Q1 2020 Earnings Call
Good morning, and welcome to the market's Corporation first quarter earnings Conference call. My name is Stephanie and that would be your operator for today.
At this time all participants are in it listen only mode. We will conduct a question answer session at the end up the conference if it anytime during the call it requires distance <unk>.
And I'll be happy to assist you as a reminder, this conference is being recorded joining us today, it's great markets, President and CEO and Doug Nice.
Executive Vice President and Chief Financial Officer in Treasure of the market's Corporation.
At this time I'd like to turn the program over to Mr. nights for his opening remarks. Please go ahead Sir.
Thank you Stephanie and good morning, everybody welcome to the fiscal 2021st quarter Conference call.
As usual I do need to begin busting independent, making a number of forward looking statements I call today, all of which we intend to we intend to qualify for the safe harbors from liability established by the private Securities Litigation Reform Act.
Forward looking statements made generally be identified by our use of words, such as we believe anticipate expect words of similar important.
Forward looking statements are subject to certain risks and uncertainties, which may cause our actual results could differ materially from those expected.
Moving but not limited to the adverse effects of the cobot 19, pandemic and our theater in hotels and resorts good.
The results of operations liquidity cash flows financial condition access to credit markets and ability to service, our existing and future indebtedness.
And the duration of the cold chain pandemic invalid shelter at home and social just requirements and the level of customer demand following the relaxation of such requirements.
Forward looking statements are based upon our assumptions, which are based only upon currently available information, including assumptions are below about our ability to manage difficulties associated with or will it. It's the coupled with 19 pandemic.
Your assumption that are either closures hotel closures and restaurant soldiers are not expected to be permit or to recur.
The continued availability of our workforce following the temporary layoffs, we have implemented as a result with the corporate 19 pandemic.
And the temporary long term effects of the Koby 19 pandemic in our business.
Listeners are cautioned not to place undue reliance on our forward looking statements.
Additional factors risks and uncertainties, which could impact your ability to achieve our expectations identified in our forward looking statements are included under the heading forward looking statements in the press release issued this morning announcing our fiscal 2021st quarter results.
Ended the risk factor section of our fiscal 2019 annual report on form 10-K, and subsequent quarterly reports on form 10-Q, and the current report on form 8-K that we filed this morning, all of which you can access on the Fccs website <unk>.
We'll also post all regulation g. disclosures when applicable on our website at www must be Corp. dotcom.
With that behind this let's begin.
Under normal circumstances, we now proceed to spend 80% over time during my initial remarks, looking backwards and talking about quarter. We just reported with only about 20% of the time dedicated to looking ahead.
Well I think we can all agree these are not normal circumstances. So plans today its flip that 80 20 rule wrong.
Well still begin by spending a few minutes looking back at this past quarter weekly sharing the two numbers with you, but then I'm going to pivot to more current topics such as the balance sheet liquidity.
Yes, I do that I'll turn the call over to Greg who will focus his prepared remarks, and where our businesses are today, what we've done to date and continue to do to manage through this crisis and it wants them for plans are for the future.
When we open up the quality questions, we certainly would be happy to revisit the quarter and answer any follow up questions if needed.
I also want to note that today, we filed a form 8-K, which extends the FCC filing deadline for first quarter form 10-Q by up to 45 days, although we're hopeful that Lee will be no more than a week or Wes.
Yes, we see provided this filing deadline lead recognizing that companies such as ours was 100% of our business is closed in many of our employees temporary laid off.
Might acquire extra time to prepare all the necessary disclosures that go along with unprecedented times such disease.
So the complicating matters Rossi. The fact that this is the first quarter that as a new we designated large accelerated filer, we must comply with what I referred to as enhanced XBRL tagging procedures.
With all the extra disclosures required this cost this quarter many with numbers that require this enhanced tagging RCC filing service needs a little more time to complete all the necessary work required to get the form 10-Q ready to be filed.
And we need more time, who either work.
What I can tell you how were however is that we believe strongly at the numbers reporting today will not change in any material, we're stuck between today and the deep we file our form 10-Q.
[noise], you've seen the numbers and with all the theaters close for the last 90 plus days this quarter.
Held experiencing a rapid increase in cancellations beginning in March and culminating with the closure of first our restaurants and bars and subsequently the hotels themselves.
And with all the nonrecurring items, we had during the period, it's likely that come in as a surprise to anyone that we reported a significant loss this quarter compared to last year.
Obviously very unfortunate because as noted in our release theaters in particular, we're off to a very good start to the first two periods of our first quarter. Thanks to a combination of both strong holdorf films from fiscal 2019, and several new films.
