Q1 2024 The Marcus Corp Earnings Call

Operator: Good morning everyone, and welcome to the Marcus Corporation first quarter earnings conference call. My name is Lauren, 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. 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.

Good morning, everyone and welcome to the Marcus Corporation first quarter earnings Conference call.

Lauren: My name is Lauren and I'll be your win rates are at today.

Speaker Change: At this time all participants are in a listen only mode.

Lauren: We will conduct a question and answer session towards the end of this conference.

Lauren: 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 call is being recorded.

Lauren: Joining us today are Greg monkeys, Chairman, President and Chief Executive Officer, and Chad, Paris, Chief Financial Officer, and Treasurer off the market cooperation.

Operator: 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 over to Mr. Paris for his opening remarks. Please go ahead, sir.

Chad M. Paris: This time I'd like to turn the program over to Mr. Paris with opening remarks. Please go ahead Sir.

Chad M. Paris: Thanks Lauren.

Chad M. Paris: Good morning, and welcome to our fiscal 2024 first 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 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 M. Paris: Good morning, and welcome to our fiscal 2024 first 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 established by the private Securities Litigation Reform Act.

Chad M. Paris: 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 M. 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 these 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 2024 first quarter results and in the risk factors section of our fiscal 2023 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 marcuscorp.com.

Our forward looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected.

Chad M. Paris: Listeners are cautioned not to place undue reliance on our forward looking statements.

Chad M. Paris: 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 2024 first quarter results and in the risk factors section of our fiscal 2023 annual report.

Chad M. Paris: Short 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 Marcus Corp Dot com.

Chad M. Paris: 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. You should look at our website, MarcusCorp.com, as an important source of information regarding our company.

Chad M. Paris: 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.

Chad M. Paris: Their stakeholders.

Chad M. Paris: You should look at our web site markets Corp, Dot com as an important source of information regarding our company.

Chad M. Paris: We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP 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. All right, with that behind us, let's begin.

Chad M. Paris: We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP measure used in evaluating our performance and its limitations a reconciliation of adjusted EBITDA to the nearest GAAP measure is provided in today's release.

Chad M. Paris: This morning, I'll start by spending a few minutes sharing the results of our first quarter with you and discussing our balance sheet and liquidity. And then I'll 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'll then open up the call to questions.

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

Chad M. Paris: This morning, we reported a quarter in which we expected to face significant headwinds. The first quarter is always a seasonally challenging quarter, with slower leisure travel at our Midwestern hotels during the winter months and what is often a lighter movie slate coming out of Hollywood. In addition to the normal seasonality, this year, we knew we would face content supply challenges resulting from the prolonged movie production shutdown during last year's Hollywood strike. With these challenges in mind, our teams were focused on closely managing our operations and the things that we could control.

Greg: This morning, we reported a quarter in which we expected to face significant headwinds. The first quarter is always a seasonally challenging quarter with slower leisure travel at our Midwestern hotels during the winter months and what is often a lighter movie slate coming out of Hollywood. In addition to the normal seasonality. This year, we knew we would face content supply.

Greg: <unk>, resulting from the prolonged movie production shutdown during last year's Hollywood strikes.

Greg: With these challenges in mind, our teams were focused on closely managing our operations and the things that we can control.

Chad M. Paris: Our first quarter results were mixed in our two segments. Our hotel division delivered revenue, rev par, and earnings growth on continued strength in our group business. While our theaters division was negatively impacted by the weaker film slate with significantly lower attendance, we managed expenses well on the lower revenue. I'll start with a few highlights from our consolidated results for the first quarter of fiscal 2024. Consolidated revenues of $138.5 million decreased $13.7 million, or 9%, compared to the prior-year quarter, with revenue growth in our hotels and resorts division offset by the revenue decrease in our theater division. Operating loss for the quarter was $16.7 million, a decline of $7.7 million compared to the prior year quarter.

Greg: Our first quarter results were mixed and our two segments. Our hotel division delivered revenue Revpar and earnings growth on continued strength in our group business.

Speaker Change: While our theaters division was negatively impacted by the weaker film slate with significantly lower attendance, we managed expenses well on the lower revenues.

Speaker Change: I'll start with a few highlights from our consolidated results for the first quarter of fiscal 2024.

Speaker Change: Consolidated revenues of $138 5 million decreased $13 7 million or 9% compared to the prior year quarter with revenue growth in our hotels and resorts division offset by the revenue decrease in our theater Division.

Speaker Change: Operating loss for the quarter was $16 7 million a decline of $7 7 million compared to the prior year quarter.

Speaker Change: Consolidated adjusted EBITDA for the fourth quarter was $2 3 million a decrease of $7 2 million over the first quarter of fiscal 2023.

Chad M. Paris: Consolidated adjusted EBITDA for the fourth quarter was $2.3 million, a decrease of $7.2 million over the first quarter of fiscal 2023. Turning to our segment results, I'll start this morning with our Hotels and Resorts Division. Revenues were $57.2 million for the first quarter of fiscal 2024, an increase of 2.5% compared to the prior year. Total revenue before cost reimbursements at our seven owned hotels increased by over $1.7 million, or 3.8%, over the first quarter of fiscal 2023.

Speaker Change: Turning to our segment results I'll start this morning, with our hotels and resorts Division.

Chad M. Paris: Revenues were $57 2 million for the first quarter of fiscal 2024, an increase of two 5% compared to the prior year.

Speaker Change: Total revenue before cost reimbursements that are seven owned hotels increased over $1 7 million or three 8% over the first quarter of fiscal.

Speaker Change: Fiscal 2023.

Chad M. Paris: Rev par for comparable owned hotels grew 2.1% during the first quarter compared to the prior year, which resulted from an overall occupancy rate increase of 2.9 percentage points, particularly partially offset by a 3.4% decrease in our average daily rate, or ADR. Our average fiscal 2024 first quarter occupancy rate for our owned hotels was 53.7 percent.

Speaker Change: Revpar for our comparable owned hotels grew two 1% during the first quarter compared to the prior year, which resulted from an overall occupancy rate increase of two nine percentage points.

Speaker Change: Partially offset by a three 4% decrease in our average daily rate or ADR.

Speaker Change: Our average fiscal 2024 first quarter occupancy rate for our owned hotels was 53, 7%.

Chad M. Paris: The decrease in ADR resulted from an increase in our group rooms as a percentage of our overall room mix, with growth in midweek group rooms sold, which generally increases occupancy at lower rates. Group rooms increased to 34.5% of our total room mix during the first quarter of fiscal 2024, compared to 28.9% in the prior year quarter. In addition, improved revenue management during slower weeks and midweek nights in the first quarter resulted in growing occupancy and rev par at lower daily rate offerings to optimize overall room revenue. Our success in growing group business and better revenue management was evident in our performance relative to our peers.

Speaker Change: The decrease in ADR resulted from an increase in our group rooms, as a percentage of our overall room mix with growth in midweek group rooms sold which generally increases occupancy at lower rates group rooms increased to 34, 5% of our total room mix during the first quarter of fiscal 2020.

Speaker Change: Four compared to 28, 9% in the prior year quarter. In addition, improved improved revenue management during slower weeks and midweek nights in the first quarter resulted in growing occupancy and revpar at lower daily rate offerings to optimize overall rooms revenue.

