Q3 2023 The Marcus Corp Earnings Call

Good morning, everyone and welcome to the Marcus Corporation.

Earnings Conference call. My name is Alex and I'll be all right just to say that.

All participants in a listen only mode. We will conduct a question and answer session towards the end of the conference.

If at any time during the call you require assistance. Please press star zero and an operator that we'll be happy to assist you.

As a reminder, this conference is being recorded.

Joining us today are Greg Marcus Chairman, President and Chief Executive Officer, and Chad, Paris, Chief Financial Officer, and Treasurer of the Marcus Corporation.

At this time I'd like to turn the program.

Paris for his opening remarks. Please go ahead.

Thanks, Alex and good morning, everyone.

Welcome to our fiscal 2023 third quarter conference call.

Need to begin by stating that we plan to make a number of forward looking statements on 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 or words 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.

Listeners are cautioned not to place undue reliance on our forward looking statements.

The risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward looking statements are included under the heading forward looking statements in the press release, we issued this morning announcing our fiscal 2023 third quarter results and in the risk factors section of our fiscal 2022 annual report on Form 10-K.

Which you can access on the Sec's website.

We will also post all regulation G disclosures when applicable on our website at <unk> Dot com.

Forward looking statements made during this conference call are only made as of the date of this conference call and we disclaim any obligation to publicly update such forward looking statements to reflect subsequent events or circumstances.

In addition, we routinely post news releases and other information regarding developments at our company that impact our investors customers vendors and other stakeholders you should look at our website markets Corp, Dot com as an important source of information regarding our company.

We also refer you to the disclosures we provided in todays earnings press release regarding the use of adjusted EBITDA, a non-GAAP measure used in evaluating our performance and its limitations.

Reconciliation of adjusted EBITDA to the nearest GAAP measure is provided in today's release.

Alright with that behind US, let's begin this morning, I will start by spending a few minutes sharing the results from our third quarter with you and discuss our balance sheet and liquidity I'll, then turn the call over to Greg who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We will then open up the call for questions.

This morning, we reported another quarter of year over year revenue and earnings growth in both of our divisions and theaters a blockbuster movie slate that drove higher attendance combined with continued increases in average ticket price and average concession revenue per customer to deliver the divisions, 25% revenue grew.

Alex: My name is Alex, and I'll be your operator for today. At this time all participants are in a listen only mode. We will conduct a question and answer section towards the end of the conference. If at any time during the call you require assistance, please press star zero and an operator will be happy to assist you. As a reminder, this conference is being recorded.

Both.

In our hotel Division comparable hotel revenues continued to grow with improvement in both occupancy and average daily rates.

Turning to the numbers I will start with our consolidated results.

Total revenues were $208 8 million in the third quarter of fiscal 2023, an increase of 13, 7% compared to the third quarter of fiscal 2022 opt.

Alex: Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer and Chad Paris, Chief Financial Officer and Treasurer of the Marcus Corporation.

Operating income was $20 9 million in the third quarter, an increase of 133, 9% compared to the prior year quarter net.

Chad Paris: At this time I'd like to turn the program over to Paris for his opening remarks. Please go ahead. Thanks Alex, and good morning everyone.

Net earnings for the third quarter were $12 2 million compared to $3 3 million in the third quarter last year and finally adjusted EBITDA for the third quarter was $42 3 million, a nearly 52% increase from the prior year's third quarter.

Chad Paris: Welcome to our fiscal 2023 third quarter conference call. I need to begin by stating that we plan to make a number of forward looking statements on our call today, all of which we intend to qualify for the safe harbors from liability. It's 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, or words of similar import.

Chad Paris: Our forward looking statements are subject to certain risks and uncertainties which may cause our actual results to differ materially from those expected. Listeners are cautioned not to place undue reliance on our forward looking statements. The risks and uncertainties which could impact our ability to achieve our expectations identified in our forward looking statements are included under the heading forward looking statements. In the press release, we issued this morning announcing our fiscal 2023 third quarter results and in the risk factor section of our fiscal 2022 annual report on form 10k which you can access on the SEC's website.

We provided a breakdown of our third quarter numbers by segments in our press release and as we will discuss today our earnings growth in the quarter was driven by strong results from both of our businesses, partially offset by the fact that we had sold one of our hotels late last year impacting our comparisons this year.

Turning to our segment results in theaters, our third quarter fiscal 2023 total revenue of $126 6 million increased 25.

Compared to the prior year third quarter.

Comparable theater admission revenue increased 29, 8% over the third quarter of 2022 with comparable theater attendance, increasing 15, 6% the.

The increase in attendance, primarily resulted from stronger performances from the top three blockbuster films during the third quarter of 2023, which were Barbie Oppenheimer and sound of freedom.

Chad Paris: We will also post all regulation G disclosures when applicable on our website at MarcusCorp.com. The forward looking statements made during this conference call are only made as of the date of this conference call and we disclaim any obligation to publicly update such forward looking statements to reflect subsequent events or circumstances. In addition, we routinely post news releases and other information regarding developments at our company that impact our investors, customers, vendors, and other stakeholders.

While the film slate for the quarter included only one more wide release films compared to the third quarter of 2022. It featured a release calendar and box office that went deeper into the summer and was more spread across the quarter, allowing films to perform better.

According to data received from Comscore and compiled by us to evaluate our fiscal 2023 third quarter results United States box office receipts increased 37, 6% during our fiscal 2023 third quarter compared to U S box office receipts during the third quarter of fiscal 2022, indicating that our.

Chad Paris: You should look at our website MarcusCorp.com as an important source of information regarding our company. We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAP measure used in evaluating our performance and its limitations. A reconciliation of adjusted EBITDA to the nearest GAP measure is provided in today's release.

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Revenue growth lagged by approximately seven eight percentage points. However, we believe what looks like under performance is mostly a reflection of exhibitors in other parts of the country playing catch up in 2023, following our earlier recovery last year in our primarily Midwestern markets, where we saw audiences return.

Chad Paris: All right, with that behind us, let's begin. This morning I'll start by spending a few minutes sharing the results from our third quarter with you and discuss our balance sheet and liquidity.

Sooner.

We believe this is illustrated by the recovery in our admission revenues relative to pre pandemic periods in fiscal 2019, compared with the recovery of the U S box office.

Chad Paris: I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead.

Chad Paris: We'll then open up the call for questions. This morning we reported another quarter of year-over-year revenue and earnings growth in both of our divisions. In theaters, a blockbuster movie slate that drove higher attendance combined with continued increases in average ticket price and average concession revenue per customer to deliver the divisions. 25% revenue growth, in our hotel division. Comparable hotel revenues continued to grow with improvement in both occupancy and average daily rates.

During the third quarter of fiscal 2023, our comparable theatres admission revenues were 93, 4% of admission revenues in the third quarter of fiscal 2019.

Which compares to a 93, 5% U S box office recovery during the same period.

During the first three quarters of fiscal 2023, our comparable theaters admission revenues were 85, 2% of admission revenues in the first three quarters of fiscal 2019, which compares to an 83% U S box office recovery during the same period, indicating that our recovery and admission revenues has been in line.

Chad Paris: Turning to the numbers, I'll start with our consolidated results. Total revenues were 208.8 million in the third quarter of fiscal 2023, an increase of 13.7% compared to the third quarter of fiscal 2022. Operating income was 20.9 million in the third quarter, an increase of 133.9% compared to the prior year quarter. Net earnings for the third quarter were 12.2 million compared to 3.3 million in the third quarter last year. And finally adjusted EBITDA for the third quarter was 42.3 million, a nearly 52% increase from the prior year's third quarter.

Width and the outperformed the recovery of the industry during 2023.

We also believe our performance in the quarter was partially attributable to an unfavorable film mix. This year that was more appealing to audiences in other parts of the U S outside of our primarily Midwestern markets compared to a favorable film mix during the third quarter of fiscal 2022 that included top gun Maverick and minions the rise of grew too.