As the press release notes, we didnt have several nonrecurring items this quarter directly related to the impact of the covert 19 pandemic.
First off we incurred approximately $5.5 million of property closure expenses.
Almost evenly between our two divisions.
Vast majority of these expenses represented payroll continuation payments made to associates temporary laid off.
Or bridge the gap between the last day, working and their eligibility for unemployment benefits.
We've always said our associates, our most important assets and this was just the right thing to do want is very difficult circumstances.
In addition, with almost all our theater hotel properties closed as of March 26, 2020, the Indian <unk> first quarter accounting guidance required us to review virtually all up our assets for impairment as of that big.
The way the accounting rules work. It's this becomes a point in time almost completely mathematical analysis that relies heavily on projections of future revenues and cash flows.
For most of our long lived assets with many years of useful lives left you were able to quickly conclude that future cash flows of each asset support the carrying value of that respective assets.
For assets that have shorter lives, particularly leased assets with lease termination dates that are approaching.
Backlog impact of near term negative cash flow impacts the impairment analysis.
As such we concluded we concluded that independent charge of approximately $6.5 million was necessary for several theater properties.
We also carry a trade name intangible asset on our books value, which is determined mathematically using the discounted cash flow methodology based upon future revenues.
With no revenues projecting for several months subsequent to the March 26 States. We were required to we calculate the discounted cash flow value of this intangible assets and the result wasn't additional $2.2 million kinda charge on this asset.
In total we reported $8.7 billion, an impairment charges this quarter.
We included a non-GAAP reconciliation of our net loss and our adjusted.
All right, Jeff or adjusted net loss and our adjusted EBITDA.
Our press release Motor show you the impact these nonrecurring items had and our reported results.
Now in the midst of the current situation it would be easy to this focus and the challenges we faced in the quarter, but there were several positive trends during the quarter that should bode well for us would begin reopening.
A press release highlight several of these items, including the fact that both our computers and hotels once again outperformed their respective industries during the quarter.
And that includes significant.
Performance for a movie tavern theaters.
A theater Division also continued their positive trend over 40 meaningful increases in their average ticket price and average concessions and food and beverage revenues per person.
It's also worth noting that spending a minute on income taxes for a couple of reasons first off you obviously reported income tax benefit this quarter due to the pre tax loss.
The effective income tax rate used was within our previously expected 24% to 26% range.
Looking ahead. However, even provisions included in the carriers Act was enacted in the first day of our fiscal 2022nd quarter.
We anticipate that our effective income tax rate and resulting benefits.
For the remaining quarters of fiscal 2020 may increase if we incur losses that can be carried back to prior years that had a higher federal income tax free.
Of course are actual fiscal 2020 effective income tax rate, maybe different from our estimated quarterly rates, depending on actual facts and circumstances.
And this benefit of the cares act won't just reduce any reported net losses, we incurred we believe it will also result in significant liquidity benefits for us this year.
Based upon a preliminary review of the provisions of this legislation, we believe will be eligible to receive an income tax refund in the $15 million to $25 million range from fiscal 2020.
Well its new rules for qualified improvement property expenditures and net operating loss carry backs.
You would also be able to apply any net tax loss incurred in fiscal 2020 to prior year income for what may be a significant refund in fiscal 2021, when our fiscal 2020 tax returns filed.
Shifting gears away from the earnings statement just for a moment, our total cash capital expenditures during the first quarter fiscal 2020 totaled approximately 10 million.
Paired to approximately 43 million last year, which included the cash component of the movie Tavern acquisition.
Most of this year's dollars expansion or do you envision on several projects as noted in our release and of course is also previously was close we have placed most future capital expenditures on hold for the time being.
Unfortunately call over to Greg. Let me also briefly comment on last weeks announcement regarding a new financing.
I don't need to tell you that markers Corporation has been a conservatively one company for its entire 85 years existence.
Our core philosophy as had been owning our own real state whenever we can and maintaining a strong balance sheet.
Well I would suggest that those core values have never been more important.
As a result of these longstanding management philosophies, we entered this crisis from a position of strength.
Example, our debt to capitalization we show at the end of 2019 was a very modest 26%.
In addition to our own hotels, we own the underlying real state for the majority of our theaters representing over 60% of our screens and even larger percentage of our revenues and cash flow.
Thereby reducing our monthly fixed lease payments.
This is a significant advantage for our company relative to our peers.
So the cash balance of 126 million at the end of the first quarter combined with our ability to significantly reduce our monthly cash needs during the period.
