025 is running over 30% ahead of where we were at the same time in fiscal 2023 for fiscal 2024, excluding bookings related to the July 2024 RNC. Banquet and catering revenue pace for fiscal 2024 and fiscal 2025 is similarly running ahead of where we were at this same time last year, excluding bookings related to the July 2024 Republican National Convention in Milwaukee. We are encouraged by continuing positive trends in group bookings for the remainder of fiscal 2024, fiscal 2025 and beyond.

Current wording

As of the date of this report, our group room revenue bookings for the remainder of fiscal 2025 - commonly referred to in the hotels and resorts industry as “group pace” - is running over 11% ahead of where we were at the same time last year, excluding bookings related to the July 2024 Republican National Convention (RNC). Group room revenue bookings for fiscal 2026 is running over 20% ahead of where we were at the same time in early fiscal 2024 for fiscal 2025. Banquet and catering revenue pace for fiscal 2025 is similarly running ahead of where we were at this same time last year, excluding bookings related to the July 2024 RNC in Milwaukee. Banquet pace for 2026 is approximately in-line and catering pace for 2026 is up over 7%, both compared to where we were at the same time in early fiscal 2024 for fiscal 2025.

Previous wording

The following table sets forth Adjusted EBITDA by reportable operating segment for the third quarter and first three quarters of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage):

Current wording

The following table sets forth Adjusted EBITDA by reportable operating segment for the first quarter of fiscal 2025 and fiscal 2024 (in millions, except for variance percentage):

Previous wording

(3)Reflects non-recurring costs related to the closure and exit of one theatre location in the second quarter of fiscal 2024.

Current wording

(2)Reflects non-recurring costs related to the closure and exit of one theatre location in the first quarter of fiscal 2025.

Previous wording

(4)Repair costs and insurance recoveries related to insured property damage at one theatre location that are non-operating in nature.

Current wording

(3)Repair costs related to insured property damage at one theatre location that are non-operating in nature.

Previous wording

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our 89-year history and our financial position remains strong. As of September 26, 2024, we had a cash balance of approximately $28.4 million, $220.2 million of availability under our $225 million revolving credit facility, our debt-to-capitalization ratio was 0.27, and our net leverage ratio was 1.67x net debt to Adjusted EBITDA. With our strong liquidity position combined with cash generated from operations, we believe we have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements, as well as fund our longer-term capital requirements.

Current wording

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our 90-year history and our financial position remains strong. As of March 31, 2025, we had a cash balance of approximately $11.9 million, $180.2 million of availability under our $225 million revolving credit facility, our debt-to-capitalization ratio was 0.31, and our net leverage ratio was 2.00x net debt to Adjusted EBITDA. With our strong liquidity position combined with cash generated from operations, we believe we have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements, as well as fund our longer-term capital requirements.

Previous wording

Net cash provided by operating activities totaled $51.4 million during the first three quarters of fiscal 2024, compared to net cash provided by operating activities of $68.6 million during the first three quarters of fiscal 2023. The $17.3 million decrease in net cash used in operating activities was primarily due to a $25.0 million decrease in net earnings, a $1.3 million increase in cash matching contributions to our retirement savings and profit-sharing plan, a decrease in deferred income tax benefits and unfavorable changes in working capital, partially offset by a $15.3 million non-cash debt conversion expense and an increase in non-cash share-based compensation expense.

Current wording

Net cash used in operating activities totaled $35.3 million during the first quarter of fiscal 2025, compared to net cash used in operating activities of $15.1 million during the first quarter of fiscal 2024. The $20.2 million increase in net cash used in operating activities was primarily due to a $5.0 million decrease in net earnings, a $3.1 million unfavorable impact in the timing of collection of accounts receivable and a $15.8 million unfavorable impact from the seasonal timing of payments of accounts payable, partially offset by increases in depreciation and amortization and non-cash share-based compensation expense.

Previous wording

Net cash used in investing activities during the first three quarters of fiscal 2024 totaled $58.4 million, compared to net cash used in investing activities of $26.9 million during the first three quarters of fiscal 2023. The increase in net cash used in investing activities of $31.5 million was the result of an increase of $27.9 million in capital expenditures, and a $5.6 million purchase of joint venture interests in The Lofton Hotel, partially offset by a $1.5 million sale of joint venture interests in The Lofton Hotel to other minority investors. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $53.8 million during the first three quarters of fiscal 2024 compared to $25.8 million during the first three quarters of fiscal 2023.