Films that drove our theater circuit to outperform the national results last year in the third quarter.

Our average admission price increased by 12, 8% during the third quarter of fiscal 2023 compared to last year.

Chad Paris: We provided a breakdown of our third quarter numbers by segment in our press release, and as we will discuss today, our earnings growth in the quarter was driven by strong results from both of our businesses, partially offset by the fact that we had sold one of our hotels late last year impacting our comparisons this year. Turning to our segment results in theaters, our third quarter fiscal 2023 total revenue of 126.6 million increased 25% compared to the prior year third quarter.

The increase in average admission price in the quarter was primarily driven by the favorable impact of full schedule pricing actions taken in the last year in response to inflation the impact of the changes to our value Tuesday promotion effective at the end of the first quarter of this year.

And by a film mix featuring more films for adult audiences at higher ticket prices.

Our average concession food and beverage revenues per person at our comparable theaters increased by six 5% during the third quarter of fiscal 2023 compared to last year's third quarter.

Chad Paris: Comparable theater admission revenue increased 29.8% over the third quarter of 2022, with comparable theater attendance increasing 15.6%. The increase in attendance primarily resulted from stronger performances from the top three Blackbuster films during the third quarter of 2023, which were Barbie, Oppenheimer, and Sound of Freedom. While the film slate for the quarter included only one more wide release film compared to the third quarter of 2022, it featured a release calendar in box office that went deeper into the summer and was more spread across the quarter, allowing films to perform better.

Higher check averages, including the impact of higher menu prices drove the increase in our concession food and beverage per caps as we are still seeing the impact of inflationary price increases implemented during the last year and the favorable impact of changes to our value Tuesday promotion.

Our top 10 films represented approximately 75% of the box office in the third quarter of fiscal 2023 compared to 83% for the top 10 films in the third quarter last year.

Chad Paris: According to data received from Comscore and compiled by us to evaluate our fiscal 2023 third quarter results, United States box office receipts increased 37.6% during our fiscal 2023 third quarter compared to US box office receipts during the third quarter of fiscal 2022, indicating that our comparable theater admission revenue growth lagged by approximately 7.8% percentage points. However, we believe what looks like under performance is mostly a reflection of exhibitors in other parts of the country playing catch up in 2023 following our earlier recovery last year in our primarily Midwestern markets where we saw audiences return sooner.

This more balanced film slate combined with our industry, leading pls penetration resulted in a decrease in overall film cost as a percentage of admission revenues.

Theater Division adjusted EBITDA of $26 7 million during the third quarter of fiscal 2023 increased approximately 114% compared to the prior year third quarter on our higher revenues.

Finally during the quarter, we closed three underperforming theaters as part of our ongoing evaluation of individual theater performance and our footprint.

The closure of these locations is accretive to earnings and cash flow and the results of these theaters are excluded from our comparable theater financial metrics discussed today.

Turning to our hotels and resorts Division revenues were $82 1 million for the third quarter of fiscal 2023 and were nearly flat compared to the prior year.

Chad Paris: We believe this is illustrated by the recovery in our admission revenues relative to pre pandemic periods in fiscal 2019 compared with the recovery of the US box office. During the third quarter of fiscal 2023, our comparable theaters admission revenues were 93.4% of admission revenues in the third quarter of fiscal 2019, which compares to a 93.5% US box office recovery during the same period. During the first three quarters of fiscal 2023, our comparable theaters admission revenues were 85.2% of admission revenues in the first three quarters of fiscal 2019, which compares to an 83% US box office recovery during the same period, indicating that our recovery and admission revenues has been in line with and outperformed the recovery of the industry during 2023.

The sale of the <unk> Hilton late in the fourth quarter of fiscal 2022 had a $4 million negative impact on revenues in the third quarter of fiscal 2003 compared to the third quarter of fiscal 2022 on.

On a comparable hotel basis, we continued our trend of revenue growth with total revenues in the third quarter of fiscal 2023, increasing $3 8 million or four 9%.

Total revenue before cost reimbursements at our seven comparable owned hotels increased over $2 8 million or four 1% over the third quarter of fiscal 2022.

Revpar for our comparable owned hotels grew five 5% during the third quarter compared to the prior year.

Chad Paris: We also believe our performance in the quarter was partially attributable to an unfavorable film mix this year that was more appealing to audiences in other parts of the U.S, outside of our primarily Midwestern markets compared to a favorable film mix during the third quarter of fiscal 2022 that included Top Gun Maverick and Minions the Rise of Crew, two films that drove our theater circuit to outperform the national results last year in the third quarter. Our average admission price increased by 12.8% during the third quarter of fiscal 2023 compared to last year.

According to data received from Smith travel research comparable upper upscale hotels throughout the United States experienced an increase in revpar of three 2% during our third quarter compared to the third quarter of fiscal 2022, indicating that our hotels outperformed the industry by approximately two three percentage points.

When comparing our revpar results to comparable competitive hotels in our markets the comparable competitive hotels experienced an increase in revpar of four 7% for the third quarter of fiscal 2003 compared to the third quarter of fiscal 2022, indicating that our hotels outperformed their competitive set by nearly 1%.

Chad Paris: The increase in average admission price in the quarter was primarily driven by the favorable impact of full schedule pricing actions taken in the last year in response to inflation, the impact of the changes to our value Tuesday promotion effective at the end of the first quarter of this year and by a film mix featuring more films for adult audiences at higher ticket prices. Our average concession food and beverage revenues per person at our comparable theaters increased by 6.5% during the third quarter of fiscal 2023 compared to last year's third quarter.

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Breaking out the third quarter numbers for the comparable owned hotels more specifically our overall revpar increased during the fiscal 2023 third quarter compared to the third quarter of last year was due to a two 7% increase in our average daily rate or ADR and an overall occupancy rate increase of two percentage.

Chad Paris: Higher check averages, including the impact of higher menu prices, drove the increase in our concession food and beverage per caps as we are still seeing the impact of inflationary price increases implemented during the last year and the favorable impact of changes to our value Tuesday promotion. Our top 10 films represented approximately 75% of the box office in the third quarter of fiscal 2023 compared to 83% for the top 10 films in the third quarter last year.

Points.

Our average fiscal 2023 third quarter occupancy rate for our owned hotels was 76, 5%.

Finally, our banquet and catering operations continued to perform well.

Food and beverage revenue at our comparable owned hotels was up one 8% in the third quarter of fiscal 2023 compared to the prior year quarter.

And was negatively in play are impacted by approximately one percentage point due to the ballroom renovations at the Pfister hotel during the quarter.

Hotel Division adjusted EBITDA of $19 4 million for the third quarter of 2023 increased 400000 or approximately 2%.

Chad Paris: This more balanced film slate combined with our industry leading PLF penetration resulted in a decrease in overall film cost as a percentage of admission revenues. Theater division adjusted EBITDA of 26.7 million during the third quarter of fiscal 2023 increased approximately 114% compared to the prior year third quarter on our higher revenues.

The sale of the Skirvin Hilton had a $500000 negative impact on adjusted EBITDA in the third quarter of fiscal 2003 compared to the prior year third quarter.

Excluding this impact comparable hotel adjusted EBITDA in the third quarter of fiscal 2023 increased $900000 or four 7% on higher revenues.

Chad Paris: Finally, during the quarter we closed three underperforming theaters as part of our ongoing evaluation of individual theater performance and our footprint. The closure of these locations is accretive to earnings and cash flow and the results of these theaters are excluded from our comparable theater financial metrics discussed today.

Shifting to cash flow and the balance sheet, our cash flow provided by operations was $21 3 million in the third quarter of fiscal 2023, an increase of $16 2 million or more than three times, our prior year third quarter cash flow from operations.