During the period that a theater smoke tells a close.
We believe that even if all our properties were acquired remain close for the rest of year.
We would have been we would've had sufficient cash to sustain or operations, even without the new financing, we announced last week.
With the new 90.8 million dollar term loan aid we provided for an additional insurance policy to further enhance our liquidity, which we believe positions the market's corporation to whether this good strong well into 2021 if needed.
With that I'll now turn call over to Greg.
Thanks, Doug.
As Doug noted earlier I'm going to focus my remarks, and where we are today.
What we've done to date and continuing to do demand you see this crisis and what some of our plans are for the future.
As you can imagine there a lot of unknowns, yet about what the future months would look like.
Our plans with the key to evolves the situation unfolds.
The fact is that while the cobot 19 pandemic has affected everyone. Our two industries movie theaters in hotels are among the hardest hit.
Well this is unprecedented environment, our priority has been theater histories, and safety and well being of our associates customers and communities.
This is guided everything you've done so far a couple of guidance in the weeks and months as well.
As leaders, we always try to anticipate challenges and opportunities that lie ahead planes.
I don't think anyone could have imagined a day would come and we would be forced to temporarily closed all of our movie theaters hotels.
Thank you sure how you're managing through this crisis in a minute, but first I need to acknowledge our team extraordinary times call for extraordinary solutions, an extraordinary leadership.
Our executive team face the challenges head on as well Glibly night and day develop an excuse strategies that will get us to this crisis put us in a strong position for continued growth over the long term.
It is fortunate to have such an experienced and dedicated leadership team.
Looking to strike a balance between taking care of our people and helping to slow the spread into Colombia by response at the same time, making decisions then they're the best long term interest at the company, our associates customers and shareholders.
This is a delicate balance.
Idle.
The hardest part of all these decisions it's the impact the temporary closings you had an arsenal. She is many of whom have been laid off.
Hearing for in valuing our since it's been a foundation of our cultures do my grandfather open disproportionately Peter back in 1930 side, it's more important today than ever before.
As Doug noted.
The body short term compensation to be associates, who are laid off in order to bridge the gap until they can perceive unemployment benefits were also continuing to provide health insurance for those Warner plan.
In addition, I keep our associates came forward with an idea to help you follow coworkers critic and that's a called markets cares.
Resource Center includes communications temporary employment opportunities job search chips benefit information in the private placement page, which you'll see it can support each other I'm surprised cheating about this effort.
Makes our company great.
Just to clarify Restrikes just began the company has been working proactively to preserve cash jurisdiction liquidity because it seems the impacts of the current situation and ultimately emerge and a continued position of strength.
In addition to the new financing, we announced last week and temporarily suspending quarterly dividend payments as required by the amended credit agreement, we've already taken in tend to take in the future and number of additional measures to enhance liquidity, including.
Just continuing on non essential operating capital expenditures.
Temporary laying off the majority of hourly theater in hotel Associates. In addition to temporarily reducing property management and corporate office staff levels.
Did you see my salary that if my dad's about 50% as well as reducing the shall we have all other executives and I mean to getting a corporate staff.
Tempur, eliminating all board of directors cash compensation.
Actively working with landlords major suppliers to modify the timing in terms of shouldn't contractual payments.
Got you wouldn't because they changed the cares that utilize and the benefits belief in resource into those provisions as appropriate and evaluating the provisions of any subsequent federal or state legislation enacted as response the covenant.
We believe these and other steps will enable us to manage the short term well, hoping to ensure our success over the long term.
So now the good news is good we along with the best of the country are now turning our attention to reopening and whatnot will look like.
You're developing plans for how we will ramp up operations, one state and local authorities and she undergrads.
That money well spent a few minutes talking about how this may play out starting with our hotels and George.
We closed our hotels it was not because of any government requirements to close a restaurants and bars I would then.
Our restaurants and bars didn't hotels are required to close that though tolls themselves, we considered essentially businesses under most definitions.
We closed our hotels do do significant drop in demand to be the financially prudent for us to close resin stay open.
As a result, the timing of reopening your hotels and resorts will likely be good by increasing demand as individual business travelers begin to travel more freely once again.
Yeah economic environment in place is this reopening happens we'll have a significant impact piece about returned to normal hotel operations.
Hotel revenues it just wasn't track very closely with traditional macroeconomic statistics, such as the gross domestic product.
After pass divestitures 911 in 2000, the financial crisis hotel demand softened for a period of time, particularly among business transient and group business travelers the travel budgets type uncertain economic times.