Speaker Change: Our success in growing group business and better revenue management was evident in our performance relative to our peers.

Chad M. Paris: According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced effectively flat REVPAR growth of 0.1% for the fiscal first quarter of 2024 compared to the first quarter of fiscal 2023, indicating that our hotels outperformed their competitive set by 2.3 percentage points. When comparing our REVPAR results to comparable upper-upscale hotels throughout the United States, the upper upscale segment experienced an increase in REVPAR of 2.0% during our first quarter compared to the first quarter of fiscal 2023, indicating that our hotels performed in line with the industry nationally.

Chad M. Paris: According to data received from Smith travel research comparable competitive hotels in our markets experienced effectively flat revpar growth of 0.1% for the fiscal first quarter of 2024 compared to the first quarter of fiscal 2023.

Speaker Change: Indicating that our hotels outperformed our competitive set by two three percentage points when.

Speaker Change: When comparing our revpar results to comparable upper upscale hotels throughout the United States. The upper upscale segment experienced an increase in revpar of 2.0% during our first quarter compared to the first quarter of fiscal 2023, indicating that our hotels performed in line with the industry nationally.

Chad M. Paris: With the continued growth in group business and events, our banquet and catering operations continue to grow, with food and beverage revenues up 6.4% in the first quarter of fiscal 2024 compared to the prior year. Finally, hotels' adjusted EBITDA increased slightly in the first quarter of fiscal 2024, an improvement of approximately $400,000 compared to the prior year.

Speaker Change: With the continued growth in group business and events, our banquet and catering operations continued to grow with food and beverage revenues up six 4% in the first quarter of fiscal 2024 compared to the prior year.

Speaker Change: Finally hotels adjusted EBITDA increased slightly in the first quarter of fiscal 2024.

Speaker Change: An improvement of approximately 400000 compared to the prior year quarter.

Speaker Change: Turning to theaters, our first quarter fiscal 2024 total revenue of $81 3 million decreased 15, 7% compared to the prior year first quarter.

Chad M. Paris: Turning to theaters, our first quarter fiscal 2024 total revenue of $81.3 million decreased 15.7% compared to the prior year first quarter. Comparable theater admission revenue decreased 13.8% over the first quarter of 2023, with comparable theater attendance decreasing 17.5%. Our first fiscal quarter began on December 29th and ended on March 28th, and thus it included three days between the holidays, but it excluded the opening weekend of Godzilla Kong: The New Empire at the end of March.

Speaker Change: Comparable theater admission revenue decreased 13, 8% over the first quarter of 2023 with comparable theater attendance decreasing 17, 5%.

Chad M. Paris: Our first fiscal quarter began on December 29th and ended on March 28, and thus included three days between the holidays, but excluded the opening weekend of Godzilla Kong the new Empire at the end of March when comparing our results to other exhibitors or industry data sources, such as box office Mojo for the first.

Chad M. Paris: Quarter is important to note that the domestic box office decrease.

Chad M. Paris: When comparing our results to other exhibitors or industry data sources such as Box Office Mojo for the first quarter, it is important to note that the domestic box office decrease for the first calendar quarter was approximately 3.3 percentage points better than the domestic box office decrease for the comparable weeks in our first fiscal quarter. When using our comparable fiscal weeks, according to data received from ComScore and compiled by us to evaluate our fiscal 2024 first quarter results, US box office receipts decreased 9% during our fiscal 2024 first quarter compared to US box office receipts during our fiscal 2023 first quarter, indicating that our performance lagged the industry by approximately 4.8 percentage points.

Speaker Change: First calendar quarter was approximately three three percentage points better than the domestic box office decrease for the comparable weeks in our first fiscal quarter.

Chad M. Paris: When using our comparable fiscal weeks. According to data received from Comscore and compiled by us to evaluate our fiscal 2024 first quarter results.

Speaker Change: U S box office receipts decreased 9% during our fiscal 2024 first quarter compared to U S box office receipts during our fiscal 2023 first quarter, indicating that our performance lagged the industry by approximately four eight percentage points.

Chad M. Paris: We believe that our lower box office performance during the first quarter was primarily attributable to two factors. First, the biggest film of the quarter, Dune Part 2, played exceptionally well on IMAX screens, resulting in IMAX screens taking market share from our ultra-screen and super-screen PLF formats in certain markets. While we believe the overall customer experience on our PLF screens with recliner seating, laser projection, and Dolby Atmos sound is second to none, the marketing and promotion approach for this film negatively impacted our PLF market share this quarter.

Speaker Change: We believe that our lower box office performance during the first quarter was primarily attributable to two factors first the biggest film of the quarter due in part to play it exceptionally well on IMAX screens, resulting in Imas IMAX screens, taking market share from our ultra screen and Super screen Pls form.

Speaker Change: Thats in certain markets.

Speaker Change: While we believe the overall customer experience on our pls screens with recliner seating laser projection in Dolby Atmos sound is second to none the market and promotion approach for this film negatively impacted our pls market share this quarter.

Chad M. Paris: We also believe the IMAX significant outperformance was unique to DUNE and its distribution strategy as we saw a return to historical norms for PLF market share on Ghostbusters: Frozen Empire. In addition, we believe this dynamic was amplified in a quarter without many other big films playing on PLFs. And given our high penetration of PLFs across our circuit, we tend to outperform in periods when there is a greater supply of P

Chad M. Paris: We also believe the IMAX significant outperformance would you need to do and its distribution strategy as well as we saw a return to historical norms for pls market share on Ghostbusters frozen Empire.

Speaker Change: In addition, we believe this dynamic was amplified in a quarter without many other big films, playing on Pls and given our high penetration of Pls across our circuit, we tend to outperform in periods. When there is a greater supply of pls content.

Chad M. Paris: Second, the total box office in our top seven markets underperformed the overall decrease in the national box office. We believe this is attributable to an unfavorable film mix that was light on family content and due to the stronger relative performance of Dune in markets where we do not have a presence.

Chad M. Paris: Second the total box office in our top seven markets underperformed. The overall decrease in the National box office.

Speaker Change: We believe this is attributable to an unfavorable film mix that was light on family content and due to the stronger relative performance of doing in markets, where we do not have a presence.

Chad M. Paris: Our average admission price increased by 4.9% during the first quarter of fiscal 24 compared to last year. The increase in our admission per cap was primarily due to strategic pricing actions taken during fiscal 2023, which were partially offset by a decrease in the percentage of 3D ticket sales during the first quarter of 24 compared to the first quarter last year, which was favorably impacted by high 3D ticket sales from Avatar: The Way of Water.

Speaker Change: Our average admission price increased by four 9% during the first quarter of fiscal 'twenty four compared to last year.

Speaker Change: The increase in our admission per caps was primarily due to strategic pricing actions taken during fiscal 2023, which were partially offset by a decrease in the percentage of <unk> ticket sales during the first quarter of <unk> 24, compared to the first quarter last year, which was favorably impacted by high <unk> ticket sales from avatar the way of <unk>.

Chad M. Paris: Water.

