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| 8-K - CURRENT REPORT - MARCUS CORP | v404627_8k.htm |
Exhibit 99.1
THE MARCUS CORPORATION REPORTS RECORD THIRD QUARTER REVENUES AND 29% INCREASE IN OPERATING INCOME
Marcus Theatres® reports record operating results and again outperforms the industry
Milwaukee, Wis., March 19, 2015….. The Marcus Corporation (NYSE: MCS) today reported results for the third quarter ended February 26, 2015.
Third Quarter Fiscal 2015 Highlights
| · | Total revenues for the third quarter of fiscal 2015 were a record $120,153,000, a 9.4% increase from revenues of $109,845,000 for the third quarter of fiscal 2014. |
| · | Operating income was $7,305,000 for the third quarter of fiscal 2015, a 29.0% increase from operating income of $5,661,000 for the third quarter of fiscal 2014. |
| · | Net earnings (before net earnings/losses attributable to non-controlling interests) were $2,834,000 for the third quarter of fiscal 2015, a 938% increase from net earnings of $273,000 for the third quarter of fiscal 2014. |
| · | Net earnings attributable to The Marcus Corporation were $3,091,000 for the third quarter of fiscal 2015, a 24.1% decrease from net earnings attributable to The Marcus Corporation of $4,071,000 for the third quarter of fiscal 2014. |
| · | Net earnings per diluted common share attributable to The Marcus Corporation were $0.11 for the third quarter of fiscal 2015, a 26.7% decrease from net earnings per diluted common share attributable to The Marcus Corporation of $0.15 for the third quarter of fiscal 2014. |
| · | Comparisons of net earnings attributable to The Marcus Corporation for the third quarter of fiscal 2015 were negatively impacted by the fact that results for the third quarter of fiscal 2014 benefited from an allocation of a $3.8 million pre-tax loss attributable to non- |
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controlling interests related to a settlement with the company’s partners in the Skirvin Hilton hotel. The settlement increased third quarter fiscal 2014 net earnings attributable to The Marcus Corporation by approximately $0.08 per diluted common share.
First Three Quarters Fiscal 2015 Highlights
| · | Total revenues for the first three quarters of fiscal 2015 were $367,983,000, an 8.4% increase from revenues of $339,465,000 for the same period in fiscal 2014. |
| · | Operating income was $41,614,000 for the first three quarters of fiscal 2015, a 7.2% increase from operating income of $38,818,000 for the first three quarters of fiscal 2014. |
| · | Net earnings (before net earnings/losses attributable to non-controlling interests) were $20,501,000 for the first three quarters of fiscal 2015, a 23.5% increase from net earnings of $16,601,000 for the same period in fiscal 2014. |
| · | Net earnings attributable to The Marcus Corporation were $20,746,000 for the first three quarters of fiscal 2015, basically flat with net earnings attributable to The Marcus Corporation of $20,747,000 for the same period in fiscal 2014. |
| · | Net earnings per diluted common share attributable to The Marcus Corporation were $0.75 for the first three quarters of fiscal 2015, a 2.6% decrease from net earnings per diluted common share attributable to The Marcus Corporation of $0.77 for the same period in fiscal 2014. |
“We are pleased to report record revenues and another strong third quarter, driven by record results for Marcus Theatres. The division significantly outperformed the industry for the fifth consecutive quarter. Marcus Hotels & Resorts also reported record third quarter revenues, although operating income was reduced by the temporary impact of construction for the conversion of our downtown Chicago hotel into one of the first AC Hotels by Marriott in the U.S.,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation.
Marcus Theatres®
“Marcus Theatres achieved an 11.5% increase in revenues and a 17.1% increase in operating income for the third quarter and significantly outperformed the industry for the fifth quarter in a
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row. The national box office was up 0.5% for the corresponding weeks of our third quarter, according to Rentrak, while our box office was up 8.3%. This achievement is especially noteworthy because a number of screens were not in use during renovation,” said Marcus.
