Q3 2021 Marcus Corp Earnings Call
Good morning, everyone and welcome to the Marcus Corporation third quarter Earnings Conference call. My name is Mel and I will be your operator for today at this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference is at any time during the call you require assistance. Please.
Press Star Zero, and an operator will be happy to assist team and as a reminder, this conference is being recorded joining us today are Greg Marcus President and Chief Executive Officer, and Todd Nice Executive Vice President and Chief Financial Officer of the Microsoft Corporation at this time I'd like to turn the program over to Mr. Nice.
When he is opening remarks, Sir please go ahead.
Well, thank you very much and good morning, everybody welcome to our fiscal 2021 third quarter conference call.
As usual I need to begin by stating that we plan on making a number of forward looking statements in our call today, all of which we intend to qualify for the safe harbors from liability established by the private Securities Litigation Reform Act. Our forward looking statements may generally be identified by our use of words, such as we believe anticipate expect rewards of similar import.
Our forward looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected, including but not limited to the adverse effects of the COVID-19, pandemic and our theater and hotels and resorts businesses results of operations liquidity cash flows financial condition access to credit Mark.
And the ability to service, our existing and future indebtedness and the duration of the COVID-19, pandemic and related government restrictions and social distancing requirements and various other mandates and the level of customer demand following the relaxation of such requirements.
Our forward looking statements are based upon our assumptions, which are based only upon currently available information, including assumptions about our ability to manage difficulties associated with or related to the COVID-19 pandemic.
The assumption that our theater closures hotel closures restaurant closures are not expected to reoccur.
And our assumptions about the release of new movies, and the temporary and long term effects of the COVID-19 pandemic on our business.
Listeners are cautioned not to place undue reliance on our forward looking statements.
Factors risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward looking statements are included under the heading forward looking statements in the press release, we issued this morning announcing our fiscal 2021 third quarter results and in the risk factors section of our fiscal 2020 annual report on Form 10-K, which you can access on the SEC's website.
We'll also post all regulation G disclosures, both disclosures when applicable on our website at Www <unk> Corp Dot com.
So with that behind US lets begin our call will follow the usual format, where I start by spending a few minutes briefly sharing a few numbers from our quarter with you and I'll also discuss our balance sheet and liquidity.
I'll, then turn the call over to Greg who will focus his prepared remarks, and where our businesses are today and what we're seeing ahead, both short and long term.
And we'll then open the call up for questions.
Well you've seen the numbers it truly is a pleasure to be reporting to you today that we hit a couple of major milestones this quarter.
For the first time since the COVID-19 pandemic outbreak now over 19 months ago, we're thrilled to be reporting both positive adjusted EBITDA and positive net earnings for the quarter.
Needless to say, we've been looking forward to this day.
The third quarter numbers in this morning's release, obviously compare our results this quarter to the third quarter last year, where the majority of our properties were either closed for a large portion of the quarter or were operating under pretty distressed conditions.
As a result as I go through some of these numbers I will sometimes reference of comparisons to pre pandemic numbers in fiscal 2019 in order to provide some added perspective.
And we did have a couple of nonrecurring items this year than last year, all of which are detailed in our non-GAAP reconciliation. We included at the end of the press release.
And as we discuss adjusted EBITDA in our remarks today I do want to refer you to the disclosures we provided in our press release regarding the use of this non-GAAP measure in evaluating our performance and its limitations.
So.
What a difference a year makes during our third quarter last year, we reported adjusted EBITDA of a negative $25 $8 million. This year, we're reporting adjusted EBITDA of a positive $24 $5 million.
Swing of over $50 million.
We will be providing a breakdown of these adjusted EBITDA numbers by operating segment in our Form 10-Q that will be filed by next Tuesday, but as a preview I'm happy to share with you that the nearly $25 million of adjusted EBITDA. This quarter includes approximately $17 million from our hotels and resorts division and nearly $11 million from our theater Division.
Partially offset by our unallocated cost in our corporate segment.
This is the second straight quarter that our hotels and resorts Division reported a positive adjusted EBITDA and its the first time our theater Division has produced positive adjusted EBITDA for a quarter since the pandemic hit.
And getting back to the financial statements for a second there were a few variations in our numbers below operating income. This worth briefly mentioning as you'd expect our interest expense continues to run higher during the third quarter to the first three quarters of the year.
Comparative prior years due to increased borrowings are higher average interest rates and an increase in noncash amortization of debt issuance costs.
Now offsetting that increase in expenses. However was an increase in gains from disposition of property equipment and other assets this quarter due to the sale of several parcels of surplus land.
In addition last year during the third quarter, we reported a larger loss from unconsolidated joint ventures, resulting in a favorable variation this year.