Chad Paris: Turning to our hotels and resorts division, revenues were 82.1 million for the third quarter of fiscal 2023 and were nearly flat compared to the prior year. The sale of the Scurvin Hilton late in the fourth quarter of fiscal 2022 had a $4 million negative impact on revenues in the third quarter of fiscal 2023 compared to the third quarter of fiscal 2022. On a comparable hotel basis, we continued our trend of revenue growth with total revenues in the third quarter of fiscal 2023 increasing 3.8 million or 4.9%.

Capital expenditures during the third quarter of fiscal 2023 were $9 9 million compared to $11 1 million in the third quarter of fiscal 2022, and we're impacted by timing of cash payments for projects when compared to the prior year.

A large portion of our capital expenditures during the third quarter were invested in the guest rooms and meeting space renovation at the Grand Geneva Resort and Spa.

And the meeting space renovation at the Pfister hotel with the balance of capital expenditures going to maintenance projects in both businesses.

Based on our current expectations for the timing of capital projects, we expect capital expenditures of $35 million to $40 million for fiscal 2023, with our lower estimate for the year due to changes in timing of projects.

Chad Paris: Total revenue before cost reimbursements at our seven comparable owned hotels increased over 2.8 million or 4.1% over the third quarter of fiscal 2022. Rev Par for our comparable owned hotels grew 5.5% during the third quarter compared to the prior year. According to data received from Smith Travel Research, comparable upper upscale hotels throughout the United States experienced an increase in rev power of 3.2% during our third quarter, compared to the third quarter of fiscal 2022, indicating that our hotels outperform the industry by approximately 2.3 percentage points.

We ended the third quarter with $36 million in cash and over $256 million in total liquidity with a debt to capitalization ratio of 27% and net leverage of one three times net debt to adjusted EBITDA.

Subsequent to the end of the third quarter, we announced that we completed the refinancing of our revolving credit facility.

This new $225 million five year facility will extend our maturities until October 2028, and as an example of our proactive approach to maintaining our strong balance sheet.

Chad Paris: When comparing our rev power results to comparable competitive hotels in our markets, the comparable competitive hotels experienced an increase in rev power of 4.7% for the third quarter, a fiscal 23, compared to the third quarter of fiscal 2022, indicating that our hotels outperform their competitive set by nearly 1 percentage points. Breaking out the third quarter numbers for the comparable owned hotels more specifically, our overall rev power increase during the fiscal 2023 third quarter, compared to the third quarter of last year, was due to a 2.7% increase in our average daily rates, or ADR, and an overall occupancy rate increase of 2 percentage points.

Our new revolver, which is currently undrawn ensures that we have significant liquidity and financial flexibility to move quickly when opportunities to invest in future growth arise.

I would like to thank our lender group for our strong long term relationships and for their continued support.

With that I will now turn the call over to Greg.

Thanks, Chad good morning, everyone.

As I shared on our last quarterly call the third quarter got off to a strong start in July.

And theaters a string of blockbusters drove huge audiences to see movies on the big screen and we had a deeper slate of films for the rest of the summer than we did a year ago and hotels favorable weather and solid leisure demand continued to support strong rates improving occupancy.

Chad Paris: Our average fiscal 2023 third quarter occupancy rate for our owned hotels was 76.5%. Finally, our banquet and catering operations continued to perform well. Food and beverage revenue at our comparable owned hotels was up 1.8% in the third quarter of fiscal 2023, compared to the prior year quarter, and was negatively impacted by approximately 1 percentage points due to the ballroom renovations at the fister hotel during the quarter. Hotel division adjusted EBIDA of 19.4 million for the third quarter of 2023, increased 400,000, or approximately 2%.

I'm happy to share that the positive trends we saw in July continued through the end of the summer and we had a great third quarter with both of our business is contributing to our revenue and earnings growth. Our teams executed really well serving our customers with excellence during our seasonally busiest quarter of the year.

The third quarter that we're reporting today once again continues our trend of year over year improvement and we're very happy to share. These results with you.

I'll start with theaters.

This quarter, both higher attendance and strong growth in per caps drove our results while.

Chad Paris: The sale of the Scriven Hilton had a $500,000 negative impact on adjusted EBIDA in the third quarter of fiscal 2023, compared to the prior year third quarter. Excluding this impact, comparable hotel adjusted EBIDA in the third quarter of fiscal 2023, increased $900,000, or 4.7% on higher revenues.

While the second quarter. This year included a few films that Mr. Mark The third quarter included a few films that exceeded expectations in a big way.

Strong performances from the cultural phenomenon known as Barbara and Hymer. It sounded freedom drove customers out theatres for these must-see films, while a steady cadence of movie releases continued into late summer and supported the habit of moviegoing, resulting in attendance growth over 15%.

Chad Paris: Shifting to cash flow in the balance sheet, our cash flow provided by operations was $21.3 million in the third quarter of fiscal 2023, an increase of $16.2 million, or more than three times our prior year third quarter cash flow from operations. Total capital expenditures during the third quarter of fiscal 2023 were $9.9 million, compared to $11.1 million in the third quarter of fiscal 2022, and were impacted by timing of cash payments for projects when compared to the prior year.

The impressive performance of these films underscored in audience appetite for a variety of narratives and it was a great reminder, to all of US in the entertainment industry are the power theatrical exhibition and building awareness of great movies.

We continued our trend of significant increases in per person revenues with our admission revenues per person growing nearly 13% year over year, and our concessions food and beverage per caps growing over 6%.

As we've previously shared our strategic pricing initiatives, including our value Tuesday promotion changes continued to favorably impact both admissions per caps and concession and food and beverage per caps.

Chad Paris: A large portion of our capital expenditures during the third quarter were invested in the guest rooms and meeting space renovation at the Gran Geneva Resort and Spa, and the meeting space renovation at the Fister Hotel, with the balance of capital expenditures going to maintenance projects in both businesses. Based on our current expectations for the timing of capital projects, we expect capital expenditures of 35 to 40 million for fiscal 2023, with our lower estimate for the year due to changes in timing of projects.

We also have been successful driving admission per caps by leveraging our expansive footprint premium large format screens.

During the third quarter non top 10 movies were mpls screens on opening weekend for eight of these nine films opening on Pls screens during the quarter, 40% or more of our opening weekend box office came from Pls showings with four films grossing more than 60% of our opening weekend box office Mpls.

Chad Paris: We ended the third quarter with $36 million in cash, and over $256 million in total liquidity, with a death to capitalization ratio of 27%, and net leverage of 1.3 times net debt to Subsequent to the end of the third quarter, we announced that we completed the refinancing of our revolving credit facility. This new $225 million five-year facility will extend our maturities until October 20, 28, and is an example of our proactive approach to maintaining our strong balance sheet. Our new revolver, which is currently undrawn, ensures that we have significant liquidity and financial flexibility to move quickly when opportunities to invest in future growth arise.

In addition, according to Comscore data on opening weekend Marcus theatres led the industry in gross box office Peel off percentage on all nine of the films opening on Pls in the third quarter.

Our proprietary ultra screens and super screens provide us with significant flexibility in scheduling multiple films on our pls screens, particularly in theater locations, where we have multiple pls.

As we look ahead, the fourth quarter in our theater Division has once again off to a good start with growth over last year led of course by Swift dynamics Taylor Swift. The Arris tour. The constant film debuted as the second highest October opening weekend of all time for any kind of movie and continues to play well in our circuit with our market share of total <unk>.

Chad Paris: I would like to thank our lender group for our strong long-term relationships and for their continued support.

Shellfish growing each week.

Going to Sierra's wasn't just going to see a movie it was an experience that became a pop culture event.

Greg Marcus: With that, I will now turn the call over to Greg. Thanks, Chad. Good morning, everyone. With the shared in our last quarterly call, the third quarter got off to a strong start in July. In theaters, a string of blockbusters drove huge audiences to see movies on the big screen, and we had a deeper slate of films for the rest of the summer than we did a year ago. In hotels, favorable weather, and solid leisure demand continued to support strong rates and improving occupancy.