What does the return to more normal demand is relatively rapid as it was after 911 workers over the course of one or more years as it was after 2000 mutual crisis is unknown at this time.
[noise]. Conversely, we now anticipate just tell supply growth to be limited, but she will feature which can be beneficial for our existing hotels.
As we speak today it is still uncertain, what it will look like Milwaukee host the Democratic National Convention in August 2020 status with Ryder Cup in September 2020, which is scheduled to be held approximately one hour north of the walking is uncertain at this time as well.
We are having discussions regarding what social distancing your other measures might be required but we'd be open then they limit our initial revenue potential.
So you could be in constant contact with the hotel trade Association and there are various brands as potential operating standards or develop some of which may be temporary and some of which might become the new up or do you see in future.
This is probably something I'm confident that our hotel division President Michael Evans, and as I've seen people effectively manage this reopening process and we look forward to welcome in guest where hotel restaurant and bar doors, the seamlessly possible delivering services that aligns with demand at that time.
The timing to our theaters, we often is uncertain as well.
You know some states began allowing theaters to reopen beginning last week, but as we speak today. The vast majority of theaters throughout the United States are currently still required to be close under various state and local government restrictions.
We will continue to monitor and fathers restrictions are lifted and even a states because lifting the restrictions we don't plan to reopen theaters and so we feel we're ready to buy the safe woken experience for both our associates and our valued customers.
We were encouraged by recent federal guidance for phase reopening of U.S. economy that included the reopening of movie theaters in phase one, albeit under strict social just didn't guidelines.
Prior to closing or theaters me it amounts to social distance exceeding plan effectively reduced each leaders auditoriums capacity by 50%.
Our current expectation is that when we do we open we will open the similar <unk> capacity limitations keep in mind the reduction capacity does not necessarily translate to equal reduction potential revenues reduced capacity may potentially impact tenants inside our tuesdays and an opening weekends of major film releases, but other showings they'd be relatively unaffected.
Given normal attendance counts and based upon our past experience, we believe the customers impacted the nose dive dollar Tuesdays and opening weekend, they adapt to reduce C to billability shifting their attendance different days and times.
Okay.
This is what happens when we pioneered decline you're sitting in our theaters capacity was reduced as a result.
We believe that the exhibition industry historically fared well during recession should want occurs resulted to cope with 19%.
We remain optimistic the industry will rebound and benefited from pent up social demand its home sheltering subsidy subsides and people seek together just in time to return to normalcy.
Let's turn to near normal may span multiple months, given by staggered DDR openings due to governmental limits reduce operating hours lingering social distancing requirements and the gradual ramp up of consumer comfortable public gatherings.
We are exploring a number of additional measures within our theaters to help support that consumer company.
This includes exploring ways to offer a low to no contract experience for our guests for example, what did initiatives. Our team is focused on his new she technology to offer a nearly contact list food beverage experience.
Maybe recall that last fall Ergobaby, Taberna Brookfield, Wisconsin introduced the ability to all the concessions and our enhanced food and beverage offerings by our mobile.
We are working towards making this technology available at all of our theaters. We think this has the potential to be widely embraced by our guest.
We also expect initially we opened with older film product another creative concepts to help excite customers to turn theaters.
We expect the film studios to work closely with the exhibition industry by the necessary product is favorable terms to facilitate a phased reopening.
A significant number of films originally scheduled to be released in March. The June 2020 had been delayed until later in fiscal 2020 or fiscal 2021, but increasing the quality and quantity of becomes available during those due to time periods.
As we speak today, most studios have kept it really schedule for films in place beginning in July 2020, but the first major release schedule B Christopher no one's new film kind of.
The next week's by <unk>.
But those films hold to those dates and you do recognize.
If those films hold to those dates and we did you recognize that the still this is still in yes.
I could see all or most of our theaters opening several weeks before that in order to get our people in process is ready for the new movies, a press release highlighted a number of other films scheduled for the second half between 20, and we generate significant box office engine as well.
However, this plays out I'm certain that belong to Rodriguez, an incredibly talented team we appear to death. The managers do this reopening process and ultimately deliver a treat great movie going experience to our guests.
I'd be remiss, if I didn't address one other issued before we open the call for questions.
There's been some speculation that the cobot 19 pandemic may result in a change in how film Studios me distributor product in the future getting celebrating the release of films and ultimate distribution coverage. That's just premium video on demand and streaming services. In fact in a couple of cases films that were scheduled to be released the theaters of instead been released directly to those alternate channels.