Shifting gears away from the earnings statement for a moment you probably saw in the supplemental information that our total capital expenditures cash capital expenditures during the first three quarters of fiscal 2019 totaled approximately $9 million.
And a large portion of these dollars were spent really on two projects a theater renovation and a lobby renovation at the Grand Geneva resort and Spa.
The rest really going towards normal maintenance projects will continue to keep capital expenditures relatively low for the remainder of this year, but we will be prepared to increase expenditures in 2022, assuming conditions continue to improve.
Let me now provide some brief financial comments on our operations for the third quarter and first three quarters and I'll start with the theater Division.
We continue to experience increased per capita spending by our customers in the theaters.
Comparisons to last year's third quarter are not particularly useful given that most of our theaters were closed during July and August last year, but our average admission price at our comparable theaters has increased six 1% during the first three quarters of fiscal 2021 compared to last year and has increased eight 4% compared to the.
First three quarters of fiscal 2019.
Our premium large format screens continue to outperform compared to a regular screens contributing to this overall increase in our average admission price.
Meanwhile, our average concession in food and beverage revenues per person at our comparable theaters increased by 15, 7% for the first three quarters of the year compared to last year and have increased by 24% compared to the first three quarters of fiscal 2019.
Our industry, leading mix of non traditional food and beverage options shorter lines at the concession stand the emphasis we're placing on encouraging guests to purchase their concessions and food and beverage ahead of time, either online or using our mobile app and.
And possibly just pent up demand for a return to normal likely has contributed to our increased per capita revenues.
Since most theaters in both of our circuit in the industry as a whole were closed during large portions of the third quarter last year. We believe a comparison of our results to pre pandemic results in fiscal 2019, maybe the best way to compare our performance to the industry this quarter.
So when you compare us to our third quarter and first three quarters admission revenues to fiscal 2019, you'll.
You'll see that our admission revenues were down approximately 45% during the third quarter and are down approximately 65% for the first three quarters of the year, both compared again to fiscal 2019.
Now according to data that we received from Comscore and compiled by us to evaluate our fiscal 2021 results United States box office receipts decreased nearly 53% during.
During our fiscal 2021 third quarter.
And approximately 71% during the fiscal 2021 or fiscal 2021 first three quarters, both again compared to U S box office receipts during fiscal 2019.
So you can do the math as a result, we believe our admission revenues declined our admission revenue decline that we just reported outperformed the industry average by nearly eight percentage points during the third quarter and approximately six percentage points for the first three quarters of fiscal 2021.
Now shifting to our hotels and resorts division the same kind of logic applies.
Comparing our total revpar or revenue per available room to last year does not really provide meaningful particularly meaningful numbers. We believe comparing the same metric to pre pandemic levels in fiscal 2019. However, does help provide perspective on the pace of the recovery.
Our revpar for our seven comparable owned hotels decreased just just around 12% during the third quarter and.
And approximately 33% during the first three quarters compared to the same periods during fiscal 2019.
These numbers exclude the Saint Kate because which had just reopened during the third quarter of fiscal 2019, and there was closed for major portions of the year.
The first three quarters of fiscal 2019.
Now according to data that we've compiled from Smith travel research for the fiscal 2021 and fiscal 2019 periods.
In order to compare our results our hotels outperformed the comparable upper upscale hotels throughout the United States during the third quarter and first three quarters by a significant 14 and 11 percentage points respectively.
The data also indicates that our hotels outperformed competitive hotels in our markets by approximately seven and eight points again, respectively for the third quarter and first three quarters of the year compared to fiscal 2019.
Now breaking out the third quarter numbers for the seven comparable hotels, a little bit more.
Specifically, our overall Revpar decrease during the fiscal 2021 third quarter comparative fiscal 2019 was due to an overall occupancy rate decrease of approximately 17 percentage points.
<unk> offset by an impressive 10, 3% increase in our average daily rate or ADR.
Our average fiscal 2021 third quarter occupancy rate.
Right for this current quarter that we're reporting.
For our owned hotels was approximately 66%.
Finally, before I turn the call over to Greg. Let me also briefly comment on our balance sheet and liquidity position.
As our press release notes as a press release notes, our liquidity remains extremely strong with $197 million in cash and revolving credit availability at the end of fiscal 2021 third quarter.
We're still waiting for an income tax refund of approximately $22 million, which we hope to receive in the fourth quarter and will of course will only further improve the significant liquidity.
In addition to the monetization of two life insurance assets during our third quarter that we told you about during our last call. We also had proceeds from the sale of surplus land of nearly $5 million during the quarter.
As we continue to take advantage of opportunities within our substantial real estate portfolio.
You'll also notice in our condensed balance sheet that we now have nearly $13 million of carrying value and additional assets currently under contract to sell later in fiscal 2021 or early 2022.