“Our multi-million dollar investments in creating the ultimate movie-going experience, along with successful marketing and pricing strategies, continue to generate industry-leading attendance gains and corresponding strong results for Marcus Theatres. Our expanded food and beverage concepts contributed to a 19.6% increase in concession revenues for the third quarter and our $5 Tuesday promotion, now in its second year, continued to generate strong attendance for us. We are also very pleased that we achieved our goal of reaching one million members in our innovative Magical Movie Rewards® loyalty program within its first year,” said Rolando B. Rodriguez, president and chief executive officer of Marcus Theatres.
The five top-performing films for Marcus Theatres for the third quarter of fiscal 2015 were American Sniper, The Hobbit: The Battle of the Five Armies, The Hunger Games: Mockingjay – Part 1, Fifty Shades of Grey and Unbroken.
“Cinderella opened strong this past weekend. Other pictures with good box office potential opening during our fiscal fourth quarter include The Divergent Series: Insurgent, Get Hard, Fast & Furious 7, Paul Blart: Mall Cop 2, Avengers: Age of Ultron, Pitch Perfect 2 and Tomorrowland,” said Rodriguez. “Looking ahead to the busy summer season and the start of our new fiscal year, the slate of highly anticipated films includes Spy, Jurassic World, Pixar’s Inside Out, Ted 2, Magic Mike XXL, Terminator: Genisys, Minions, Ant-Man and Mission Impossible 5.”
“We are making good progress on our plans for significant renovations and additional new amenities at a number of our theatres. We added DreamLounger SM recliner seating to two additional theatres during the third quarter, with another location to be completed next week. We have also recently converted two auditoriums to our UltraScreen DLX® concept and added
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another Take FiveSM lounge and Zaffiro’s® Express to our circuit. Two more Zaffiro’s Express locations and another Take Five lounge will be added in early fiscal 2016, with additional major investments in the developmental stage,” said Rodriguez.
“A highlight of the fourth quarter will be the opening of the Palace at Sun Prairie Cinema, our brand-new 12-screen theatre located near Madison, Wis. Opening April 30, this exciting new entertainment destination will feature all of our new amenities in one location. The new theatre will be the ultimate in movie-going, with options, comforts and conveniences that will appeal to guests of all ages,” added Rodriguez.
Marcus® Hotels & Resorts
“Marcus Hotels & Resorts achieved record revenues for the third quarter, which is typically the weakest quarter for the division due to the impact of winter weather on our predominantly Midwestern locations. Excluding the Chicago property that is undergoing a significant renovation, revenue per available room (RevPAR) for comparable company-owned hotels was up 5.3% for the third quarter and 6.1% year to date. The decrease in operating income for the third quarter was due entirely to the construction at our Chicago property, which resulted in reduced occupancy and a lower average daily rate,” said Marcus
“While the construction had a temporary negative impact on operating income, we look forward to the opening of our new AC Hotel by Marriott in May. This stylish, urban lifestyle brand is a perfect fit for our location in Chicago’s popular River North area. The AC Hotel brand is generating a lot of excitement across the lodging industry and will be an excellent addition to our portfolio,” said Joseph Khairallah, chief operating officer of Marcus Hotels & Resorts.
“Hotel occupancy rates continue to be at historic highs and we are encouraged by the improvement in group business,” said Khairallah. “We are also continuing to pursue growth opportunities through additional management contracts.”
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Conference Call and Webcast
Marcus Corporation management will hold a conference call today, March 19, 2015 at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the third quarter results. Interested parties can listen to the call live on the Internet through the investor relations section of the company's website: www.marcuscorp.com, or by dialing 1-857-244-7325 and entering the passcode 51399523. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the website at least 15 minutes prior to the call to download and install any necessary audio software.
A telephone replay of the conference call will be available through Thursday, March 26, 2015, by dialing 1-888-286-8010 and entering the passcode 50720193. The webcast will be archived on the company’s website until its next earnings release.