We believe these select few instances are isolated will response to be immediate circumstances, and really not pushing the movie theaters being closed worldwide did not reflect the changing permanent distribution plans <unk>.
Other films, a greater expected box office potential for these same studios recently released early promise in the film community in general the degree supportive of the importance.
Cool experience.
Hi, there always discussions around distribution distribution strategies.
Sure there, but it's important to remember that the exhibition industry has been an $11 billion to $12 billion, just with U.S. and approximately $40 billion worldwide. The film studios derive significant was consistent with trying to investment until I'm confident from theatrical distribution.
Just this past week ahead of selling to the talent like World. There is no economic model it doesn't exist to recover besides the investment the big theatrical movie without theatrical revenue.
We believe distributing films in the movie Theater will continue to be an important component of their business model.
In this rapidly changing environment you can rest assured we're continually reviewing situation both their businesses and we will make our changes to our plans as warranted a company's built for challenging times like this our leadership team managers and associates and stepped up the challenging ways to go way above and beyond that we're in.
Most grateful we.
We also very much appreciate the confidence and supported the investment community. During this challenging time, that's why I'm, just telling you talked about once we get through the storm.
We'll get through this I think we'll want to do all the things that used to go outside go out to dinner movie meet with customers and travel perhaps they go value would even more when that happens.
With that at this time, Doug I'd be happy to open the call up for any questions you may have.
And we'll go first which Jim Goss with Barrington Research.
Thanks, Good luck to all of you through this crisis.
I'm thinking I think I was I was wondering if you could talk a little more about the.
The nature of the Reopenings on the hotel side persist theatrical said it would seem like the theaters could.
Pretty much open simultaneously at some stage, but the hotels.
[noise] are more likely to be even just as you're closing this where uneven and maybe I'm wrong on that but I wonder if you could talk about that and also maybe talk about the nearly car contact with food and beverage.
Maybe go under a little more detail on just how that's being executed.
Sure.
Well, you know I think that they'll be.
I think I'm, even yeah, because the word I think the I think they'll be generally uneven depending on the markets. If you look at a market like Milwaukee might be open.
Exacts in time.
Probably not Mike will phase in as the man.
But that's just you need to us right as demand steps is to be unbilled, we'll be able to respond to whats coming.
Frankly, each market will be supports come in that regard.
You're right a little more homogenous, however, still I think that will be more open everything all at once and I think there's going to flip the switch because we're gonna be testing and try and.
No again things that to see how they're working to understand a again to take the fishing season demand we might not have every.
Every complex open in the market right away, but but.
Faceted hotels, I think I, just thought frankly that we just don't know again all demand dependent.
And speaking to your question about.
The contactless experience.
So we got this focus on be called notable contact how do you make that whole experience and really either our businesses and they both lend themselves to the technology and they didn't know kind of take experience for the customer.
Peter side, you can stand off and you can what do you take it on your phone.
So you don't have to go to the box office you can what do you concessions on your phone. It's that we've said it's been working on it now for maybe a little over a year, but I think about nine months ago, we restarted rolled out and customs and border theaters and then we really rolled it out into the Brookfield movie fabric and you can order anything.
On your phone I'm, you know it and say I'd like to pick it up at X time.
We may offer delivery to seat, but again to be contact list. You know your goal you will your order will be set it will be set up it up and instead the pickup station. So that you could just go sort of like you're going into you know many mattered casual dining you're getting a fast casual places where they've got to set up for couldn't be preordered, you pick your order up and set up area.
And then you can go into the theater.
You scan your phone on scanner you don't have that had the ticket rip didn't know when you can scans bono I should actually will be six feet away, but if it we'll just see that you haven't ticket and then are you going we will come clean cedar between between showings sanitize. The seating you know we had because we'll have we'll have more of a checkerboard seeding style. We do have seven people.
Gross.
So we've got the statistics on that front to back and then we'll put seats in between.
The customers they sit down.
And that's how we see does a pretty loading contact experiencing now the one thing we've always we've been talking about as we talked to municipalities about this you know.
Because I think that they think about these you know more along the lines about.
So the way it's very much different yeah, we don't have a thousand people all showing up at one time, you know, we're able to spread the shows out.
We could thereby we make sure who goes in the lobby doesn't go into lobby or you can sort of keep that at a very low level, because you're just not ignore and you just just done do show schedule.
And then nothing you getting a movie theater.
And you don't talk there's no you sit there quietly there was no there's no you're being expelled I'm just reading, but really that's you know there's not a there's not it's not a more.
Besides I think so it's it's it's a it's an environment that we see.