Finally, just as a reminder, early in our third quarter, we amended our revolving credit agreement and made an early payment on our term loan facility, reducing the balance of our short term borrowings from approximately 84 million to $50 million and extending the maturity data remaining term loan facility to September 2022.
We also favorably tweaked our existing debt covenants through fiscal 2022 as well.
With that I'll turn the call over to Greg.
Thanks, Doug.
Four I make a few comments on our operating businesses I wanted to briefly pick up where Doug just left off.
You certainly have heard us refer to our balance sheet and our real estate holdings fairly often in the past.
But I think our results this quarter warrant a couple of comments about what I believe are key differentiators for the Marcus Corporation in fact.
I would argue that today's announced results our poster child for the value. We believe we've been able to gain from owning our real estate and having a diversified business portfolio.
We're thrilled to be reporting and returned to profitability this quarter.
I think it's fair to say this may have been faster than many had anticipated.
So let's talk about this for a moment starting with our diversified businesses.
Marcus hotels and resorts reported a very strong third quarter with overall revenues at nearly 90% of pre COVID-19 numbers in the third quarter of fiscal 2019.
Our theater business gets a lot of attention as it should but in this recovery from an unprecedented time for our customers and our country as a whole our hotels and resorts businesses continued surprises and has accelerated our overall company wide recovery.
Those of you have followed us for a long time know that we have had multiple legs of the proverbial stool over the years and while our business mix has and still may change overtime.
Our diversified business model has served us well and clearly differentiates us from our theater peers.
Another differentiator is our substantial real estate holdings by owning the majority of our theater real estate not only do we believe it enables us to be more nimble and faster to market with our with new amenities and other changes to our business model, but it also has a direct impact on our financial results. There is no question in my mind that one of the reasons, we've been able to return to profitability is key.
As we have is due to the fact that we have a more limited exposure to fixed monthly lease payments and here's the thing without leases it might be reasonable to expect to find that we have more debt on the balance sheet than our peers.
Thats simply not the case.
We have the lowest debt to capitalization ratio of any of our theater peers by far and that's even with the substantial hotel asked I just mentioned.
Another benefit of our real estate is the fact that selected monetization of surplus and noncore real estate has provided and continues to provide an additional source of liquidity for us further strengthening our balance sheet.
Arsenal I don't think we always get enough credit for the value of our diversified business model, our significant real estate holdings, and our strong balance sheet provide but I'll leave that for the market to decide.
We view the world through a long term lens as I said last quarter. The recovery journey. We are on may not always be a straight line and we clearly are not back to pre pandemic levels in either of our businesses yet.
But I do believe unequivocally that the key differentiators for the Marcus Corporation, our major strengths for our company and.
A contributor to both our short term progress and our long term success.
This quarter was another step on that journey and we're pleased to be sharing these results with you today.
So let me start my remarks, our hotel Division Doug.
Doug shared some of the numbers with you, including comparisons to our pre pandemic fiscal 2019 numbers and the fact that the data indicates that we once again significantly outperformed both the industry and our competitive set this quarter.
As you know our hotels have consistently outperformed our markets in prior years as well, but the amount of our performance in recent quarters has widened significantly and while an overall occupancy rate of approximately 66%. During the third quarter is certainly still below where we were in 2019 I can honestly say that our performance in this division has continued to surprise us.
The positive each and every month so far this year.
The leisure customer was certainly out in force this summer and as we noted in our press release, several special events, particularly Milwaukee contributed to our higher average daily rate and a much strong performance this quarter.
And while you've heard me say this before it bears repeating.
Our outperformance is also a direct reflection on the quality of our hotels and resorts and the operational excellence of our outstanding teams both in the corporate office and then each hotel.
Stated simply we've always had some of the best properties and best people in our respective markets and it doesn't surprise us that we've outperformed during this period of recovery.
We certainly still have a ways to go with the business traveler and group business, but even there there are a number of indicators, suggesting that improvement may continue.
In these important segments, we've always believed that in order for the business travel to return to pre pandemic levels. It all begins with employees returning to offices that then can lead to businesses getting comfortable with their employees getting back on the road to see clients potential clients remote offices plants et cetera.
Available data suggests that office occupancies have been gradually increasing that as a result, it appears travel intentions continues to rise as well, we're beginning to see that in our markets, which is encouraging continued progress of the business traveler segment would be particularly helpful. In the coming months as the weather worsens leisure travel returns to being more weekend focused and.
We experienced our typical seasonality associated with primarily Midwestern based hotels and resorts.
As for group business, we continue to have a very strong wedding season, and we're experiencing increases in smaller group business as well.
Our group room revenue bookings for fiscal 2022, commonly referred to in the hotels and resorts industry as group pace is currently running approximately 20% behind where we would historically be at the same time and pre pandemic years.