Once again, we are leveraging our pls screens to present the film the way our customers want to see it most dancing in the aisles in front of a giant screen with immersive Dolby Atmos sound. In fact, we are leading the industry with over 50% of our <unk> gross box office coming from Pls screens for each of the three weekends in opening.

While Taylor Swift is in a class of ROE and we do believe that areas. As an example of the breadth of content. We can play another big music icon will leverage the appeal of the theatrical experience to connect with fans through a concert film in early December with Renaissance film by biopsy.

Greg Marcus: I'm happy to share that the positive trends we saw in July continue to the end of the summer, and we had a great third quarter with both of our businesses contributing to our revenue and earnings growth. Our teams executed really well, serving our customers with excellence during our seasonally busiest quarter of the year. The third quarter that we are reporting today once again continues to our trend of year-over-year improvement, and we're very happy to share these results with you.

As we look ahead to the rest of the year. The holiday film slate includes trolls band together wish Walkup Aqua, Matt on the loss Kingdom migration, a strong set of family films that should play well to our Midwest audiences.

Greg Marcus: I'll start with theaters. This quarter, both higher attendance and strong growth in per-cap strobe our results. While the second quarter this year included a few films that missed a mark, the third quarter included a few films that exceeded expectations in a big way.

The film slate is rounded out with a healthy dose of content targeting it's all of the audiences that we're excited about including the marvels hunger games valid of songbirds, and snakes, Napoleon and the color purple.

Last quarter I provided some thoughts on the strikes in Hollywood and our view on this topic remains largely the same.

Greg Marcus: Strong performances from the cultural phenomenon known as barbenheimer and sound-of-freedom drove customers out the theaters for these must-see films. While a study cadence of movie releases contained into late summer and supported the habit of movie going, resulting in attendance growth over 15%. The impressive performance of these films underscored an audience appetite for a variety of narratives, and it was a great reminder to all of us in the entertainment industry of the power, theatrical exhibition, and building awareness of great movies.

The disruption from the strikes is not helpful. As expected there have been some shifts in the release calendar and we will not have better visibility to the ultimate impact in 2024 films slate until the strike is settled and film production resumes at the end of the day. This remains a short term supply chain disruption the product isn't going away or skipping theatrical exhibition, it's getting moved around.

And shifted out.

With the writers strike settled the beginning of the supply chain is working again restocking. The script inventory. We are encouraged by the very active negotiations in the last week between the screen actors Guild and the studios and while we have no insight into the discussions we are cautiously optimistic for a resolution in the near term.

Greg Marcus: We intended our trend of significant increases in per-person revenues. With our admission revenues per person growing, you know, it's 13% year-over-year, and our concessional student beverage per-cap is growing over 6%. As we previously shared, our strategic pricing initiatives, including our value Tuesday promotion changes, continued to favorably impact both admissions, per-caps, and concession food and beverage per-caps. We also have been successful driving admission for your hats by leveraging our expansive footprint of premium large format screens.

Shifting to our hotels <unk> resorts division, you'll see.

The segment numbers and Chad shared some additional detail, including the bridge from our reported results to our comparable hotel results. Following the sale of the scripting hotel Skirvin Hilton late last year.

This quarter is typically our strongest with the summer travel season that its peak and this year was no different as you may recall last year. The hotel division posted record results for <unk> third quarter, either pre or post pandemic.

Greg Marcus: During the third quarter, nine of the top 10 movies were on PLF screens on opening weekend. For eight of these nine films opening on PLF screens during the quarter, 40% or more of our opening weekend box office came from PLF showing. With four films grossing more than 60% of our opening weekend box office on PLFs. In addition, according to ComScore data, on opening weekend Marcus leaders led the industry in gross box office PLF on all nine of the films in opening on PLFs in the third quarter.

This year, our hotels, you broke that record again with $19 4 million of adjusted EBITDA, Despite having one less hotel.

This level of success speaks to both the high level of execution by our team and the quality of our hotel assets.

There are a few hotel division highlights in the third quarter that I would like to point out.

Overall revenue before cost reimbursements at our comparable properties grew four 1% compared to the prior year.

Greg Marcus: Quater. Our proprietary ultra screens and super screens provide us with significant flexibility in scheduling multiple films on our PLF screens, particularly in theater locations where we have multiple PLFs. As we look ahead, the fourth quarter in our theater division is once again off to a good start with growth over last year, but of course by Swiftynamics, Taylor Swift, the Ares Tour, the concert film debuted as the second highest October opening weekend of all time for any kind of movie and continues to play well in our circuit with our market share of total box office growing each week.

We outperformed both the national upper upscale revpar growth and Revpar growth of our competitive sets.

We continue to see strong average daily rates and improving occupancy.

Revpar grew at six of our seven of our comparable owned hotels with average daily rate growth at five of our seven hotels and occupancy growth in four out of seven hotels, resulting in overall revpar growth of five 5%.

Occupancy grew up both weekends and weekdays weekends almost back to pre pandemic levels.

While the trend of leisure demand returning to pre pandemic levels continues following record demand in fiscal 2022 overall leisure demand remains healthy and our properties continue to capture our share of leisure travel grew.

Greg Marcus: Going to see Ares wasn't just going to see a movie, it was an experience that became a pop culture event. Once again, we are leveraging our PLF screens to present the film the way our customers want to see it most. Dancing in the aisles in front of a giant screen with immersive Dolby Atmos sound. In fact, we are leading the industry with over 50% of our Ares gross box office coming from PLF screens for each of the three weekends and opening.

Group demand in the quarter continued to increase with weekday and weekend growth increasing our group rooms revenue to approximately 41% of our total rooms revenue in the third quarter of fiscal 2023 compared to approximately 39% in the third quarter last year.

Greg Marcus: While Taylor Swift is in the class of Rome, we do believe that Ares is an example of the breath of content we can play. Another big music icon will leverage the appeal of the theatrical experience to connect with fans through a concert film in early December with Renaissance, a film by Beyonce. As we look ahead to the rest of the year, the holiday film slate includes trolls band together, Wish, Wonka, Aquaman on the Lost, Kingdom in Migration, a strong set of family films that should play well to our Midwest audiences. The film slate is rounded out with a healthy dose of content targeting adult audiences that we are excited about, including the Marvels, Hunger Games, Ballad of Songbirds and Snakes, Napoleon and the Color Purple.

This compares to our pre pandemic group mix of approximately 44% in the third quarter of 2019.

Group booking trends remain positive with our group room revenue bookings for the remainder of fiscal 2023 for our group pace in the year for the year running approximately 11% of where we were same time last year.

For fiscal 2024 is running approximately 14%.

We were the same time last year for fiscal 2023 and.

In addition, banquet and catering pace for the remainder of fiscal 2023 and fiscal 2024 is similarly running ahead of where we were at this time last year.

Finally.

I would like to recognize our hotels team for several awards that are properties recently received as many in our hospitality industry know the <unk> Nast traveler readers choice awards are the longest running and most prestigious recognition of excellence in the travel industry and in October our properties one several of them in.

Greg Marcus: Last quarter, I provided some thoughts on the strikes and how they would in our view on this topic remains largely the same. The disruption from the strikes is not helpful. As expected, there have been some shifts in the release calendar and we will not have better visibility to the ultimate impact in the 2024 film slate until the strike has settled and film production resumes. At the end of the day, this remains a short-term supply chain disruption.

In Milwaukee, the Pfister Hotel was named the number two top hotel in the Midwest and Saint Kate was named the number four top hotel in the Midwest Kimpton Hotel Monaco Pittsburgh was recognized as the number nine top hotel in the mid Atlantic and the Garland in North Hollywood, California was rated the number 16 top hotel in Los Angeles.