It can be properly addressed through do good social distances.
Okay. Thanks for going through all that are never my last question then would be the 64000 other questions your opinion about.
Customer.
Attitude towards taking the quote risk of attending even if you are socially space.
And and whatever protrusion might have to mitigating or reducing those concerns or are there.
Like you intend to final people through a channel and take their temperatures or something of that nature or are there. Other things you haven't done but I think.
You've gone through out quite a bit already but are there any other opinions you have about.
Yeah. The two people might have about coming back to you have enough supposedly says environment.
Yes.
We Oh <unk> first of all.
The number of things that we're gonna do give insight everything yet, but we know that all of our associates with these you know during proper PPD in terms of having you know the the masks and logins and they'll be that'd be a very visual sanitation process going on so the people can.
This is a clean environment.
This is Ah.
So that so from our and our employees temperatures would be taken they will now every day when they when they come to work the [noise].
So that we know that our employee base is going to present the safe.
Experience for our guests are you also offer masks to I guess, if they want and need.
They'll be it and I'm and there's other things to the we're looking I'm sure at the end of the day one than we've seen some survey work in the basically says half the people will pretty much come back you.
No.
Comfortable how are you know <unk> levels.
There's actually experiencing time that they'll be cranes seats environment for everybody.
Yeah.
The.
The so I said I think that that's.
That's how how will I won't get there.
Well. Thank you very much appreciate it.
Next we will have Mikey with the benchmark company. Please go ahead.
Hi, Greg God Hope you guys are.
Good to hear definitely I'm gonna challenges.
But thought execution commencing so.
Uh huh.
Thanks, Mike.
The I guess that you think about no coming here can you give us.
Some perspective on a revenue.
HM.
Yeah.
Okay got it must be cash flow positive.
Mike I'll start with.
It's one the hotel side. This and this is this is this kind of follows on little bit as well to Jim's earlier question.
There's not a one size fits all answer to that question and it was evidenced by the fact that we.
Close.
Close them all down initially as well so.
Yeah, a property is a big box property with lots of outlets et cetera.
Thanks, and differently with the different cost structure, then he oh property, that's more select service like the AC in Chicago or as an example, and in et cetera et cetera. So so each of our eat owned properties and then you get into our managed properties as well.
Really are different animals, and and so our team is really focused focused in on property by property basis, what those metrics might be.
Keep in mind that when we close and I think people ask us about occupancy and in well certainly occupancy is important revpar is more important revpar as the combination of rate and occupancy and so so we'll be doing and we would we are doing and we will continue to do a lot of analysis and.
We're in a fun and processing, but really trying to get a good handle on that right now to understand where each property.
What's the right Revpar, what's the right activity levels.
Need to be in order to be you know in order to reach that point, where it's incrementally time for us to be opening up and so so it really will be a hotel by hotel.
Decision and Oh and end market by market.
As a theater side.
Look I mean, you've all heard the statistics I mean, I quote unquote Aki statistics are sometimes are attributed to the theater industry that talked about total occupancy be yeah, 20% or give or take me I've heard type or 20 to 34 different numbers.
But of course, that's you know that that number doesn't mean a lot. When you look at total because as weve addressed in our prepared remarks, we've got a five dog Tuesdays weekends that are really busy we've got the other days that are less busy and they all average out to those kind of numbers. So we'll do a lot of our analysis routing dad is.
No I mean, the as Greg mentioned in his prepared remarks.
We've seen prior evidence.
Of times when capacity has been reduced.
When well how customers react.
And adapt to the situation by in turn go into different showtime's going to different days and as well and so.
So there you know there's lots of goes into that analysis as well and we're not going to basic there's some given revenue numbers. It's it's it's a that also could be as Greg indicated we'll be looking very closely if the markets and that could be scenarios, where maybe that initially that every theater could open in them.
Markets I'm, you know there could be markets, where they all open at once so.
That's not probably that.
So long winded answer to say that there's not a single number that we can share with you that says that's the magic points, where we now we open.
<unk>.
Because nothing to fill that Doug the to build on that still little bit is gonna be just again, we will react to whats coming in the door and I will tell a certain percentage of the didn't certain IDR in occupancy we will have to have that provide a service that is commensurate with what's coming in it may not be the service that we had before still want to buy a high level of service.
It will just depend on <unk> on that we've got <unk> the rightsizing the ship the what's coming in.
But we just on either side, they would just because to make it more clear because it was clear go back the reason that experience, we're talking about going to be inclined to do since we were among the first and one of our markets to put recliner said you know what we saw it first was you know that big share shift and while there was something that's next year shifted.