About The Marcus Corporation
Headquartered in Milwaukee, Wisconsin, The Marcus Corporation is a leader in the lodging and entertainment industries, with significant company-owned real estate assets. The Marcus Corporation’s theatre division, Marcus Theatres®, currently owns or manages 685 screens at 55 locations in Wisconsin, Illinois, Iowa, Minnesota, Nebraska, North Dakota and Ohio. The company’s lodging division, Marcus® Hotels & Resorts, owns and/or manages 20 hotels, resorts and other properties in 11 states. For more information, visit the company’s web site at www.marcuscorp.com.
Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division, as well as other industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (2) the effects of adverse economic conditions in our markets, particularly with respect to our hotels and resorts division; (3) the effects on our occupancy and room rates of the relative industry supply of available rooms at comparable lodging facilities in our markets; (4) the effects of competitive conditions in our markets; (5) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (6) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our businesses; (7) the effects of adverse weather conditions, particularly during the winter in the Midwest and in our other
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markets; (8) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; and (9) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or incidents such as the tragedy in a movie theatre in Colorado in July 2012. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
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THE MARCUS CORPORATION
Consolidated Statements of Earnings
(Unaudited)
(In thousands, except per share data)
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
| February 26, | February 27, | February 26, | February 27, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues: | ||||||||||||||||
| Theatre admissions | $ | 44,279 | $ | 40,873 | $ | 118,418 | $ | 110,955 | ||||||||
| Rooms | 19,277 | 19,040 | 83,636 | 80,158 | ||||||||||||
| Theatre concessions | 28,113 | 23,508 | 73,519 | 63,073 | ||||||||||||
| Food and beverage | 15,107 | 13,730 | 51,396 | 44,806 | ||||||||||||
| Other revenues | 13,377 | 12,694 | 41,014 | 40,473 | ||||||||||||
| Total revenues | 120,153 | 109,845 | 367,983 | 339,465 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Theatre operations | 37,614 | 35,923 | 100,430 | 96,007 | ||||||||||||
| Rooms | 9,728 | 9,570 | 31,855 | 30,422 | ||||||||||||
| Theatre concessions | 7,479 | 6,472 | 20,041 | 17,378 | ||||||||||||
| Food and beverage | 13,443 | 11,823 | 41,430 | 34,860 | ||||||||||||
| Advertising and marketing | 5,799 | 5,805 | 19,897 | 19,218 | ||||||||||||
| Administrative | 13,954 | 11,978 | 39,301 | 35,348 | ||||||||||||
| Depreciation and amortization | 9,808 | 8,284 | 29,042 | 25,068 | ||||||||||||
| Rent | 2,118 | 2,139 | 6,432 | 6,379 | ||||||||||||
| Property taxes | 3,874 | 4,142 | 11,499 | 11,316 | ||||||||||||
| Other operating expenses | 8,715 | 8,048 | 26,126 | 24,651 | ||||||||||||
| Impairment charge | 316 | - | 316 | - | ||||||||||||
| Total costs and expenses | 112,848 | 104,184 | 326,369 | 300,647 | ||||||||||||
| Operating income | 7,305 | 5,661 | 41,614 | 38,818 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Investment income (loss) | (22 | ) | 389 | 28 | 409 | |||||||||||
| Interest expense | (2,326 | ) | (2,585 | ) | (7,118 | ) | (7,563 | ) | ||||||||
| Loss on disposition of property, equipment and other assets | (289 | ) | (193 | ) | (790 | ) | (965 | ) | ||||||||
| Equity losses from unconsolidated joint ventures, net | (106 | ) | (164 | ) | (120 | ) | (193 | ) | ||||||||
| (2,743 | ) | (2,553 | ) | (8,000 | ) | (8,312 | ) | |||||||||