But that's quite an improvement from where we were earlier in the year and the increased amount of activity. In leads we are experiencing suggest to us that we may end up better than that percentage by the time, we get through 2022.
Banquet and catering revenue pace for fiscal 2022 is also running behind where we would typically be at the same time in prior years, but not as much as group room revenues due in part to the strength of wedding bookings.
Overall, we generally expect our revenue trends to track or hopefully continue to exceed the overall industry trends for our segment of the industry, particularly in our respective markets.
As in the past.
And this division will vary by quarter due to the seasonality of our properties historically experience, but on a relative year over year basis. We look for continued improvement during this ongoing recovery and as I've said in the past. We believe we have special assets that make our portfolio of unique and gives us the ability to pivot to other customer segments, we wait for business travel to fully return.
In the near term I would be remiss, if I didn't note that our hotels continue to be challenged by the ongoing labor shortage that we and many other businesses, including our theaters are experiencing.
An unusual twist as challenges likely helping our operating margins currently but it is a challenge Nonetheless, our people are working extremely hard in both of our businesses and we continue to focus on opportunities to use technology to reduce our labor needs, but we will need to add staff as the recovery continues.
Finally, as the press release notes, we officially took over the Hyatt Regency Coral Hotel and conference Center during our fiscal 2021 third quarter, and we will continue to seek opportunities to strategically grow our hotel portfolio in the future.
So let's shift to our theater division.
Doug went over the numbers with you and as you saw the steady improvement has continued in this division we returned to positive adjusted EBITDA from this division during our third quarter, which was a major milestone for our team and with virtually all of our theaters reopen and an increasing number of new films being released we've continued to see good progress in the growth of our admission revenues as the recovery.
It continues.
And as Doug pointed out we're very pleased with the results from our concession and food and beverage portion of our business.
I think the numbers really put this recovery path perspective.
It may seem like a long time ago, but we began this fiscal year with January box office results equal to only 16% of our fiscal 2019 prepaying debt numbers.
As more theaters opened the vaccination rate increase and film studios began slowly releasing new product our fiscal 2021 second quarter and with the mission revenues during the month of June equal to approximately 48% of 2019.
That improvement then continued into the third quarter with both August and September producing admission revenues of 60% or more compared to 2019.
And as our press release noted.
That percentage relative to 2009 relative to 2019 for both us and the industry increased quite a bit in October as more hit films were released at a faster pace, resulting in the single best month at the box office, we've had since the pandemic began in March of 2020.
Like our hotel Division one of the highlights of the quarter was our continued outperformance versus the industry as Doug shared with you based on industry data available to US. We believe we once again outperformed the industry during the third quarter and for that matter throughout fiscal 2021.
Additional data received compiled by us from Comscore indicates our admission revenues during the third quarter and first three quarters of fiscal 2021 represented approximately 353, 6% respectively of total admission revenues in the U S. During the same two periods. This is commonly referred to as market share in our industry.
This percentage represents a material increase over our reported market share of approximately three 1% during the comparable periods of fiscal 2019.
Prior to the pandemic once again I want to call out our outstanding teams in our theaters and our corporate office like their counterparts in our hotel division they've had to navigate through an unchartered period of time, while dealing with some of the same later labor shortages. Most businesses are dealing with these days.
So with incredible effort.
Dedication.
So one of the obvious question is where does the business go from here.
We have no illusions that we're back to normal whatever that ultimately means but several indicators do suggest we're on the right path pace of recovery is accelerating.
First off the October box office results show that more and more moviegoers are ready to return to seeing films. The way they are meant to be seen.
On a big screen with incredible sound recliner seating in some of the best concession and food and beverage options in the industry.
Recent surveys by the National Association of theater owners back this up the percentage of those surveyed said they are very or somewhat comfortable going to the movies is once again approaching 80% after dipping into the high mid to high 60% a couple of months ago as concerns over the Delta Varian took hold throughout the country. So.
So there is still a portion of the movie going audience, who needs a little more time, it's very encouraging to see this percentage increase once again.
Of course, another major development during the quarter was increased commitments from our film studio partners to stick with their film release schedule and Justice significant reaffirm our commitment to the importance of an exclusive theatrical window as we all know there's been a lot of experimenting by multiple studios during the pandemic, but as the smoke clears we continue to believe the entire film.
Ecosystem performs better when a film is first released exclusively in theaters.
The ethical exhibition still represents an important component of the financial model of a film and its distribution and.
In addition to other important benefits theatrical exhibition spares millions of people to collectively seek a shared experience on any given weekend.
Catalog submission because of film gravitas that can't be achieved the tie on a television screen.
Theatrical exhibition creates franchises like nothing else can.
The <unk> exhibition makes piracy more difficult and most importantly theatrical exhibition makes money for the studios. Thus, we weren't surprised and Warner brothers indicated intends to return to an exclusive theatrical window with a significant number of films in 2022, when Disney announced the remainder of their 2021 films would receive an exclusive theatrical wind.