Chad M. Paris: Our average concession food and beverage revenues per person at our comparable theaters increased by 0.8% during the first quarter of fiscal 2024 compared to the same quarter last year. The increase was primarily due to inflationary pricing changes implemented during 2023 and was partially offset by a decrease in the number of concession items purchased per customer, which we believe is the result of fewer blockbuster films in the quarter, which tend to result in larger average purchase sizes as customers make a bigger event out of going to see the bigger films.

Speaker Change: Our average concession food and beverage revenues per person at our comparable theaters increased by 0.8% during the first quarter of fiscal 2024 compared to last year's first quarter.

Chad M. Paris: The increase was primarily due to inflation inflationary pricing changes implemented during 2023 and was partially offset by a decrease in the number of concession items purchased per customer, which we believe is the result of fewer blockbuster films in the quarter, which tend to result in larger average purchase size is as customers make a bigger event.

Chad M. Paris: Out of going to see the bigger films.

Chad M. Paris: Our top 10 films in the quarter represented approximately 62% of the box office in the first quarter of fiscal 2024, compared to 71% for the top 10 films in the first quarter of last year. The less concentrated film slate resulted in an approximately three percentage point decrease in overall film cost as a percentage of admission revenue. On the lower revenues, theater division adjusted EBITDA during the first quarter of fiscal 2024 was $6.2 million, compared to $13.8 million in the prior year quarter. Given the soft film slate, we closely managed operating hours and labor throughout the quarter.

Speaker Change: Our top 10 films in the quarter represented approximately 62% of the box office in the first quarter of fiscal 2024 compared to 71% for the top 10 films in the first quarter last year. The less concentrated film slate resulted in an approximately three percentage point decrease in overall film.

Chad M. Paris: <unk> cost as a percentage of admission revenues.

Chad M. Paris: The lower revenues Theater division adjusted EBITDA during the first quarter of fiscal 2024 was $6 2 million compared to $13 8 million in the prior year quarter.

Chad M. Paris: Given the soft film slate, we closely manage operating hours and labor throughout the quarter.

Chad M. Paris: Shifting the cash flow in the balance sheet, or cash flow from operations, was a use of cash of $15.1 million in the first quarter of fiscal 2024 compared to cash used by operations of $7.7 million in the prior year quarter, with the increase in cash used primarily due to lower EBITDA. As a reminder, our cash flow from operations in the first quarter is historically impacted by seasonal changes in working capital resulting from the slowdown in our businesses following the peak holiday season and by the timing of various year-end accounts payable and compensation payments.

Chad M. Paris: Shifting to cash flow and the balance sheet, our cash flow from operations was a use of cash of $15 1 million in the first quarter of fiscal 2024 compared to cash used by operations of $7 7 million in the prior year quarter with the increase in cash used primarily due to the lower EBITDA.

Chad M. Paris: As a reminder, our cash flow from operations in the first quarter is historically impacted by seasonal changes in working capital, resulting from the slowdown in our businesses. Following the peak holiday season, and by the timing of various year, it accounts payable and compensation payments.

Chad M. Paris: Total capital expenditures during the first quarter of fiscal 2024 were $15.4 million, compared to $8.9 million in the first quarter of fiscal 2023. A large portion of our capital expenditures during the first quarter were invested in renovation projects in the hotel business at the Pfister Hotel and Grand Geneva Resort and Spa, with the balance going to maintenance projects in both businesses. Our capital investments and renovation projects have progressed as planned, and we continue to expect capital expenditures for fiscal 2024 of $60 to $75 million, recognizing that the timing of several of our planned expenditures is still just estimates at this time.

Chad M. Paris: Total capital expenditures during the first quarter of fiscal 2024 were $15 4 million compared to $8 9 million in the first quarter of fiscal 'twenty three are.

Chad M. Paris: A large portion of our capital expenditures during the first quarter were invested in renovation projects in the hotel business at the Pfister Hotel and Grand Geneva Resort and Spa with the balance going to maintenance projects in both businesses, our capital investments and renovation projects have progressed as planned and we continue to expect capital expenditures.

Chad M. Paris: For fiscal 2024 of $60 to $75 million recognizing that the timing of several of our planned expenditures are still just estimates at this time.

Chad M. Paris: We are still finalizing the scope and timing of various projects, and the actual timing of these projects will impact our final capital expenditure number for the year. We will update our capital expenditure estimates as the year progresses. In addition to our capital expenditures, during the first quarter, we also invested approximately $4 million in a joint venture that acquired the Lowe's Minneapolis Hotel, a 251 room full-service luxury hotel that Greg will discuss further.

Chad M. Paris: We are still finalizing the scope and timing of various projects and the actual timing of these projects will impact our final capital expenditures number for the year.

Chad M. Paris: We will update our capital expenditure estimates as the year progresses.

Chad M. Paris: In addition to our capital expenditures during the first quarter, we also invested approximately $4 million.

Chad M. Paris: In a joint venture that acquired the Loews Minneapolis Hotel, a 251 room full service luxury hotel that Greg will discuss further.

Chad M. Paris: This investment and our ability to execute on this deal is a great example of the flexibility and strategic advantage that our strong balance sheet and liquidity provide, making us an attractive asset buyer to sellers and allowing us to move quickly when attractive investment opportunities become available. Our balance sheet remains strong, and we ended the first quarter with $17 million in cash and over $237 million in total liquidity, with a debt-to-capitalization ratio of 27 percent and net leverage of 1.7 times net debt-to-adjusted EBITDA. With that, I will now turn the call over to Greg.

Greg: This investment and our ability to execute on this deal is a great example of the flexibility and strategic advantage that our strong balance sheet and liquidity provide making us an attractive asset buyer to sellers and allowing us to move quickly when attractive investment opportunities become available.

Chad M. Paris: Our balance sheet remains strong and we ended the first quarter with $17 million in cash and over $237 million in total liquidity with a debt to capital is a capitalization ratio of 27% and net leverage of one seven times net debt to adjusted EBITDA with that I will now turn the call over to Greg.

Gregory S. Marcus: Thanks, Chad. Good morning, everyone. We entered the year with a mixed short-term outlook on our two businesses. In hotels, we saw a continuing trend of strong group bookings, an overall healthy economy with steady travel demand, significant events and demand drivers in our markets, and several recently renovated properties in our portfolio with strong positioning in By contrast, in theaters, we know we would have to navigate a short-term content supply disruption resulting from the shutdown of movie production during the 2023 Hollywood strikes that would likely create challenges for several, As I shared on our last call, January and February got off to a slow start, and while I'm happy to share that March was better, it was still a tough quarter for the team.

Greg: Thanks, Jeff Good morning, everyone. We entered the year with a mix short term outlook and our two businesses and hotels, we saw a continuing trend of strong group bookings and overall healthy economy with steady travel demand significant events and demand drivers in our markets and several recently renovated properties in our portfolio with strong positioning in their markets.

Gregory S. Marcus: Contrast in theaters, we knew we would have to navigate the short term content supply disruption, resulting from the shutdown of movie production. During the 2023 Hollywood strikes that would likely create challenges for several quarters.

Gregory S. Marcus: As I shared on our last call January and February got off to a slow start and while I am happy to share that March was better was still a tough quarter for the movies. We anticipated. These short term challenges in our industry and we manage the business accordingly.

Gregory S. Marcus: We anticipated these short-term challenges in our industry, and we managed the business accordingly. While the comparisons to last year are certainly tough, the overall company first quarter results are actually slightly better than last week. We often get asked why we have these two different results.