| Earnings before income taxes | 4,562 | 3,108 | 33,614 | 30,506 | ||||||||||||
| Income taxes | 1,728 | 2,835 | 13,113 | 13,905 | ||||||||||||
| Net earnings | 2,834 | 273 | 20,501 | 16,601 | ||||||||||||
| Net loss attributable to noncontrolling interests | (257 | ) | (3,798 | ) | (245 | ) | (4,146 | ) | ||||||||
| Net earnings attributable to The Marcus Corporation | $ | 3,091 | $ | 4,071 | $ | 20,746 | $ | 20,747 | ||||||||
| Net earnings per common share attributable to | ||||||||||||||||
| The Marcus Corporation - diluted | $ | 0.11 | $ | 0.15 | $ | 0.75 | $ | 0.77 | ||||||||
| Weighted ave. shares outstanding - diluted | 27,690 | 27,036 | 27,623 | 27,083 | ||||||||||||
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THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
| (Unaudited) | (Audited) | |||||||
| February 26, | May 29, | |||||||
| 2015 | 2014 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 15,664 | $ | 14,812 | ||||
| Accounts and notes receivable | 10,866 | 9,472 | ||||||
| Refundable income taxes | 170 | 2,958 | ||||||
| Deferred income taxes | 3,241 | 3,056 | ||||||
| Other current assets | 5,970 | 6,367 | ||||||
| Property and equipment, net | 659,785 | 647,592 | ||||||
| Other assets | 83,067 | 84,666 | ||||||
| Total Assets | $ | 778,763 | $ | 768,923 | ||||
| Liabilities and Shareholders' Equity: | ||||||||
| Accounts payable | $ | 19,624 | $ | 30,954 | ||||
| Taxes other than income taxes | 14,939 | 14,333 | ||||||
| Other current liabilities | 46,658 | 44,826 | ||||||
| Current portion of capital lease obligation | 5,031 | 4,871 | ||||||
| Current maturities of long-term debt | 8,330 | 7,030 | ||||||
| Capital lease obligation | 19,584 | 23,370 | ||||||
| Long-term debt | 233,752 | 233,557 | ||||||
| Deferred income taxes | 45,303 | 42,561 | ||||||
| Deferred compensation and other | 40,857 | 37,442 | ||||||
| Equity | 344,685 | 329,979 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 778,763 | $ | 768,923 | ||||
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THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)
| Theatres | Hotels/ Resorts | Corporate Items | Total | |||||||||||||
| 13 Weeks Ended February 26, 2015 | ||||||||||||||||
| Revenues | $ | 75,642 | $ | 44,404 | $ | 107 | $ | 120,153 | ||||||||
| Operating income (loss) | 16,341 | (4,976 | ) | (4,060 | ) | 7,305 | ||||||||||
| Depreciation and amortization | 5,281 | 4,396 | 131 | 9,808 | ||||||||||||
| 13 Weeks Ended February 27, 2014 | ||||||||||||||||
| Revenues | $ | 67,810 | $ | 41,918 | $ | 117 | $ | 109,845 | ||||||||
| Operating income (loss) | 13,959 | (4,369 | ) | (3,929 | ) | 5,661 | ||||||||||
| Depreciation and amortization | 4,145 | 4,036 | 103 | 8,284 | ||||||||||||
| 39 Weeks Ended February 26, 2015 | ||||||||||||||||
| Revenues | $ | 201,304 | $ | 166,277 | $ | 402 | $ | 367,983 | ||||||||
| Operating income (loss) | 40,978 | 11,757 | (11,121 | ) | 41,614 | |||||||||||
| Depreciation and amortization | 15,016 | 13,678 | 348 | 29,042 | ||||||||||||
| 39 Weeks Ended February 27, 2014 | ||||||||||||||||
| Revenues | $ | 183,694 | $ | 155,432 | $ | 339 | $ | 339,465 | ||||||||
| Operating income (loss) | 36,179 | 13,574 | (10,935 | ) | 38,818 | |||||||||||
| Depreciation and amortization | 12,278 | 12,386 | 404 | 25,068 | ||||||||||||
Corporate items include amounts not allocable to the business segments. Corporate revenues consist principally of rent and the corporate operating loss includes general corporate expenses. Corporate information technology costs and accounting shared services costs are allocated to the business segments based upon several factors, including actual usage and segment revenues.
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