Greg Marcus: The product isn't going away or skipping theatrical exhibition. It's getting moved around and shifted out. With the writer's strike settled at the beginning of the supply chain, it's working again, restocking the script inventory. We are encouraged by the very active negotiations in the last week between the Screen Actors Guild and the studios and what we have no insight into the discussions. We are cautiously optimistic for a resolution in the near term.

In addition, the Pfister Hotel also recently received the USA today readers Choice Award is the number six best Historic hotels in the United States. We are incredibly proud of these awards and while hotels are.

Greg Marcus: Shifting to our hotel and resource division, you've seen the segment numbers and Chad shared some additional detail, including the bridge from our reported results to our comparable hotel results following the sale of the Scriven Hotel. Scriven Hilton light last year. This quarter is typically our strongest with the summer travel season that it's and this year was no different. As you may recall, last year the hotel division posted record results for any third quarter, either pre or post-pandemic.

Rooms, and amenities, what truly makes a hotel special is the hospitality experience our guests have while they stay with US we win these awards because of the incredible effort and care that our associates deliver each day to make our guests stay extraordinary I'd like to thank and congratulate the hotel team on a job well done and while I'm tossing out congratulations I also want to refer.

Greg Marcus: This year, our hotel team broke that record again with 19.4 million of adjusted EBITDA despite having one last hotel. This level of success speaks to both the high level of execution by our team and the quality of our hotel assets. There are a few hotel division highlights in the third quarter that I'd like to point out. Overall revenue before cost reimbursements in our comparable properties grew over 4.1 percent compared to the prior year.

<unk> on Chad Paris, and his team's great job with our bank facility.

That was impressive work in this environment.

And it speaks to our company's long standing foundational belief in the managing the strength of our balance sheet.

Before we open up the call for questions I want to once again express my appreciation for our dedicated associates of the Marcus Corporation their outstanding work and commitment to serving our customers is responsible for our success. We appreciate all that they do every day. So on behalf of our board of directors and our entire executive team. Thank you to all of our associates.

Greg Marcus: We outperformed both the national upper upscale revark growth and revark growth of our comparison, and David C. We continue to see strong average daily rates in improving occupancy. Rev. Park grew at six of our seven of our comparable own hotels, with average daily rate growth at five of our seven hotels and occupancy growth at four out of seven hotels, resulting in an overall rev. Park growth of 5.5%. Occupancy grew on both weekends and weekdays with weekends almost back to prepandemic levels.

And with that at this time, Chad I'd be happy to open up the call for any questions you may have.

As a reminder, if you'd like to ask a question he compressed slightly.

One on the telephone keypad.

Like to remove your question you May press Star two.

Decent show you on mutant hopefully when asking your question.

Our first question for today comes from Eric load of be Rodney Securities. Your line is now open. Please go ahead.

Greg Marcus: While the trend of leisure demand, turning to prepandemic levels continues following record demand in fiscal 2022, overall leisure demand remains healthy, and our properties contains capture our share of leisure travel. Group demand on the quarter continues to increase with weekday and weekend growth, increasing our group rooms revenue to approximately 41% of our total rooms revenue in the third quarter of fiscal 2023, compared to approximately 39% in the third quarter last year.

Hey, good morning, everybody. Thank you for taking my questions.

A couple of a couple of questions just one.

Following the three theaters that were closed in the quarter anything left on that front to close and then how is the.

The acquisition of Newbuild pipeline for theaters shaping up at this point.

I Didnt hear what was your what did you say about the three that we closed what was the specific.

Greg Marcus: This compares to our prepandemic group mix of approximately 44% in a third quarter of 2019. Group booking trends remain positive with our group room revenue bookings for the remainder of fiscal 2023 or group pace in the year for the year, running approximately 11% of what we were same time last year. Group pace for fiscal 2024 is running approximately 14% of what we were the same time last year for fiscal 2023. In addition, bank Whitton catering pace for the remainder of fiscal 2023 and fiscal 2024 is similarly running ahead of what we were at this time last year.

Just to forget anything it seems like anything else that needs to be closed.

Not that we know the NDA getting these were these were very special situations in a mall.

Market that we've got.

Very good coverage in.

That businesses can be picked up in other theaters and at these theaters were one was a lease that was ending and the other two were.

We just.

We had made the decision that we weren't going to make the investments that you need to have you know how we feel about having our physical plant in top shape and competitive but I think that I think I think we were talking about it puts our recliner penetration has got to be over 90% now because those didn't have recliners.

Greg Marcus: Finally, I would like to recognize our hotel team for several awards that our properties recently received. As many in our hospitality industry know, the Covenast Traveler Reader's Choice Awards are the longest running and most prestigious recognition of excellence in the travel industry, and in October our properties went several of them. In Milwaukee, the fiscal hotel was named the number two top hotel in the Midwest, and St. Kate was named the number four top hotel in the Midwest.

And then alright, thank you bill.

The four acquisitions.

No no new builds.

And.

There is I would say that we're starting to see some stuff.

Up.

Nothing that we've.

Had an interested in yet.

But but.

But it feels like you know that the.

Greg Marcus: Kimpton Hotel Monaco Pittsburgh was recognized as the number nine top hotel in the Mid-Atlantic, and the Garland and North Hollywood, California was rated the number 16 top hotel in Los Angeles. In addition, the fiscal hotel also recently received the USA Today Reader's Choice Award as the number six best historic hotels in the United States. We are incredibly proud of these awards in our hotels. Our part rooms and amenities, what truly makes the hotel special, is the hospitality, and experience our guests have while they stay with us.

The ice breaking up all of it but I have nothing to report to you.

Got it and then.

Shifting to the.

The hotel segment.

Any update on the decision around.

Milwaukee Hilton can you remind us kind of what the any.

Any deadline is with that and kind of maybe what ultimately needs to be done.

<unk> got property, you kind of get near to the Convention Center opening next year of expansion it will be next year.

Greg Marcus: We win these awards because of the incredible effort and care that our associates deliver each day to make our guests stay extraordinary. I would like to thank and congratulate the hotel team on a job well done, and while I'm costing out congratulations, I also want to reflect on Chad Parris and his team's great job with our banking facility that was impressive work in this environment. And it speaks to our company's long-standing foundational belief in the managing the strength of our balance sheet.

Eric we're continuing to work on it.

Is one that we hope to have some some idea of the path forward by the end of the year and something to share.

On our next call in late February, but again, it's one where we're trying to make the returns make sense and.

With a hotel that size the capital investment is significant and.

We're working on it so no no update right now, but hopefully we'll have something next quarter.

Greg Marcus: Before we open up the call for questions, I want to once again express my appreciation for our dedicated associates at the Marcus Corporation. They're outstanding work and commitment to serving our customers is responsible for our success. We appreciate all that they do every day, so on behalf of our board of directors and our entire executive team, thank you to all of our associates.

Okay.

Not something we're decision deadline.

Assuming you've got time on that one correct.

Well no I mean, we have to we do have to make sure. There's no. We don't have a deadline to report, but there's look there's a lot of there's a lot of things that we.

Chad Paris: And with that at this time, Chad, I'll be happy to open up the call for any questions you may Thank you. As a reminder, if you'd like to ask a question, you can press start, fly by one on the telephone keypad. If I to remove your question, you may press start, fly by two. Please ensure you're unmuted, hopefully, when asking your question.

We have to take into account.

That includes.

Just the fact that we have because of the community has just made a big investment in a new Convention center.

And in addition to the Convention center.

Refurbishing the older section.

And it.

It would be helpful to have.

To have this complement that.

Eric Wold: Our first question for today comes from Eric Wold of Be Riley Securities. Your line is now open, please go ahead. Hey, good morning everybody. Thank you for taking my question. A couple of questions.

Understood. Thank you Bob.

Okay.

Thank you.

Our next question comes from Mike Hickey of Benchmark company.