Gregory S. Marcus: While the comparisons to last year are certainly tough the overall company first quarter results are actually slightly better than what we expected we often get asked why we have these two different businesses.

Gregory S. Marcus: And this quarter, along with the last several years, has really illustrated the benefits of our diversified business, which can provide a counterbalance when we encounter periodic bumps in one of our. Well, the short-term expectations for our theater and hotel divisions are going to differ this year. Our long-term outlook for both businesses remains positive and optimistic, and we expect growing momentum in the back. Start today with our hotel and resort. You've seen the segment numbers.

Gregory S. Marcus: This quarter along with the last several years have really illustrated the benefits of our diversified business model that can provide a counterbalance encountered periodic bumps in one of our businesses.

Gregory S. Marcus: While the short term expectations for our theater and hotel divisions are going to defer this year.

Gregory S. Marcus: Our long term outlook for both businesses remains positive and optimistic and we expect growing momentum in the back half of the year.

Gregory S. Marcus: I'll start today with our hotels <unk> resorts division, you've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance of the comp sets in our in line performance with upper upscale hotels nationally.

Gregory S. Marcus: And Chad shared some additional detail on the performance metrics, including our out-performance for the Comp Sets and our in-line performance with Upper Upscale Hotels. As we've discussed in previous years, there's significant seasonality in our hotel business given that most of our company-owned hotels are located in the Midwest. We often lose money in this division during the winter months, and in the first quarter of fiscal 2024, we were a break-even EBITDA, an improvement over our prior year EBITDA loss.

Gregory S. Marcus: As we've discussed in past years, there is significant seasonality in our hotel business given that most of our company owned hotels are located in the Midwest.

Gregory S. Marcus: We often lose money in this division during the winter months and in the first quarter of fiscal 2024, we were at breakeven EBITDA an improvement over our prior year EBITDA loss.

Gregory S. Marcus: There were a few notable trends in the quarter that I would like to highlight. I'll start with what we're seeing with average daily rates. Our average daily rates were down 3.4% in the first quarter compared to the first quarter last year, and the drivers of this are due to three factors.

Gregory S. Marcus: There were a few notable trends in the quarter that I would like to highlight.

Gregory S. Marcus: I'll start with what we're seeing with average daily rates.

Gregory S. Marcus: Our average daily rates were down three 4% in the first quarter compared to the first quarter last year and the drivers of this are due to three factors changes in our mix of business changes in revenue management strategy and some market softening.

Gregory S. Marcus: Changes in our mix of business. Changes in our revenue management strategy, and some market software. I'll start with our mix of business. In the first quarter of 2024, group room revenue was over 34% of our overall mixed revenue, compared with 29% of our mixed glass. Group business is typically at lower rates, and is dilutive to ADR.

Gregory S. Marcus: I'll start with our mix of business in the first quarter of 2020 for group room revenue was over 34% of our overall mix of business.

Gregory S. Marcus: Paired with 29% of our mix last year.

Gregory S. Marcus: Our group business is typically at lower rates.

Gregory S. Marcus: And as dilutive to ADR it allows us to grow midweek occupancy.

Gregory S. Marcus: It allows us to grow mid-week and is accretive to our overall revenue. In addition, the strength of our group business provides growth for our banquet and catering business compared to the first quarter last year. We continue to refine and optimize revenue. During the first quarter at Select Hotels, we adjusted our strategy to sell rooms at lower daily rates during low demand periods to drive occupancy and maximize revenue with our available room-night capacity. This approach was particularly effective during the winter months when demand is seasonally low, and we were more aggressive on rates this year than we were last year.

Gregory S. Marcus: And is accretive to our overall revpar and.

Gregory S. Marcus: In addition, the strength of our group business provides growth to our banquet and catering business, which grew six 4% in the first quarter of 2024 compared to the first quarter last year.

Gregory S. Marcus: Secondly.

Gregory S. Marcus: We continue to refine and optimize revenue management during the first quarter at select hotels, we adjusted our strategy to sell rooms at lower daily rates during low demand periods to drive occupancy and maximize revenue with our available room night capacity.

Gregory S. Marcus: This approach was particularly effective during the winter months when demand is seasonally low and we were more aggressive on rates. This year than we were last year.

Gregory S. Marcus: The net result was successful in growing our occupancy and overall revenue. Finally, we did see some general rates softening in the quarter at some of our properties. One quarter does not make a trend, and the winter months are typically weak demand to begin with, but we do expect moderating ADR growth rates compared to last year, and we will continue to monitor the trend. Rat Park grew at three of our seven owned hotels, with average daily rate growth at two hotels and occupancy at four out of seven, resulting in overall Rampart growth. 2.1%

Gregory S. Marcus: The net result was successful in growing our occupancy and overall revpar.

Gregory S. Marcus: Finally, we did see some general rate softening in the quarter at some of our properties.

Gregory S. Marcus: One quarter does not make a trend in the winter months are typically weak demand to begin with but we do expect moderating our ADR growth rates compared to last year, and we will continue to monitor the trend.

Gregory S. Marcus: Revpar grew at three of our seven owned hotels with average daily rate growth of two hotels and occupancy growth in four out of seven hotels, resulting in overall revpar growth of two 1%.

Gregory S. Marcus: Group business remains strong, and we're doing a great job capturing our share of group business. I previously shared with you the strength in our group bookings over the last several quarters, and we're seeing that coming through. The bookings continue to look strong, with our group room revenue bookings for the remainder of fiscal 2020, or group base for the year, running approximately 23% ahead of where we were at this time last year, approximately 11% of where we were at this time last year, excluding the impact of the upcoming Republican National Convention in Milwaukee this summer Our group pace for Fiscal 2025 is running over 60% ahead of where we were this time last year.

Gregory S. Marcus: Group business remained strong and we're doing a great job capturing our share of group business. We've previously shared with you the strength in our group bookings over the last several quarters and we're seeing that coming through the results.

Gregory S. Marcus: The bookings continued to look strong with our group room revenue bookings for the remainder of fiscal 2024 or group pace in the year for the year running approximately 23% ahead of where we were at this time last year.

Gregory S. Marcus: At approximately 11% of where we were at this time last year, excluding the impact of the upcoming Republican National Convention in Milwaukee This summer.

Gregory S. Marcus: Even more encouraging our group pace for fiscal 2025 is running over 60% ahead of where we were at this time last year.

Gregory S. Marcus: Banquet and Catering pays for the remainder of fiscal 24 and 25, and is similarly ahead of what we're getting into. Chad mentioned our investments in renovations in our owned hotels. One benefit of our seasonality and slower winter months is that it gives us an opportunity to complete these projects with limited disruption to hotel operations. We continue to make great progress on our renovation projects, with most of the updated ballrooms and meeting space at Grand Geneva now back in service. The guest room renovation of the historic tower at the Pfister Hotel is on track.

Gregory S. Marcus: Banquet and catering pace for the remainder of fiscal 'twenty, four and 'twenty. Five Similarly ahead of where we were at this time last year.

Gregory S. Marcus: Chad mentioned, our investments and renovations in our owned hotels this quarter, one benefit of our seasonality and slower winter months is it gives us an opportunity to complete these projects with limited disruption to hotel operations.