Current wording

Net cash used in investing activities during the first quarter of fiscal 2025 totaled $22.8 million, compared to net cash used in investing activities of $20.8 million during the first quarter of fiscal 2024. The increase in net cash used in investing activities of $2.0 million was the result of an increase of $7.6 million in capital expenditures, partially offset by a decrease in net contributions to hotel joint ventures in the prior year period that did not recur. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $23.0 million during the first quarter of fiscal 2025 compared to $15.4 million during the first quarter of fiscal 2024. In fiscal 2024, we contributed $5.6 million for the purchase of joint venture interests in The Lofton Hotel, partially offset by a $1.5 million sale of joint venture interests in The Lofton Hotel to other minority investors.

Previous wording

Fiscal 2024 first three quarters cash capital expenditures included approximately $11.4 million incurred in our theatre division, primarily related to normal maintenance capital projects. We incurred capital expenditures in our hotels and resorts division during the first three quarters of fiscal 2024 of approximately $36.6 million, including costs related to guest room renovations at The Pfister Hotel, associate housing construction and meeting space renovations at the Grand Geneva Resort and Spa and normal maintenance capital projects. We incurred corporate capital expenditures during the first three quarters of fiscal 2024 of approximately $5.8 million primarily related to office construction for the relocation of our corporate and divisional headquarters (a portion of which will be reimbursed by the landlord in a future period).

Current wording

Fiscal 2025 first quarter cash capital expenditures included approximately $4.4 million incurred in our theatre division, primarily related to normal maintenance capital projects. We incurred capital expenditures in our hotels and resorts division during the first quarter of fiscal 2025 of approximately $15.9 million, including costs related to guest room renovations at Hilton Milwaukee and normal maintenance capital projects. We incurred corporate capital expenditures during the first quarter of fiscal 2025 of approximately $2.7 million, which includes $1.2 million for the purchase of land acquired in a 1031 tax-deferred exchange for future development, and the final costs related to office construction for the relocation of our corporate and divisional headquarters that occurred during fiscal 2024.

Previous wording

Net cash used in financing activities during the first three quarters of fiscal 2024 totaled $19.8 million compared to net cash used in financing activities of $26.2 million during the first three quarters of fiscal 2023. During the first three quarters of fiscal 2024, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added $81.0 million of new short-term revolving credit facility borrowings, and we made $81.0 million of repayments on short-term revolving credit facility borrowings during the first three quarters of fiscal 2024 (net zero borrowings on our credit facility). We ended the third quarter of fiscal 2024 with no outstanding borrowings under our revolving credit facility.

Current wording

Net cash provided by financing activities during the first quarter of fiscal 2025 totaled $29.3 million compared to net cash used in financing activities of $3.4 million during the first quarter of fiscal 2024. During the first quarter of fiscal 2025, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added $69.0 million of new short-term revolving credit facility borrowings, and we made $29.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2025 (net $40.0 million increase in borrowings on our credit facility). We ended the first quarter of fiscal 2025 with $40.0 million of outstanding borrowings under our revolving credit facility. During the first quarter of fiscal 2024, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $5.0 million of new short-term revolving credit facility borrowings, and we made $5.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2024 (net zero borrowings on our credit facility).

Previous wording

Principal payments on long-term debt were approximately $11.0 million during the first three quarters of fiscal 2024 compared to payments of $11.1 million during the first three quarters of fiscal 2023.

Current wording

Principal payments on long-term debt were approximately $0.3 million during the first quarter of fiscal 2025 compared to payments of $0.3 million during the first quarter of fiscal 2024.

Previous wording

Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.27 at September 26, 2024, compared to 0.26 at December 28, 2023.

Current wording

Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.31 at March 31, 2025, compared to 0.26 at December 26, 2024.

Previous wording

During the first three quarters of fiscal 2024, we repurchased 0.7 million shares of our common stock for $9.7 million in the open market, compared to no share repurchases of our common stock in the open market during the first three quarters of fiscal 2023. As of September 26, 2024, approximately 1.7 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.

Current wording

During the first quarter of fiscal 2025, we repurchased 0.4 million shares of our common stock for $7.1 million in the open market, compared to no share repurchases of our common stock in the open market during the first quarter of fiscal 2024. As of March 31, 2025, approximately 1.3 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.

Previous wording

Dividends paid during the first three quarters of fiscal 2024 were $6.6 million. Dividends paid during the first three quarters of fiscal 2023 were $5.3 million. We have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.

Current wording

Dividends paid during the first quarter of fiscal 2025 were $2.2 million. Dividends paid during the first quarter of fiscal 2024 were $2.2 million. We have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.