Greg Marcus: I guess one, following the three theaters that were closed in the quarter, anything left on that front to close, and then how is the acquisition of new bill pipeline for theaters shaping up at this point? I didn't see what did you say about the three that we closed, what was your specific, anything else that you could be closed, not that we know. Again, these were very special situations in a market that we've got very good coverage in.

Your line is now open. Please go ahead.

Hey, Greg Good morning, guys, great quarter, Thanks for taking my questions here.

Just two from us one.

Obviously, Greg you guys don't guide to.

Four.

It appears that either but just curious.

As you can.

Sort of frame for us.

24 growth opportunity on revenue as you see it today obviously.

Greg Marcus: That business is going to be picked up in other theaters. One was a lease that was ending in the other two. We had made the decision that we weren't going to make the investments that you need to have. You know how we feel about having our fiscal point in top shape and competitive. I think that, I think we were talking about I think it puts our recliner penetration. It's got to be over 90 percent now because those didn't have recliners.

Moving pieces on the theater side.

In terms of the strike impact.

I'm curious if you see.

You also have some leverage in the model in 'twenty four and beyond the first question.

And the second question is.

It sounds like on the hotel side.

Pretty good.

Leading indicators there.

On growth.

And so maybe that sort of offset to this question, but just curious an update on the <unk>.

Greg Marcus: No new builds. I would say that we're starting to see some stuff pop up. Nothing that we've had an interest in yet, but it feels like, you know, that the ISIS is breaking up a little bit, but I have nothing to report to you.

Consumer.

Specifically within that.

Augment.

The business side being more impacted by the economy incentive leisure here seems like it's.

Our rollout effort, Greg over the last year or two just curious.

Economy or sentiment or just the pullback in spend is impacting where you think it could impact that piece of your business. Thanks guys.

Greg Marcus: And then shifting to the hotel segment, any update on the decision around Milwaukee, do you mind us kind of what the any deadline is with that and kind of maybe what ultimately needs to be done to that property. You kind of get near to the convention center hoping that you're expansion opening that you're. We're continuing to work on it. You know, this is one that we hope to have some some idea of the path forward by the end of the year and something to share on our next call in in late February, but again, it's it's one where we're trying to make the returns make sense.

Sure.

Actually we're going to be holding a sense.

Next week to figure out what the theater business going to look like next year, but we just don't know.

Kevin.

We don't even know when we know what's coming at us because we talked about on the call rate was in the prepared remarks, nobody could have get nobody ever can guess.

What a specific as movie is going to do it if somebody would have told me that Barbie was going to just absolutely go bananas and.

Other films were not going to perform as expected and Scott and I said, Amit once it didn't perform as expected, but there were some you just.

There is no there is no telling and so it all comes down to the number of films released and we don't need on Hollywood as you know is not really disclosing.

Greg Marcus: And with the hotel of that size, the capital investment is significant. And you know, we're working on it. So no no update right now, but hopefully we'll have something next quarter. That that's not something we're decision. We're in a deadline new thing. You've got time on that one. Correct. Well, no, and we have to we do have to make there's no we don't have a deadline to report, but there's look, there's a lot of there's a lot of things that, you know, that we have to take into account and, you know, that that includes, is just the fact that the community has just made a big investment in a new convention center or an addition to the convention center and refurbishing the older section and it would be helpful to have this complement that. Understood, thank you both.

There's been some moves.

Greg Marcus: So, thank you.

We know that doing to move to next year well, okay, that's going to fill a little bit of a hole. It left us with a little bit of a hole, but all of a sudden Taylor Swift showed up she wrote in a horse to save the day. So we just it is just a business where you don't know it will ultimately come down to the number of films released if you look at the stats issue, which I think has some great stats to look at we have about 15% less films.

Released the pre pandemic and we've got about a 15% decline in box office compared to pre pandemic, So and that's an increase from last year. So.

The pipeline gets refilled business will come back to you to us we're not looking quarter to quarter, we're looking at the overall.

Whereas the business trending overall and Thats, how we see that on the on the hotel side.

We the leisure traveler has I think the revenge travel period is over but people are still traveling.

Want to go about and we still have a strong leisure business, but as we've talked about today are our pace for group business is looking more solid as well as improved over last year early Milwaukee, specifically this market is going to see some real positive benefits from the Republican conventions coming.

Michael Hickey: Our next question comes from Mike Hickey of Benchmark Company. Your line is now open, please go ahead. Hey Greg, Chad, good morning guys. Great quarter. Thanks for taking our questions here. We just two from us. One, obviously Chad Greg, you guys don't guide 24. Your peer set doesn't either. But just curious, as much as you can sort of frame for us your 24 growth opportunity on revenue, as you see it today, obviously there's some moving pieces on the theater side in terms of the strike and impact.

Michael Hickey: And curious is if you see, you also have some leverage in the model in 24 and beyond that's the first question. And the second question is, it sounds like on the hotel side you've got some pretty good leading indicators there on growth. And so maybe that sort of offsets this question but just curious an update on the consumer specifically within that segment. Obviously the business side being more impacted by the economy and sentiment and leisure here seems like it's had a heroic effort Greg over the last year or two.

The opening of the convention center, which against not only speaks to.

Next summer, but really long term, that's a big and that was up over $400 million investment in this market. So.

And the Convention center so.

Good things in the long run.

Yes.

Greg just a quick follow up.

You can't control, but that product, obviously I wish you could that would.

Great.

All of us.

Yeah.

But on your screen count this concern a pig.

Piggyback off.

First question you look at obviously, you're optimizing here, which is a good thing and it's accretive which is also a really good thing.

But when you look at your <unk>.

Your screen network.

You saw that down.

It looks like 10%.

Versus where you were.

Pre pandemic.

And of course.

It moves the other direction historically created a lot of value.

Greg Marcus: Just curious if the economy or sentiment or just the pullback and standards is impacting, when you think it could impact that piece of your business, thanks Gus. Sure, well actually we're going to be holding a say on this next week to figure out what the theater business is going to look like next year. We just don't know. We don't even know when we know what's coming. As we talked about in the call, right, was in the prepared remarks.

And I know that sounds like you're incrementally more positive maybe on the M&A market, but just curious.

Philosophically or otherwise youre still motivated here too.

To grow your your screen count and when you look at the deals that are starting to come through you say youre not interested is that youre not interested in the asset that you are looking at.

The price is it both.

Protect the year.

Balance sheet, just given how much you still don't know about 'twenty four slate, maybe the economy just curious because we hold the 79 theaters through the next couple of years I think it's less appealing than baking in some sort of M&A as part of your philosophy and driving growth. Thanks guys.

Greg Marcus: Nobody could have guessed, nobody ever can guess what a specific is movie is going to do. And if someone would have told me that Barbie was going to just absolutely go bananas and that other films were not going to perform as expected. And I said I wanted to perform expected, but they were some, you just tell, there's no telling. And so it all comes down to the number of films released. And we don't, you know, in Hollywood as you know is not really disclosing, you know.

Look at the end of the day. It is ultimately so I'll work backwards on what we would what we would acquire if anything it would be simply it has to have good economics and were not seeing the economics that we would want to see at this point.

Greg Marcus: So like there's been some moves. You know, we know the Dune 2 moved next year. Well okay, that's going to fill a little bit of a hole. It left us a little bit of a hole, but all the sudden Taylor Swift showed up, you know, she wrote it in a horse to save the day. So you know, we just, it is just a business where you don't know will ultimately come down to the number of films released.

And the.

Because at the end of the day.

We want we believe in growth.

But we believe it's important to grow our businesses and.

So that's the goal, but at the other hand, but really day to day is to have the most cash flow.

Greg Marcus: You know, if you look at the stats this year, which I think is some great stats to look at. We have about 15% less films released than pre-pandemic. And we've got about a 15% decline in box office compared to pre-pandemic. So, and that's an increase from last year. So as the pipeline gets refilled, you know, business will come back. You know what, we're not looking quarter to quarter. We're looking at the overall, you know, where is the business trending overall?