Gregory S. Marcus: We continue to make great progress on our renovation projects with most of the updated ballrooms and meeting space at Grand Geneva, now back in service and the Guestroom renovation of the historic tower at the Pfister Hotel on track for completion in June the.

Gregory S. Marcus: The updated space and rooms look great, and our team has done a fantastic job executing these large and complex projects. As our hotel division heads into the busier spring and summer travel months, we are excited by what we see ahead. The investments we are making in our properties put us in a great position to win in our market. And, of course, the Republican National Convention in July will be great for the entire city of Milwaukee, and we're excited to showcase our wonderful, Last quarter, I shared an update on our growth strategy in hotels and briefly commented on our pending acquisition of the Lowe's Mini-Hotel.

Gregory S. Marcus: The updated space in rooms, with great and our team has done a fantastic job executing these large and complex projects.

Gregory S. Marcus: As our hotel division heads into the busier spring and summer travel months, we are excited by what we see ahead.

Gregory S. Marcus: The investments we are making in our properties puts us in a great position to win in our markets.

Gregory S. Marcus: And of course, the Republican National Convention in July will be great for the entire city of Milwaukee, and we're excited to showcase our wonderful community.

Gregory S. Marcus: Last quarter I shared an update on our growth strategy in hotels and briefly commented on our pending acquisition of the Loews Minneapolis Hotel.

Gregory S. Marcus: The joint venture closed on the hotel acquisition on March 1st, and our team hit the ground running, taking over management of the hotel and executing our repositioning strategy for this property. The luxury lifestyle hotel was rebranded as The Lofton.

Gregory S. Marcus: Drawing venture closed on the hotel acquisition on March one and our team hit the ground running taking over management of the hotel and executing our repositioning strategy for this property the luxury lifestyle hotel was rebranded the lofton.

Gregory S. Marcus: Tapestry Collection by Hilton. It was part of the Hilton Reservation System on day one of our ownership in May. We will continue to make improvements at the hotel over the next year to create value and turn around what we believe is a property with great value. Turning to the numbers, Chad went over the numbers with you, including our continued increases in per person revenue. The beginning of the first quarter got off to a very different start than what we experienced last year when the industry benefited from strong holds on carryover.

Gregory S. Marcus: A tapestry collection by Hilton Hotel.

Gregory S. Marcus: It was part of the Hilton Reservation system on day, one of our ownership and management, we will continue to make improvements at the hotel over the next year to create value and turnaround what we believe is a property with great potential.

Gregory S. Marcus: Turning to theaters.

Gregory S. Marcus: Javelin over the numbers with you, including our continued increases in per person revenues at the beginning of the first quarter got off to a very different start than what we experienced last year when the industry benefited from strong holds on carryover.

Gregory S. Marcus: Avatar: The Way of Water, and Puss in Boots, the last. In fact, Avatar was the number one movie for the first five weeks of our fiscal 2023. Well, there were a number of good films and theaters over the holidays that continue to play into the new year. We didn't have a single blockbuster like Avatar that held as long and performed as strong in January. In terms of the quantity of wide release films in the first quarter, we had a similar number of titles with 24 wide releases in the first quarter of fiscal 2024 compared to 23 in the first quarter last year.

Gregory S. Marcus: Avatar, the way of water and pushing boots the last wish.

Gregory S. Marcus: In fact avatar was the number one movie for the first five weeks of our fiscal 2023.

Gregory S. Marcus: While there were a number of good films in theaters over the holidays that continues to play into the new year. We didn't have a single blockbuster like avatar that held as long and performed as strong in January this year.

Gregory S. Marcus: In terms of the quantity of wide release films in the first quarter, we had a similar number of titles with 24 wide releases in the first quarter of fiscal 2024 compared to 23% in the first quarter last year. However, the first quarter slate. This year was weaker overall with lesser performances and fewer blockbuster films with no films in the first quarter opening over $100 million.

Gregory S. Marcus: However, the first quarter slate this year was weaker overall, with lesser performances and fewer blockbuster films, with no films in the first quarter opening over $100 million. And with an average opening weekend U.S. box office gross per wide-release film that was 25% lower than the same average in the first quarter last year. We believe this was another side effect of last year's Hollywood strikes, with bigger titles getting pushed out of the film slate as a result of the movie production shutdown.

Gregory S. Marcus: And with an average opening weekend box office gross per wide release film that was 25% lower than the same average in the first quarter last year.

Gregory S. Marcus: We believe this was another side effect of last year's Hollywood strikes with bigger titles getting pushed out of the film slate as a result of the movie production shutdown and smaller films getting wide releases that would have normally been limited releases, if the product supply were strong.

Gregory S. Marcus: Smaller films get wide releases that would normally be limited releases if the product supply was limited. There were a few bright spots in the quarter, with Dune Part 2 exceeding industry expectations and delivering on its potential, and Bob Marley won Love, Surprising, with a strong opening and a great... Chad shared some of the market share dynamics that we believe impacted our market share on Dune, with the film significantly outperforming on IMAX screens now, which only represent three of our 125 premium large formats.

Gregory S. Marcus: There were a few bright spots in the quarter with due in part to exceeding industry expectations and delivering on its potential and Bob Marley, one love surprising with a strong opening in a great run.

Gregory S. Marcus: Chad shared some of the market share dynamics that we believe impacted our market share on June with the film significantly outperforming on IMAX screens nationally, which only represents three of our 125 premium large format screens.

Gregory S. Marcus: As Chad discussed, the IMAX performance on this film does appear to be unique to Dune and its distribution strategy, as we saw a return to a more typical PLF market shared with Ghostbusters: Frozen Empire. Chad also noted that our PLF strategy particularly benefits us when there are multiple significant films in the market at the same time. Our admission per cap was up 4.9% in the first quarter, and we were able to overcome the headwind from the high percentage of 3D tickets sold on Avatar last year.

Gregory S. Marcus: <unk> discussed the IMAX performance on this film does appear to be unique to do and its distribution strategy. As we saw a return to a more typical pls market share with Ghostbusters frozen Empire jet also noted that our pls strategy, particularly benefits us when there are multiple significant films in the market at the same time.

Gregory S. Marcus: Our admission per caps were up four 9% in the first quarter and we were able to overcome the headwind from the high percentage of <unk> tickets on avatar last year.

Gregory S. Marcus: However, as we look forward, we expect our admission per cap growth rate to flatten as we have passed the one-year anniversary of the pricing changes to our Value Tuesday promotion that we made in March last year. We will continue to review our regular non-Tuesday ticket prices in our markets to ensure we remain competitive and offer attractive value to all types of consumers. This will be increasingly important as we work to incentivize customers to maintain the habit of moving during periods of product gaps.

Gregory S. Marcus: However, as we look forward, we expect our admission per cap growth rate to flatten as we've passed the one year anniversary of the pricing changes to our value Tuesday promotion that we made in March last year.

Gregory S. Marcus: We will continue to review our regular non Tuesday ticket prices in our markets to ensure we remain competitive and offer an attractive value to all types of customers. This will be increasingly important as we work to incentivize customers to maintain the habit of moviegoing during periods of product gaps in the release calendar.