After the success of Shaanxi and the legend of the 10 rings and when it comes to positive indicators for future performance last but certainly not least is a really impressive upcoming film slate.
We looked at a number of films scheduled to be released during the remainder of the fourth quarter, beginning with marvels. The internals. This weekend and the list of films scheduled for 2022 reads like a who's who of successful film franchises. As a result, we're excited about building upon the progress we've made so far in our theater Division and we look forward to continued improvement in the periods ahead.
As I wrap up I want to note that this week, we are celebrating 86 years for the Marcus Corporation, starting on November 1st $19 35, with a single movie theater in Ripon, Wisconsin.
A remarkably resilient company and collection of businesses is navigated and adapt to change for the entire 86 years of our existence and I'm confident that we will continue to adapt and thrive in the months and years ahead.
And just first said by my grandfather Bad markets when asked what he attributed the company's success too.
It all starts and ends with our people.
With Thanksgiving right around the corner I want to publicly express how thankful my dad, our entire executive team and I am for our dedicated associates throughout our organization.
They are simply the best in everything we've accomplished during this recovery and return to profitability are due to their extraordinary efforts.
With that at this time, Devin I'd be happy to open the call up for any questions you may have.
Thank you ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Switch to Eric Wold with B Riley <unk> is now open you may ask your question.
Thank you good morning.
Got it.
Rick a couple of questions I guess, one on on labor.
You, obviously mentioned the fact that you need to hire more staff the business continues to rebound.
With both segments.
The lack of staff to date more driven by the lack of available workers or a desire to kind of avoid.
Higher wage rates and then we think about wage rate heading into next year.
How are you thinking about those in regards to kind of seasonal labor.
Is that something you experienced in <unk>.
We're mainly levels need to possibly keep the moderation.
Yeah.
I think I'll try and remember all the questions there, but the first one.
I think that.
To test my memory. Thanks, Eric.
The.
The.
The there was a lack of available staff I mean that is the first part people have.
We are having.
It's a challenge to get it to get all the work done and so.
It is.
We need more were going to need more people that look at the market. We will be looking for ways as I said in my remarks to work smarter and to use technology and to leverage technology and one.
One of the things we've talked about in the past was just thinking about our movie Tavern is one of the reasons, we came into the pandemic with our food and beverage up ready to go. We're so people because order remotely in a low contact environment was because we were already seeing labor issues with our movie tavern with the ability to attract servers and so the idea of getting the customer to be able to order on the app.
And then just run the food out with something that we were already focused on so.
Just what do they say the intersection of.
The opportunity in preparation as luck so.
We were lucky in that regard. So we will continue to focus on that and but we just we're going to need more people and as the business continues to to come back we will need more people as for what the rates are going to be.
You tell me, what's going to happen with inflation I'll tell you, what's going to happen with with the rates we're.
We're not we're not modeling an exorbitant increase.
And to our budgets for next year, we're monitoring more of a market increase sort of what we've historically been doing.
But.
It's something I didn't talk about in my remarks.
But the one thing that we have is an advantage in both of our businesses in both the theaters and hotels, which is when you think about it essentially very high real estate businesses, we adjust our prices every day and so we can react to inflation with with unfortunately increased prices, but but it does a lot we're not sitting here with.
A 10 year lease where inflation, leading us away and we can't change. The we can't change what were the revenue side of that equation. So it's a delicate dance and we will.
They make these changes as appropriate.
I would add Eric is that look we've already had to make.
And deal with some rising rising wages this year.
So the number the numbers you're looking at reflect maybe less people but.
Paying some of these people paying people more.
So we're already adept at dealing with some of that today.
Got it and then.
Last question I'll make this one would think Greg.
You mentioned that you'd expect obviously capex due to increase.
Next year, how much of that.
Given the earmark towards the hotels in a sense that are we getting to a point where the decision that we made on how much did spend on hotels and renovations versus possibly looking to.
Reduce the portfolio so to speak.
Yes, I mean, Eric you nailed it in terms of the calculus that we go through because as these properties.
I mean hotels have a cycle of reinvestment and so so that typically are kind of decision, making about properties kind of tends to coincide with those cycles and so.
We've look we've already indicated that we have done a renovation at the grant of the lobby at the Grand Geneva, and <unk> and.
And Grand Geneva is lined up to receive a larger renovation beginning in 2022.
And we've got other properties that are lined up as well and.
But that is the math part of the math that we go through as we think about other properties and where they are in the cycle and do.
How much do you spend do you spend it do you think about you referenced monetization. That's certainly an option. So we so those are the kind of things that we go through I mean, we're not going to.
In a call like this we're not going to indicate what our current thinking is on any given asset, but we but we do.