It feels good to say that I'm.

I am a certain size, but I'd, rather have more cash flow at the bottom line and Thats you know thats, how we think about stuff.

No.

We can do both but we're just going to have but we will be we will be patient and deliberate as we always have been and then when we see the opportunities will move.

Thanks, guys.

Thanks, Mike.

Thank you. Our next question comes from Jim Goss of Barrington Research.

Your line is now open. Please go ahead.

Alright, thanks, so much.

You mentioned earlier in explaining why he.

Parent.

Underperformance, despite the strong gain in revenues might have related somewhat to.

Greg Marcus: And that's... Hickey, James Goss, Eric Wold. And the opening of the convention center, which against not only speaks to just next summer, but really long-term, that was a over a $400 million investment in this market, so in the convention center, so, you know, good things in the long run. Greg, just a quick follow-up. You can't control the fan product, obviously. I wish you could. That'd be great. But on your screen count, just to sort of piggyback off the first question, you look at obviously optimizing here, which is a good thing, and it's a credo, which is also a really good thing.

Recovering sooner than the rest of the industry, which recovered a little later.

Are you do you think you are now running at what you might consider a more comparable basis thats the comps would be more true going forward.

It seems like you Jim if you look at the comparisons to 2019 that I shared on the call Youll notice that we were basically in line in the third quarter, but still ahead on a year to date basis. So that catch up has been progressing throughout the course of the year.

And.

You remember we were open much earlier, so we re habitually the customer to moviegoing.

Think happened in our circuit sooner and that certainly benefited us in 2022.

Greg Marcus: But when you look at your screen count, your network, you sort of down, looks like 10% versus where you were pre-pandemic. And of course, you move the other direction, historically, and created a lot of value. And I know that it sounds like you're incrementing more positive, maybe on the M&A market. But just curious, philosophically or otherwise, you're still motivated here to grow your screen count. And when you look at, you know, the deals that are starting to come through, you say you're not interested, is that you're not interested in the asset that you're looking at? Is it the price? Is it both? Is it protecting your balance sheet, just given how much you still don't know about 24 slight, maybe the economy?

Last year, which was evidenced by the outperformance numbers that we reported a year ago. So.

It seems like we're everybody's sort of getting back on par here as we get to the latter part of the year.

Yes, I think it just gets modulate it okay.

I think it just gets modulated by now bye bye product, that's not going to be huge amounts of.

But it just sort of tilt so for example.

<unk> talked about in the remarks, a good slate of family stuff should should adhere to our benefit.

Over the holidays.

Which hurt us in the third quarter comparison versus Q2 Q3 last year, because we had two films that we pointed out that that where we really outperformed the market versus the mix that we had this year, which we did well on but not as well as we did in <unk>.

Terms of over performance last year.

Alright.

Greg Marcus: Just curious, because, you know, we hold the 79 theaters through, you know, the next couple of years, I think it's lots of appealing than baking in some sort of M&A as part of your philosophy and driving growth. Thanks, guys. Look, at the end of the day, it is ultimately, I'll work backwards on what we would acquire for anything. It would be simply, it has to have good economics. And we're not seeing the economics that we'd want to see at this point.

A couple of questions about the cluster of films that.

Sort of led the way in the summer.

Barb Manheimer and sounded freedom.

Sucked up a lot of the oxygen in the room.

It seemed like mission impossible is one of the admin out and maybe the Indiana Jones movie did a little bit better than that.

Quite is quite as well.

It did.

With your collection.

Multiple pls screens were you able to take better advantage of mission impossible than was true in the industry as a whole or did it also wind up being sort of squeezed out a little bit in your theaters as well.

Greg Marcus: And the, because at the end of the day, we believe in growth, you know, that we believe that it's important to grow our businesses. And the, so that's the goal. But at the other hand, but really, the end of the day is they have the most cash flow of the line. You know, it feels good to say that I'm a certain size, but I'd rather have more cash flow at the bottom line, and that's it.

Yes.

I don't I don't remember off top my head exactly how it played out with that.

I think it still ended up getting a little pinch, but we probably had more we had more opportunity than anybody else, but it was.

Greg Marcus: And you know, that's how we think about stuff. And so, but we can do both, but we're just going to have, but we will be, will be patient and deliberate as we've always have been. And then when we see the opportunities will move. So, thanks, guys. Thanks, bye.

Greg Marcus: Thank you.

It didn't get to have the same by the way.

Impossible. If you look at the history of mission. We all went into this again this is why I said.

We should have a regular weekly sands to figure out what the films are going to do to make predictions because it's a bottoms up analysis extremely challenging in this industry and if you look at the history of mission impossible movies, it actually wasn't a tremendous.

Jim Legos: Next question, Controlman, Jim Legos, or Farrington Research?

Greg Marcus: Your line is now open. Please go ahead. All right, thanks much. You mentioned earlier in explaining why the parent underperformance despite the strong gain in revenues might have related it as somewhat to your recovering sooner than the rest of the industry which we covered a little later. Are you do you think you're now running out what you might consider a more comparable basis that the cops would be more true going forward?

Underperformers.

It's Tom cruise, where all we're all thrilled with what you did last year with.

With what's it called with top gun.

Okay.

Very optimistically.

But by the way I Love mission impossible, I watch that movie over and over.

Jim maybe I can add just a little color because I've got the numbers in front of me.

We led the industry with mission impossible on our Pls screen, 67% of our opening weekend box on that film.

Greg Marcus: It seems like it Jim, if you look at the comparisons to 2019 that I shared on the call you'll notice that we were basically in line in the third quarter but still ahead on a year to date basis so that catch up has been progressing throughout the course of the year. And you know you remember we were open much earlier so re re-habitualizing the customer to to movie going I think happened in our circuit sooner and that certainly benefited us in 2022 last year which was evidenced by the outperformance numbers that we reported a year ago.

<unk> from from Pls.

But you had barbian Oppenheimer debuting the same weekend shortly thereafter, and we used all of our pls in that opening weekend essentially for those two films. So I think.

Mission impossible is probably hurt really just by the calendar more so than.

And then anything else, but it didn't get didn't get a share of pls once those other two films premiering.

Alright, and one other thing in that area.

IMAX took an outsized share of Oppenheimer box office, it really pushed that.

Greg Marcus: So it seems like we're everybody sort of getting back on par here as we get to the to the latter part of the year. Yeah, I think it just gets modulated by now by sort of by product. Yeah, that's going to be huge amounts of, you know, but it just sort of tilts. So for example, we talked about in the remarks a good play the family stuff should should a year to our benefit, you know, they get over the holidays, which heard us in the third quarter of the course in versus Q3 last year because we we had two films that we pointed out.

Particular film and did really well with that I am wondering if that had any impact on what you feel you might have taken or was it not really that much of a comp issue in your particular markets and also related to that they are bringing back Oppenheimer.

To the big the biggest screens how are you thinking of doing something similar given the.

Lack of some of the new content right now.

So so IMAX.

Greg Marcus: That that where we really outperformed the market versus the mix that we had this year which we did well on but not as well as we did in terms of over performance last year. All right, and a couple of questions about the cluster of films that sort of led the way in the summer, carbon hammer and sound of freedom sort of sucked up a lot of the oxygen in the room. It seemed like mission of pass bowl is one of the admin out and maybe the Indiana Jones movie did a little bit better but not quite as quite as well.

Led with Oppenheimer on the weekend that those films debuted we had the ability to play both Barbie and Oppenheimer on on our Pls screens, particularly because we have a lot of multi locate multi pls locations and because we were doing.

Some flexible scheduling with those two films so.

I look at how we performed on Pls both of those films I think we got more more than our share certainly.

Box office from Peel outs.