Gregory S. Marcus: In April, we were with our theater team at CinemaCon, and there were a few things I took away from this year's conference. First, and most importantly, our studio partners, film directors, and talent all continue to reaffirm the importance of theatrical exhibition to the overall film entertainment ecosystem and our role in elevating it. Second, we got a closer look at the film slate for the rest of the year and into 2025. And as we move past the supply chain issues from the strikes, there's a lot to be excited about with several great titles this summer and later this year that look really good, and we expect a strong, much stronger slate for 2025.

Gregory S. Marcus: In April we were with our theater team at Cinema Khan and there were a few things I took away from this year's conference first and most importantly, our studio partners film Directors and talent all continued to reaffirm reaffirm the importance of theatrical exhibition to the overall filmed entertainment ecosystem and our role in elevating their content.

Gregory S. Marcus: Second we've got a closer look at the film slate for the rest of the year and into 2025 and as we move past the supply chain issues from the strikes there is a lot to be excited about with the several great titles. This summer and later this year that look really good and we expect a strong a much stronger slate for 2025.

Gregory S. Marcus: The summer movie season kicks off tomorrow with the opening of The Fall Guy and is followed by a number of big titles, including Kingdom of the Planet of the Apes, Furiosa, a Mad Max saga, Inside Out 2, Horizon, an American saga, A Quiet Place Day 1, Despicable Me 4, Twisters, Deadpool, and Wolverine. This fall, we are excited about Beetlejuice 2, Joker Saw XI and Venom, the last.

Gregory S. Marcus: The summer movie season kicks off tomorrow with the opening of the fall Guy and is followed by a number of big titles, including Kingdom of the plans of the apes.

Gregory S. Marcus: Curiosa Mad Max Saga inside out to horizon in American soccer, a quiet place day, one despicable me for Twisters Deadpool Wolverine. This fall we are excited about betelgeuse beetle juice Joker Folio do saw 11 invented the last dance for the holidays we.

Gregory S. Marcus: For the holidays, we look forward to Gladiator 2, Moana 2, Wicked, The Lord of the Rings, The War of the...I...War of the Rohirrim, Kraven the Hunter, Mufasa, and Sonic the Hedgehog. We continue to project 95 to 100 wide-release films for 2020. As we look to next year, 2025 will feature several strong franchises, including Superman, Fast and Furious, Captain America, Mission Impossible, Jurassic World, Karate Kid, The Fantastic Four, Snow White, Wicked 2, and Avatar 3, just to name a few. We've always taken a long-term view in managing our businesses.

Gregory S. Marcus: Look forward to Gladiator tube and wanted to wicket the Lord of the rings The war.

Gregory S. Marcus: War of the awards that we're hearing craving, the Hunter Mufasa and Sonic the Hedgehog III.

Gregory S. Marcus: We continue to project 95 to 100 wide release films for 2024.

Gregory S. Marcus: As we look to next year 2025 will feature several strong franchises, including Superman fast and furious Captain America mission impossible Jurassic World Karate Kid that fantastic for snow White wicket to an avatar three just to name a few.

Gregory S. Marcus: We've always taken a long term view in managing our businesses and as we look at the product supply ramping back up to and potentially exceeding 23 2023 levels. In 2025, we remain very positive and optimistic about the long term future for the industry and our theater business.

Gregory S. Marcus: And as we look at the product supply ramping back up to and potentially exceeding 2023 levels in 2025, we remain very positive and optimistic about the long-term future for the industry and our theater. Finally, I'd like once again express my appreciation for our dedicated associates. Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all that they do every day. They are our most important.

Gregory S. Marcus: Finally, I'd like 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 and we appreciate all that they do every day.

Gregory S. Marcus: They are our most important asset so on behalf of our board of directors and our entire executive team. Thank you to all of our associates.

Gregory S. Marcus: So on behalf of our Board of Directors and our entire executive team, thank you to all of our... And with that, at this time, Chad and I would be happy to open up the call for any questions you may have.

Gregory S. Marcus: And with that at this time, Chad and I would be happy to open up the call for any questions you may have.

Chad: Thank you.

Operator: If you would like to ask a question and you have joined on the telephone line, then please press star followed by 1 on your telephone keypad. To withdraw your question, please press star followed by 2. Please also ensure that your phone is unmuted locally.

Speaker Change: Just wanted to ask a question and you have joined on the telephone line and please press star one on your E P.

Operator: Pat.

Speaker Change: What's truly your question. Please question Stephanie.

Operator: Pizza and ensure the truth is that muted late today.

Operator: As a reminder, that is a star followed by one to ask a question. Our first question comes from Eric Wold from Be Riley Securities. Please go ahead.

Speaker Change: As a reminder that is star.

Eric Christian Wold: One to ask a question.

Operator: Our first question comes from Eric Wold.

Eric Christian Wold: Brian is to guarantee please go ahead.

Operator: Yeah.

Eric Christian Wold: Good morning, guys. A few questions, kind of based on some of the comments you made in your opening remarks. I guess one... Other than the, for the theater segment, you know, other than the spending patterns around tickets and mostly concessions, you know, that are kind of influenced directly by the film slate, can you talk about anything you're seeing from your theater customers in terms of their willingness to spend or change in their spending patterns?

Eric Christian Wold: Good morning, guys.

Eric Christian Wold: A few questions.

Speaker Change: Kind of.

Eric Christian Wold: Based on comments.

Eric Christian Wold: Yeah.

Eric Christian Wold: Your opening remarks, I guess one.

Eric Christian Wold: Other than the.

Eric Christian Wold: Peter segment other than the spending patterns.

Eric Christian Wold: Around tickets and most of the concessions.

Eric Christian Wold: Influenced directly by the film slate.

Eric Christian Wold: You talked about anything you are seeing.

Eric Christian Wold: From your theater customers in terms of their willingness to spend or changing their spending patterns.

Eric Christian Wold: You know, any shifts in ticket price, any movements around upgrades, days of the week they visit, basket size, incident at the concession counter, anything that would kind of give you more or less confidence in the health of the consumer as you kind of enter, hopefully, a more, you know, strengthened film slate in the coming quarters.

Eric Christian Wold: Any shifts in ticket price any movements around upgrade gauged the weekly visits basket size incident, because thats a downturn we.

Eric Christian Wold: Kind of give you more or less confident in kind of the health of the consumer.

Eric Christian Wold: You can enter <unk>.

Eric Christian Wold: <unk> film slate in the coming quarters.

Gregory S. Marcus: Yeah, uh, you know, I.., it's it's look it's hard to actually tell like like for an example do we know what days of the week they shifted to we don't know necessarily we're not seeing a lot of it's hard to see where they've necessarily shifted from one to the other we can see a little in our data uh from our loyalty stuff to see where people are But look, I think the bigger thing that we want to be thoughtful about as we look forward and that is that the movie business tends to be a really, if there is going to be, And I think the jury is out. But if there's going to be weakness, the movie business tends to benefit, you know, in that, you know, the saying six out of the last eight recessions, the movie business got better.

Eric Christian Wold: Yes.

Eric Christian Wold: Yes.

Gregory S. Marcus: Look it's hard to actually tell like for example, do we know what days of the week. They shifted to we don't know necessarily we're not seeing a lot of it is hard to see where they are necessarily shifting from one to the other we can see a little in our data.