Expect in 2022 to have some increased capital spending in the hotel business because we've got.
Ted I've got a couple of big properties that are that are due for some of that.
Maybe ask a different way.
I would ask you to call it the properties, but are there any of those properties were decision that we made.
You can see that decision that you made in 2022 better than outside.
I mean, there are a couple of big properties I mean, yes, I mean, there's a couple that I would say 'twenty two 'twenty three there are a couple of properties that are going to be in line that we will have to go through that calculus.
Perfect. Thanks.
Thank you. The next question comes from the line of Jim Goss with Barrington Research. Your line is now open you may ask your question.
Okay. Thanks.
First I'd like to ask is the streamed availability of.
Of films and the shorter windows hurting the legs of most films.
There may be fewer return visits.
And also then the ultimate theatrical box office.
And is this limiting the ultimate potential to return to pass.
Domestic totals.
Especially since some of the smallest phones may be more likely to go direct to streaming rather than go to the theatrical window.
Ah.
Let's break that into multiple questions Jim.
The first question lets say.
As day and date streaming impacting films I think yes, I think I think we can see that I don't think that's a big secret I think we can see a day and date stream model.
Is not having it is impacting the ultimate performance of a film.
The good news for our industry is having a lot of negative impact just beyond theatrical in this huge issue. This piracy issue I guess I couldnt have anticipated.
Started talking about it but it's a real negative for them because.
It's just the to have a pristine copy out.
14 seconds after the.
After the release of movie day and date.
Is not helpful for their whole distribution model.
What will the shortened windows mean.
And they are shortening.
Really I don't know yet I don't think anybody knows yet.
No.
Because in a way the consumer has changed.
The.
<unk>.
<unk>.
They expect to everything.
Yes.
Immediately everybody wants everything immediately and so.
It does what does.
If we're at 45 days.
Anybody if anybody wants to go see something in the theater will they even wait.
Wait for anything anymore, we talked about that on these calls before I mean <unk> had noted that 45 days for kids today is an eternity. It is an attorney and so.
I don't know what the effect will be.
Of that overall.
Other your other question relates to what kind of content are we going to see.
Are we going to see those smaller or medium sized films, what kind of window will there be.
Okay.
I don't know again, I don't want to predict it so hard to make predictions right. This minute over what things are going to look like ultimately.
There's a lot of content that we arent planning that that other producers are putting out that may come with a window as they start to see what may be we'd like to get that Halo effect that comes from playing in a movie theater that will actually help our streaming services I want to talk we don't talk about that a lot but.
Because it's not like it's not like it's not going to be exclusive to their streaming service. After it plays in the theater and that going back to that moving tens of millions of people to get off their couches and go do something of very active event versus the passive laying on the sofa with via remote in your hand, and flipping through things, while you look at your phone and the <unk>.
Dog is barking, and maybe youre eating something and the lights are on.
Leaving the house and going to a theater.
Subversive yourself in that experience.
That's a that's really powerful.
And to then say, yes that now it's available exclusively on your streaming service you can't get it anywhere else.
In a world, where it's screaming is getting clearly very competitive and there is no shortage.
The product, they're making so.
You cannot you can argue lots of different ways about the way. This is going to play out and then also we also have our eyes out looking for what are the content can we play.
On our screens too.
Theres going to be a change we're not just going to sit here and say well you know what I guess there'll be less movies will be looking for new things to do one of our competitors announced these sports. We're all looking at different alternative content that can become more important as we built out our loyalty programs that we know how to reach out to our customers better. We can provide content that would be more tailored to them.
So.
There's a lot of ways. This can play out and to try and.
Addicted I, just don't know, but but positive there'll be youll see good things.
Okay, a couple of things.
Specific to.
Your concessions.
Gain was significantly better than the admissions and I Wonder if you might talk about that relationship and less sustainable that is and then on the hotel side I Wonder if you might talk about the specific hotels and markets.
And whether.
Certain areas are doing better than others.
The opportunity youre seeing on that side.
Well I'll take the first part of it here, Jim and so I mean look we've.
It's not it's been very consistent over the years that our growth in our per cap. The cap per capita spending for our concessions and food and beverage is faster than our ticket price I mean, where we are.
We're very sensitive to the ticket price.
We obviously.
One of the key components of our success is our discount Tuesdays in.
And so.
Overall.
What we try to accomplish on the admission pricing side of things is by by trying to offer the right price at the right time and so so we have different so we have some discount programs on the other hand as we've talked about we're seeing increases in that because of increasing our overall admission price because of the.
The popularity of our Pls ultra screens in our Super screens.
And as <unk>.
People I mean, those are the first theater is that people gravitate to when these big pictures come out and so so we've made a big investment in that and we have a higher percentage of those types of theaters than most and so so that's.