There was only certain amount of seats, even the you know when you had all going and in data that we found people. Okay. They came later they came earlier they found other shows to building. So they can get to see what they wanted to see so in that regard a if there's excess demand we could get on slide into these other tumor types.
Okay. Thanks.
The.
Appreciate that can be I guess going on your reopening.
That's an increase in demand.
I guess, that's not impossible to measure when you're close you can look at no economic situation played et cetera peers.
When you think about.
The opening obviously, there's an expense.
There.
Of course, you Inflecting castle positive, but I guess, how do you factor man.
Ah that appears to be.
So the real possibility.
The second wave.
But not necessarily because you down but could sort of.
Pressure.
And then turn the occupancy so good that does or wait a measure that or how do you sort of bounced back consideration.
Okay reopening process.
Well.
I guess I would I would say that we don't since it looks like it's really hard to two didn't have any idea what that might look like a when that might come we're.
Will there be a therapeutic before that happens you know what steps so hard for it so for US and this is well past business and I do want to make sure is that we had the balance sheet to be able to.
Two.
Look to whatever that might be because it's just that that's the unknown and that's why our balance sheet is the way. It is no. It does take it from there.
Well, the only thing I would add.
Mike is that.
And it also hearkens back to similar comments earlier is that we see technology is being an important part of this and and because that can also help from full across perspective in a cost structure perspective, we were focused on that before this happened.
Before this all happen where did you hear from us call after call or number because.
Opportunity was to deal with labor costs and shortage of labor and just in general lighting labor costs rising labor costs well.
The fact, the matter is that technology, which could help us in the situation staff properly and have a cost structure. That's still allows us to get habit b.
Makes sense for us to be open and operating and and profitable ultimately.
Hi, Thanks, Doug last one from me up on that point I'm assuming.
That could sort of a more normalized future, which I'm sure we will.
And then sort of.
Construction to embrace.
Change technology.
What.
So who are your future profitability profile compared to what extend its locally.
You know Mike again, I mean, it's it's.
We don't know I mean, it's the fact that matter is that if you.
A larger percentage of customers embrace ordering their food for example, or concessions that certainly could impact how we staff, but we haven't I mean.
We have I don't have numbers the share in terms of saying that well, if if all the sudden 20% or 30% or 40% or whatever the percentages.
But but we certainly think pellets that that would be overall helpful. And we thought that was the case before this happened.
Yeah, that's why more developed that's what we're developing a the stuff. That's why we're developing the software we were developing I do think that were ahead of a lot of the industry actually in this in that and that Google 'cause because of the labor markets.
We got to you know, we do we need to be able to employ technology to the best of our abilities and so.
That's why we even in a position actually right now to do them literally could switch to say, okay. Okay. All of my theaters.
Online either put a little bit technology in some of them for the most part.
We've been thinking that way so it's just accelerate.
Thanks, guys.
Ladies and gentlemen, as a reminder to asking audio question. Please press star one on her touch time telephone I cant desktop one.
We will now take Eric Wold with B. Riley.
Thank you good morning Garden Doug.
A couple of questions Yeah, nothing that's a hard findings in the same I've been asked every every which way Sunday already but I guess on the on the reopening 10 hotels.
I guess trust income the dart on how you'd make the decision is clearly you've got to turn on the switch to begin accepting reservations for certain days before you may know what demand is starting on that date for you know hotel occupancy. So I guess the are you looking at.
You know when flight start kind of getting rebooked again, when events started kind of coming back into play in Milwaukee other markets, what kind of gets that this is it went to what you want to support it start taking reservations and then how easy is it to.
Initially you know.
Definitely tell at low levels, clearly you can open happening floors and.
Perhaps the rooms, and kind of commensurately kind of hard to bring in half the cleaning staff and Intelsat et cetera, but how do you use that to do versus versus a theater.
Depends on well see how Oh, we know what that is the big question. How we know when do I continents, I think because we'll start to as the economies start to open up.
We will start to see a demand for traveled and you can look at the other countries to see sort of as they opened themselves up sort of what that curve had looked like so we've got some level of guidance that that will be a part of that it will then also you know have bearing on where these properties are you know one.
So for example, the Granger me, though is a.
It's really a drive to property right. So for US, we actually think that as people become comfortable with traveling and what we do believe that you know leisure is gonna be the first travel to come back right. So that's what we're going to be looking so as the leisure guests says in Chicago in Milwaukee, or another and yet or do you know sort of mid western Europe.