Greg Marcus: And did that with your collection or your of multiple PLS screens were you able to take a better advantage of mission and possible than was true in the industry as a whole or did it also wind up being sort of squeezed out a little bit in your theaters as well. I don't I don't know off top of my head exactly how it played out with that I look at I think it's still ended up getting a little pinch but we but we probably had more we had more opportunity than anybody else but it was it didn't get to have to say no by the way.

Yeah.

Okay.

<unk>.

On the hotel side.

Any.

Construction status update.

Aside from the ballroom at the sister are there any other things going on and with that completion of that project are you looking for some pretty.

Pretty good comps going forward.

With the renovated ballroom.

I'll start with the last part first.

The sales teams have had some really nice success in selling that space in.

In bookings and we will see that over the next couple of years.

Greg Marcus: It's impossible if you look at the history of mission and we all went into this again this is why I said we hope you know we should have a regular weekly say on to figure out what the films are going to do to make predict. James Goss, Eric Wold, Michael Hickey James Goss, Eric Wold, Michael Michael Hickey James Goss Eric Wold, Michael So I'm actually led with Oppenheimer on the weekend of those films debuted.

But it's.

It's been really well received particularly for social social events.

Active construction projects we are kick.

Kicking off the meeting space renovation here later in the quarter at Grand Geneva.

And then we also have the rooms renovation at Pfister, which will will begin right. After the holidays, so that and that will continue throughout the course of the spring.

And with some of the common space and lobby renovations later in the spring so the entire renovation at the hotel will be done before.

The RNC Convention Convention next summer, so theres quite a bit of construction activity is still happening in the hotel business. It's the original part of the Pfister building bracketing the rooms renovation at the holdup.

The other hotel.

<unk> done we've endemic.

Alright thats it.

For now thanks, Thanks very much.

As a reminder to ask a question you can press star followed by one on your telephone keypad.

Our next question comes from Chris Potter opened northern border investments.

Chris Your line is now open. Please go ahead.

Hey, guys I was.

Just thinking about how well your businesses cooking along.

In terms of revenue.

With a couple of exceptions couple of quarterly exceptions.

2019, this looks like.

This most recent quarter revenue was the highest in the <unk>.

<unk> history, your long term borrowings.

If I'm looking at this right are the lowest they've been in the company's history, just doesn't seem like the market is giving you the credit it should.

Turns of your equity place.

I'm just wondering if you've if you've given any thought to separating the businesses spinning off the hotels from the theaters.

Yes.

The hotel business is probably.

Greg Marcus: We had the ability to play both Barbie and Oppenheimer on our PLF screens, particularly because we have a lot of multi-PLF locations and because we were doing some flexible scheduling with those two films. So as I look at how we performed on PLFs, both those films, I think we got more than our share, certainly of box office from PLFs.

Worth as much as the whole enterprise value of the company.

Just curious about your thoughts on that.

Well.

Let's say that's a good question.

As we look.

I'm guess I'm guessing that I'm guessing that.

Separated the market would give them a lot more credit than combined for some reason.

The only comment that could really make on that obviously, obviously and that is that.

Uh huh.

Instantly look at our structure.

Greg Marcus: Okay. And on the hotel side, any construction status update aside from the ballroom at the sister, are there any other things going on? And with that completion of that project, are you looking for some pretty good comps going forward with the renovated ballroom? I'll start with the last part first. The sales teams have had some really nice success in selling that space, in bookings, and we'll see that over the next couple of years.

And what is the optimal structure for the company going forward.

And what is the best way.

Sure.

Manage the balance sheet to manage the the returns to manage the value of the public market valuations we are.

We look at it regularly and.

So I have nothing to announce on this phone call.

But.

And I appreciate the thoughts and what you've just suggested.

The best I can say is we always we always look at these things.

There is no shortage of investment bankers, who would call on us.

Greg Marcus: But it's been really well received, particularly for social events. Active construction projects, we are kicking off the meeting space renovation here later in the quarter at Gran Geneva. And then we also have the Rooms renovation at Fister, which will begin right after the holiday. And that'll continue throughout the course of the spring and with some of the common space and lobby renovations later in the spring. So the entire renovation at the hotel will be done before the R&C convention next summer. So there's quite a bit of construction Hotel. And it's the original part of the Fist of building. And that's the other hotel. Okay. The other hotel. Yeah. All right. Yeah.

To present ideas.

Okay. Thank you I just had one more if I can and forgive me I missed the beginning of the call. So if you already spoke about this but can you just comment on what the.

The property market is like.

As you are seeing in terms of.

These theaters that you quote that you closed three underperforming theaters that Mike.

Be candidates for sale.

The appetite is for.

For those kinds of properties.

Well the properties that we that we closed.

One was just coming off lease so that that's just something that we are we don't have to deal with that anymore in terms of what the what the obligation is.

The other two one is has active interest.

Greg Marcus: That's it for now. Thanks. Thanks very much. Thank you. As a reminder, I invite to ask a question. You can press the flood by one on your telephone keypad.

And the other one has.

We just don't we just don't know yet but.

The math, we really did was looked and said, okay, even with the cost.

Christopher Potter: Our next question comes from a Chris Potter of Northern Border Investments. Chris, your line is now open. Please go ahead. Hey guys, I was just thinking about how well your business is cooking along. And in terms of revenue, with a couple of exceptions, a couple of quarterly exceptions in 2019. This looks like just most recent quarter revenue was the highest in the company's history. Your long-term borrowings, if I'm looking at this writer, the lowest they've been in the company's history, it just doesn't seem like the market's given you the credit it should in terms of your equity price.

Absolute minimum with the cost of carry because of where they sit in relation to other theaters, we will be better we can capture enough business.

And the other theaters.

The cost of that the cost of carry as just justified.

Closed.

Very unique situations, we do not have too many of those.

Can do that.

Understood. Thank you.

Thank you. Thank you.

At this time, we have no further questions. So I'd like to turn the call back to Mr. Paris.

Additional or closing remarks.

Thanks, Alex that we would like to thank you once again for joining us today and we look forward to talking to you again in late February when we release, our fiscal 2023 fourth quarter results until then thank you and have a good day.

Greg Marcus: And I'm just wondering if you've given any thought to separating the businesses, spinning off the hotels from the theaters. If I had to guess, the hotel business is probably worth as much as the whole enterprise value of the company. Just curious about your thoughts on that? Well, let's say that's a good question. I'm guessing that separated the market would give them a lot more credit than you combined for some reason. The only comment I can really make on that, obviously, and that is that we constantly look at our structure and what is the optimal structure for the company going forward? And what is the best way to manage the balance sheet to manage the returns to manage the value of the public market valuations? We look at it regularly.

Thank you for joining today's call you may now disconnect your lines.

[music].

Fourth quarter results until then thank you and have a good day.

Greg Marcus: And I have nothing to announce around this phone call. And I appreciate the thought and what you've just suggested and the best I can say is we always look at these things. There's no shortage of investment bankers who would call on us to present ideas.

Christopher Potter: Okay, thank you. I just had one more if I can and forgive me, I missed the beginning of the call, so if you already spoke about this, but can you just comment on what the property market is like as you're seeing it in terms of these theaters that you close and if there are other underperforming theaters that might be candidates for sale? What the appetite is for those kinds of properties? Well, the properties that we close.

Christopher Potter: Hickey, James Goss, Eric Wold. We will be better. We can capture enough business in the other theaters that the cost of carries is just justified. It's closed. Very unique situation. We do not have too many of those. Well, we can do that. Understood.

Chad Paris: Thank you. At this time, we have no further questions.

Chad Paris: If I'd like to turn the call back to Mr. Paris for any additional or closing remarks. Thanks, Alex. We would like to thank you once again for joining us today and we look forward to talking to you again in late February when we release our fiscal 2023 fourth quarter results. Until then, thank you and have a good day. Thank you for joining us. That's cool. You may now disconnect your lines. Fourth quarter results. Until then, thank you and have a good day.