That's one of the key contributors to why Youre seeing the increase you are on the admission side.
<unk> side look.
There's no way I consider today and tell you that I think we're going to consistently have 15% to 24% increases in our per capita spending in that on that particular metric.
But if you look at our history, we have traditionally had some pretty healthy well over inflation increases in that category as we continue to expand.
The food and beverage amenities that we offer.
We're really good at it I mean, I don't want to underplay that I mean, we we merchandise.
Merchandise it well, we sell it well we.
Product that we offer.
I'm biased, but we think it's the best in the industry.
With our pizza product and things along those lines. So we do continue to expect that that will be that we'll see healthy increases.
But but right now for all the reasons, we said.
Our prepared remarks, there are there is some explanations for why the percentages are probably as high as they are right now.
Okay.
Of the hotel.
Markets are specific properties.
Well look this quarter, we called out some special events.
That occurred and so there's no question. This particular quarter that we benefited from hearing our Milwaukee market, where we have three hotels, we benefited from the Bucks playoff run we benefited from <unk>.
Some are fast being moved into three weekends in September the Ryder Cup.
Our north of here in September.
So.
Major League baseball and fans being back in attending and so so theres certainly some some things that look.
Quote unquote air quotes normal conditions, we always have various special events and all of our markets. We just didn't have them last year and so Milwaukee.
Wealth or in this particular quarter and so certainly that market performed extremely well.
This particular quarter, but all eight of our properties had increases.
So Scott just to add to that.
Again, we talked about it we've talked about the way that we reflected in our remarks to limit our properties.
And for the most part are pretty are really special special assets.
They play beyond they don't they don't play in one narrow lane.
Whether it's the pfister the Saint Kate the Grand Geneva.
In others I can I could name them almost all of them.
They have.
Yes.
They arent just strictly a business hotel.
They played a business very well they've got great group space.
But they also.
They have they are they appeal to the to the leisure traveler because of their special assets and someone who says I want go on vacation.
Really get to experience something that special beyond just sort of you really strictly group box or strictly business box.
And so we've had that we've had that advantage.
Okay. Thanks, So let it go.
Great quarter. Thanks, Tim.
Thank you again, if anyone would like to ask a question you will need to press Todd and the number one key on your Touchtone telephone again that would be not tie and then the number one key on your Touchtone telephone.
Next question, we have the line of Mike Hickey of the bed.
<unk> Company. Your line is now open you may ask your question.
Hey, guys Greg.
Congrats on quarter.
Thank you.
What a journey compared to where we were last year. So congrats to your entire team.
Really remarkable to see that that EBITDA creation. So.
Really appreciate it.
Yes.
Sure.
Two questions one I guess in your.
Hotel and resorts obviously.
Leisure was spectacular it looks like I think it's on a segment perspective, maybe a record.
Quarter, four EBITDA for hotels and resorts.
So great success, there on top of your theater.
But I guess historically when you look at your <unk>.
Hotels, and resorts, where does it sort of balance between.
Leisure.
Business Group I guess.
Yeah.
Revenue for you, what's the historical balance between the two and as we sort of think forward here maybe the perception is that you have a sustained step down in business travel, but on the flip side do you think we may also have.
Sort of a sustained pick up here in domestic leisure travel that can sort of offset that just sort of curious your thoughts there and I have a quick follow up.
Let me do the first part and then Greg to the second part of it here, but I mean.
Mike.
We've always.
It's been a little cautious about giving a like.
The mix and saying this is what our mix is because it really does vary by we only have eight properties.
Typically.
Kind of what I would try to roll them all together I would tell you historically if.
If you take the two business segments group travel and business traveler that kind of that transient business traveler historically I guess, we've probably a set of your mixed everything altogether.
60, 40 kind of feels like it's about where it's historically bandwidth those first two groups or 60 in the leisure is 40.
Obviously, that's not where we're currently experiencing.
It is heavily weighted right now towards the leisure traveler and some of the small business small trailer.
Which that 60 40 mix is probably.
I mean keep in mind, our biggest properties are the Grand Geneva, Milwaukee Hilton and the Pfister and those of those three are much bigger than the other the other five properties and so you've got a convention hotel you have you have a resort that can be a lot of leisure, but it also has a ton of meeting space and there's a lot of business group typically.
And so so we probably.
Normally skew a little bit more towards that group.
But.
As you've seen and you saw on the numbers I mean.
Nobody for the most part has a lot of business travel right now nobody has a lot of group travel and yet we outperformed.
The industry by 14 points.
And so and so that's that disclosed greg's earlier comment about the type of properties. We have that we have the type of property is that.
Can pivot.
And in turn and focus on that leisure customers. So I guess, that's kind of how I'd answer the first half of the question.
The second answer.
Okay. Thanks for letting me do the predictions.
Okay.
But that's really kind.