He is around here, so I want to I'd like to just get away I'd been locked in my house for the last number of months I Wanna get away. They just take a couple of days going somewhere else.
Other short like the Green Geneva is actually easy to get you don't you know you don't have begun to point to go there and for the most of our for most of our properties there not indeed, we markets. So we're not so you know not international markets that we're not sitting there you know.
Waiting for the international flights to pick up again, so I think that there's going to be a fair amount of other emphasis on drives to business.
And.
And again starts would leisure.
<unk> well just gonna have to wait and see you can watch and see as the economy is up but nothing that said, we can you just guidelines citrus that's come out of Asia, and Europe as they seem to be economies in there.
Lodge facilities. So it's it's a gradual growth, but it did but does it does grow into a.
To start keeping the show up again.
And then I'm sure. It was that what was the other question just kind of on that the.
Operating income was it forced out yeah.
It's not easy, but but I know our teams are working very hard on it a and trying to figure out what is the what is the right amount of staffing to be able to.
To put in place as as we start as we start things off.
No.
That's the you know we won't have for example, we're not going to having first as much a you know banquet business because it just to be skewed getting through that made the weather's going we do know done probably start to be something that weve with socially distance that kind of a thing, but we would just bringing staff that as they as the business.
<unk>.
Okay and then.
Second question last question I guess on the in the Peter side.
And he did a great job.
In past years, but unified our two day promotion kind of shifting attendance into that slot going to make it into you know began a week and you said there's been talk about obviously consumers naturally migrate into the other days that's supposed to covert environment.
Would you try to kind of help that migration, maybe see a room to kind of.
Maybe nursery promoted but somehow going up.
Oh I could lead push people to go to Monday, Wednesday, Thursday, not only to spread attendance, but also possibly there.
On your staff in kind of that post current environment going to produce kinda there.
The pressure kind of a and you guys as well.
Oh, we haven't made plans to yesterday, but I wouldn't I wouldn't put it I would doubt that we'd like to some stuff like that will we get we couldn't begin to look and see if the business looks like.
You bet there.
What I would add what I would add Eric is that look. This is another case. This is another situation where the having a loyalty program with now 4 million members really pays off.
Because we haven't we have the ability to communicate.
And so.
While we have been during this time of being close as you can imagine we have kept in touch with their customers and we have and continue to try to keep them engaged and so it's already proved extremely beneficial just in this time and if we were to decide to do things along with what you're suggesting that.
Would be a vehicle that would allow us to do that and I'm. So that's that's once again, a case of where that was that.
Program becomes extremely important and that's how we would do it.
Perfect. Thank you bye.
And to be will now take Ryan Hamilton with Morgan Dempsey. Please go ahead.
Good morning, gentlemen.
Hey, Ryan.
I'd like to Echo a previous caller on the on the solid execution here feel it sounds like Youre doing the most would be a there hasn't been no. So kudos to you.
Most of my question to answer [laughter], just got one.
Any conversations with our vendors supply chain issues that may come up as you plan on reopening.
Keeping on that front.
Uh huh.
What kind of issues.
Well I you know maybe it ability for them to to provide as they have in the past maybe if there if they're struggling along the lines of staffing or whatever it might be I'm, just thinking you know I'm kind of box a little bit.
I mean, we've been in yeah, we've been in constant contact with all of our key vendors through this process Ryan and.
Obviously, you have to start with the studios and so and so that's so it's a theater side that's been so obviously we've had.
You mean in constant contact with them and Weve in our prepared remarks, we talked about.
Some of the plans to watch I initially opened up possibly library product and things along those lines until we get to the point, where that with the new films or raise debut.
But we continue to talk to all of our our vendors and at this point in time, there we really don't.
See any problems with the with our existing suppliers on the on the theater side and I believe that's generally true as well and on the hotel side.
They all they all seem to be there.
I remember it is well underway I guess I'm speaking from staffing and maybe the inability for them to get certain products.
Maybe menu changes.
Kind of getting a picture upper or what it might look like when you do we open maybe a limited menu.
I think in here.
Well I think our money's might be little bit limited, we opened not not necessarily because of just.
Of the ability to get something the more along the lines. It just trying to keep the process easy to be able to social probably social distance things like that.
That that's where we might start not because we're having done do that we've had we've sort of anything and vendor issues.
Okay.
And I will be what we'll just have just opinion.
Right. Okay. That's my question Big Block I.
Thank you Ryan.
Thank you at this time it appears there no further questions I kinda called back to Mr. nice for any additional I close in combat.
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