Gregory S. Marcus: From our loyalty stuff to see where people are moving but.

Gregory S. Marcus: Look.

Gregory S. Marcus: The bigger thing that we want to be thoughtful about as we look forward and that is that the movie business tends to be a really.

Gregory S. Marcus: If there is going to be weakness.

Gregory S. Marcus: The jury is out, but if theres going to be weakness in the movie business tends to benefit from that.

Gregory S. Marcus: In that.

Gregory S. Marcus: The same success over the last eight recessions the movie business got better.

Gregory S. Marcus: And that's because, you know, we have become the most attractively priced out of home entertainment option for people. And so for us, we then make sure that our price is appropriate to capture that customer who may be feeling some economic stress and being smart about how, but we don't have any.

Gregory S. Marcus: And that's because we become the most attractive priced out of home entertainment option for people and so for US. We then make sure that our pricing.

Gregory S. Marcus: He is appropriate to capture that customer who may be feeling some economic stress.

Gregory S. Marcus: And being smart about how we do that but we don't have any still a little early.

Gregory S. Marcus: It's still a little early.

Speaker Change: Got it okay.

Gregory S. Marcus: And then.

Eric Christian Wold: Chad, you talked about, you know, speaking of the theater segment still, you talked about, you know, some of the market share loss around Dune II, given the strength of IMAX and what IMAX did to kind of, you know, really promote and market that film as, you know, shot with IMAX cameras and the best way you could see it and all that. Knowing that IMAX's goal over the coming years, they've got an increased slate of films shot with IMAX cameras that will be coming out this year and next year.

Gregory S. Marcus: As Chad and you're talking about.

Eric Christian Wold: Sticking with you guys I know you've talked about.

Eric Christian Wold: The market share loss around Iran. Due to given the strength of IMAX, where IMAX there'll be kind of really promote and market that film.

Eric Christian Wold: And shot with IMAX cameras, and the best way you can see it and all that.

Eric Christian Wold: Knowing that imax's goal.

Eric Christian Wold: Over the coming years, and they've got an increase slate of films shot with IMAX cameras that will be coming out later this year into next year.

Eric Christian Wold: You know, even get a more robust film slate overall that can be playing in your PLS, and you've got more versatility there. Is there a risk of sustained share shift if that becomes an increasing part of IMAX's strategy and the studio strategy to use IMAX in that way?

Eric Christian Wold: You can get a more robust film slate overall that can be playing in your pls and you've got more.

Eric Christian Wold: Utility there.

Eric Christian Wold: Is there a risk of <unk>.

Eric Christian Wold: <unk> share shift if that becomes.

Eric Christian Wold: Increasing part of Imax's strategy and in the studio strategy to use IMAX in that way.

Chad M. Paris: Yeah, I mean, Dune was a pretty unique movie, Eric, in the magnitude of the shift that we saw. And when we look back at films that were similar last year, we didn't see that shift. And then when we looked at the other films that would be a good fit for PLFs in the first quarter, which is a limited sample size, we didn't see it at all. In fact, we saw it go back to historical norms.

Eric Christian Wold: Yes.

Eric Christian Wold: Doing it was a pretty unique movie Eric in the magnitude of the shift that we saw and when we look back at films that were similar last year, we didn't see that shift.

Chad M. Paris: And then when we look at the other films that would be a good fit for pls in the first quarter, which that's a limited sample size.

Chad M. Paris: We didn't see it at all in fact, we saw it go.

Chad M. Paris: I'll go back to historical norms. So.

Chad M. Paris: So you know, as I said in my prepared remarks, it really gets amplified when we don't have a lot of PLF content. And we, as you know, we have such a high penetration of PLFs across our circuit that we do really well when there's more than one big film to show in any given quarter. And we just didn't have that this quarter.

Chad M. Paris: As I said in my prepared remarks, it really gets amplified when we don't have a lot of pls content and we as you know we have such a high penetration of <unk> across our circuit that we we do really well when there is more than one big film to show in any given quarter and we just didn't have that this quarter so well.

Chad M. Paris: <unk> to monitor the dynamics here, but I would just say they've had that strategy with other films last year Oppenheimer was one that I would point out.

Chad M. Paris: So we'll continue to monitor the dynamics here. But they've had that strategy with other films last year; Oppenheimer was one that I would point out. And even with Ghostbusters, it was, you know, had similar shown in IMAC type promotion, and we didn't see it there. So we'll continue to monitor it. But we feel pretty good about how our PLFs are set up in the customer experience.

Chad M. Paris: And even with Ghostbusters it was.

Chad M. Paris: Similar.

Chad M. Paris: Shown in IMAX type promotion and we didn't see it there. So we'll continue to monitor it but we feel pretty good about how our how our <unk> are set up and the customer experience.

Eric Christian Wold: helpful. And the last question for me, I guess more of corporate philosophical question. I mean, you know, the stock price is that kind of the lowest level it's been in 10 years, excluding, you know, the pandemic hit, I guess, given, you know, the optimism you guys have, and I think we all have on, you know, the box office recovery path, post this, you know, strike impacted year, along with your ability to kind of continue to grow the, the, the hotel segment, you know, when do buybacks become a, a better use of cash flow?

Chad M. Paris: Helpful.

Speaker Change: Last question for me.

Eric Christian Wold: I guess more of a.

Eric Christian Wold: Corporate philosophical question.

Eric Christian Wold: Stock price is at the lowest level, it's been in 10 years excluding.

Eric Christian Wold: The pandemic hit.

Eric Christian Wold: Given the optimism you guys had and I think we all have one.

Eric Christian Wold: The box office recovery path.

Eric Christian Wold: This strike.

Eric Christian Wold: Strike impacted year, along with your ability to kind of continue to grow the hotels.

Eric Christian Wold: Hotel segment.

Eric Christian Wold: Didn't do buybacks become a a better use of cash flow I know there is some uncertainty around capex needs with the hotel segment.

Eric Christian Wold: I know there is some uncertainty around capex needs in the hotel segment and, you know, one of your properties there, but just thinking about when does that become a better use of capital than maybe something else, given, given, you know, what we could see in the coming years from both your segments. Yeah, I guess.

Eric Christian Wold: One of your properties, there, but just thinking about.

Eric Christian Wold: When does that become.

Eric Christian Wold: Better use of capital than maybe something else given given what we continue in the coming years from both of your segments.

Chad M. Paris: Yeah I guess I'll start with I think you're right we certainly have have strong conviction and optimism long term on both of these businesses. But we are weighing several things on capital allocation. The $60 to $75 million of CapEx this year is certainly significant and a big ramp up in the hotel business. And we've got some other reinvestments to consider as we head into next year, also in the hotel business. But you know it creates a unique opportunity down here at the share price and and we want to clean up the capital structure so there's there's you know there's a few different ways that you can look at at share repurchases and and we've got a convert that is coming due next year that we're going to want to deal with over the course of the next year and a half so those are all the things that we're thinking through but we do have an open authorization on share repurchases and opportunistically that's always an option for us.

Speaker Change: Yes, I guess I'll start with I think Youre right. We certainly have have strong conviction in optimism long term on both of these businesses.

Chad M. Paris: But we are waiting several things on capital allocation, the $60 million to $75 million of Capex. This year.