The.
It's located in predicting as higher I'll work backwards look at at the end of the day with no matter, what I say I would tell you that we're positioned as we've announced we're reiterating for whatever the mix looks like I think we have the assets that that.
Will that will play and capture what's out there.
And people.
You can't look at one of the things, we've always talked about people want to be together and people like to get out and travel in whatever format that is whether it's for their worker for themselves personally I think we saw this let's get out of the house.
And to your point I mean, as I'm sitting here I'm going to just extemporaneously off the copy thinking well if people are working from home.
They're going to be itching to get out right. So okay. That's good for that consumer that's going to travel, but let's assume that thats going to modulate back and people are going to be going back to the office, well theyre going to be having business travel and I know that businesses are itching to travel and then try to tell you what I can predict in the short run.
Very hard this summer we were getting ready for the business traveler to come back in the fall and then we were surprised to the downside of the business traveler wasn't back in the fall because of Delta.
But I'll tell you we've been.
In a small way surprise, Lisa I have been on the other side of that which is I am still see.
Anecdotally just in albeit in one of the hotels and I'll look at who's in the hotel, what's going on and we just don't know.
Here's the meeting rooms, and Theres meetings going on in association is getting together and I've started to go to meetings and I've gone to a few galas.
And I'll tell you the most amazing thing is watching how much money. These so.
That's a big that's a big piece of our social business, where we have these group the convention floors and stuff and the conferences. This gala business.
We're we're a.
Nonprofit is getting together to raise money and they have their dinner and they had their fundraiser.
And the amount of money, they're raising is staggering.
Really at a record for their events.
And then I recently went to one that someone is still had virtually and it really was unimpressive looking at a bunch of heads on a screen.
Just.
You cannot replace getting together.
So that's really good not when does that aren't going to happen I can't tell you what quarter, that's going to be for sure, but but but things.
As they say in the financial World. The trend is your friend, while the trend is moving in a positive direction.
Thanks.
Sure.
Thank you for that last question for me and this is sort of left field Greg.
So.
Be prepared here, but.
Yes.
Yes, I guess.
On the.
I mean, I guess, we're early days in the normal maybe a new normal the old normal.
Who knows but.
I guess in.
In itself, we're getting closer to the new normal may.
But when you when you look around.
And you see sort of the tech trends.
You see the change in.
Behaviors.
It's obviously shaping your current businesses today with hotels and resorts in theaters.
When you sort of think entrepreneurial, which obviously your company has a big history of doing do you see the opportunity.
For a new venture as new verticals in terms of maybe some interesting restaurant concepts or.
Some hotel concepts that it's sort of been shaped by the pandemic that could offer you something interesting on the growth side over the next few years.
Yeah, Let me look you're right we've been that.
We do like to think that way and where is the world going and what are we doing and what we will.
I would tell you I think.
Less.
Industry specific like auto where we're looking at this new business or that new thing, we're probably really more focused on how do we keep our assets and make them more productive and we have a program on our theater side and we call. It the future is now and we're looking at what are the different things that could go on and the box. In addition to bringing people back what different things can we do ours.
Adding to it earlier.
What what.
I would tell you there is no better way to watching a sporting event and watching it on a movie screens.
On a screen in a theater lets not call. It will be screened screened an auditorium.
Insane to watch something like that.
There is the E sports stuff that people really are starting to try to figure out and see how thats going to play out again, all the alternative content, we're really focused on.
What what does.
If we look at our business and say we are about people getting together.
In whatever format that is how to and we have the facilities to do that how do we do that and really that applies to both of our businesses.
What does it look like.
On the hotel side.
And it has but youre right the restaurants have been interesting to us though.
That's come back where we had that's been really interesting to see a lot of a lot of the people want to get out and need to get this desire to get out we are seeing it.
We're seeing our restaurants come back to some pretty in a lot of cases, it's not across the board but.
But it seems to surprise us and I'll tell you I'm not sitting here on this call, saying, we're going to do anything with us, but I will not take we have been surprised just to call one little piece of our business the safehouse.
We opened the safehouse it as it is.
Small little.
Fun really fund restaurant here in Milwaukee, and its an institution and we were like okay.
Let's open it up we didn't know what it was going to do and it has surprised us so.
Thinking about how people get together and congregate is what we will do and we will be looking for the opportunities.
Nice thanks, guys best of luck.
Thanks, Mike.
Thank you at this time it appears there are no other questions I'd like to turn the call back over to Mr. <unk> for any additional or closing comments.
Thanks, Mel and listen Thank you everybody once again for joining US today, we look forward to talking to you. Once again in early 2021 or 2022 when we released our fiscal 2021 fourth quarter and year end results.
Until then thank you have a great Thanksgiving and have a good day.
Thank you that concludes today's call you may disconnect your line at any time.
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