Chad M. Paris: Certainly significant and a big ramp up in the hotel business.

Chad M. Paris: And we've got some other other reinvestments to consider as we as we head into next year.

Chad M. Paris: Also in the hotel business.

Chad M. Paris: But it creates a unique opportunity down here at this share price and and we want to clean up the capital structure. So there's there's a few different ways that you can look at share repurchases and we've got a convert that is coming due next year that we're going to want to deal with over the course of the next year and a half. So those are all the things that we.

Chad M. Paris: We're thinking through but we do have an open authorization on share repurchases and Opportunistically Thats always an option for us.

Operator: understood. Thanks, guys. I appreciate it.

Speaker Change: Understood. Thanks, guys I appreciate it.

Operator: Thank you. Our next question comes from Jim Goss from Barrington Research. Jim, please go ahead.

Speaker Change: Thank you.

Operator: Next question comes from Jim Goss from Barrington Research. Please go ahead.

Operator: Okay.

James Charles Goss: All right, thank you. One question on the hotel side with this conversion and purchase in Minneapolis for the tapestry collection. I'm not so familiar with that particular brand. I think you mentioned it was a luxury lifestyle hotel. I wonder if you could talk about that in terms of the pricing level and the incremental benefit you think you're going to be able to get out of that particular investment.

James Charles Goss: Alright, thank you.

James Charles Goss: One question on the hotel side with this conversion.

James Charles Goss: Purchased in Minneapolis to the tapestry collection.

James Charles Goss: So familiar with that particular.

James Charles Goss: Brand I think you mentioned there was a luxury lifestyle hotel I Wonder if you could talk about that in terms of the pricing level and the incremental benefit you think youre going to be able to get out of that particular property.

Gregory S. Marcus: Well, you know, the Tapestry Collection Hotel is, it's Tapestry Collection by Hilton. You know, the goal is to get into the Hilton reservation system and the Hilton Loyalty Program. So, you know, that's the way, you know, that's one of their, what they call a soft brand. So, it's not, it doesn't have the Hilton name, but it's tapestry by Hilton, so it's pretty close.

James Charles Goss: Well.

James Charles Goss: The tablets the tapestry collection hotel as is debbie's question at Hilton.

Gregory S. Marcus: The goal is to get into is the beyond the Hilton reservation system, and our <unk> loyalty program.

Gregory S. Marcus: <unk>.

Gregory S. Marcus: <unk>.

Gregory S. Marcus: That's the way that's one of there with one of their.

Gregory S. Marcus: What they call a soft brand so.

Gregory S. Marcus: It's not doesn't have the Hilton and I pulled the Hilton, but it's tapestry vital so it's pretty close.

Gregory S. Marcus: And again, it gives the benefits of being in the We don't discuss specific hotel projections and increases but trust that we expect that by moving it to a stronger system... We expect that that will drive increased...

Gregory S. Marcus: And again it benefits.

Gregory S. Marcus: As the benefits of being in their system.

Gregory S. Marcus: And we don't discuss specific.

Gregory S. Marcus: Hotel.

Gregory S. Marcus: Rejections and increases, but but trust that we expect that that by moving it to a stronger system.

Gregory S. Marcus: We expect that that will that will drive increased performance.

James Charles Goss: Okay, and one follow-up on Eric's question about Dune. I was wondering if you felt that particular movie had more of an urban focus and to the extent that most of the competition you would have with IMAX would be in a smaller subsector of your markets where that would be a conflict. Do you think that's part of the issue too, that just the nature of the film itself, relative to your market?

Gregory S. Marcus: Okay.

Gregory S. Marcus: And.

James Charles Goss: One follow up on the <unk>.

James Charles Goss: To Eric's question about June.

James Charles Goss: I was wondering if you feel that particular movie have Marvin urban focus.

James Charles Goss: To the extent that.

James Charles Goss: Most of the.

James Charles Goss: Competition, you would have with IMAX would be in.

James Charles Goss: A smaller sub sector of your markets where.

James Charles Goss: That would be a conflict.

James Charles Goss: <unk>.

James Charles Goss: Do you think that's part of the issue to that just the nature of the film itself.

James Charles Goss: Relative to your markets.

Gregory S. Marcus: Yeah, absolutely. And we believe, generally, we've had some, one of the things contributing this quarter was just the film mix. You know, when you get to the smaller films, they don't play as well in the Midwest. And now Dune is not a smaller film, but again, that one had more. When you get more of an urban focus, that's not where we shine. And so it's, you're right; we were facing headwinds from that.

James Charles Goss: Yes.

Gregory S. Marcus: Absolutely, we believe and we believe generally we've had some one of the things contributing this quarter was it just a film mix stuff when you get to the smaller films they don't play as well in the Midwest.

Gregory S. Marcus: <unk>.

Gregory S. Marcus: And I'll do it is not a smaller film, but again that one had more when you get more urban focus that's not where we shine.

Gregory S. Marcus: And so its youre.

Gregory S. Marcus: Youre right, we were facing headwinds from that and we even saw we have.

Gregory S. Marcus: And we even saw, you know, we have an IMAX in a pretty isolated market, and its performance was not as robust as some of the other ones. So we have some insight into what's going on with IMAX because we do have a few of them. But it performed really well on IMAX.

Gregory S. Marcus: IMAX is a pretty isolated market and its performance was not not not as robust as some of the other ones. So we have some insight into what's going on with IMAX, because we do have a few of them.

Gregory S. Marcus: But it performed really well in IMAX looks that but it was.

Gregory S. Marcus: No.

Gregory S. Marcus: You know, there was one time when an analyst wrote something about the tax treatment we got. Is it an aberration or a revelation? I'm not sure it's a revelation.

Gregory S. Marcus: That was one time analysts wrote something about tax treatment. We got is ask the questions as an aberration or a revelation metrics of revelation.

James Charles Goss: Okay. Also, I wanted to ask about the impact of the footprint optimization you have executed in recent years along with the rest of the industry. I think you've been a little more aggressive than some, and I wonder what sort of Edwin you think that might characterize or you might be able to quantify in terms of the revenues you may have been able to generate out of the theaters? Has that been significant, do you think? Maybe this is a chat question.

Gregory S. Marcus: Okay.

Gregory S. Marcus: Also I wanted to ask about the impact of the <unk>.

James Charles Goss: Footprint.

James Charles Goss: <unk> is executed.

James Charles Goss: Some years, along with the rest of the industry and I think you've been a little more aggressive than some and I wonder what sort of <unk>.

James Charles Goss: Headwind do you think that may characterize.

Speaker Change: You might be able to quantify.

James Charles Goss: In terms of.

James Charles Goss: The revenue has been able to generate out of the theaters.

James Charles Goss: There have been significant do you think maybe this is Chad question.

Chad M. Paris: Yeah, no, I'll take that one, Jim. So just to clarify, when we talk about our growth rates and our comparisons year over year, those are same store numbers. And so I'll start with that. Then, generally, in the locations that we've closed, we often have other theaters in the market. And what we're really doing is consolidating customers into other capacity in the market. Now, are there some customers who may not come anymore because the theater that we closed was really close to them, and they have to drive another five miles to get to our next closest theater? Yeah, there's some, there may be some level of that.

Speaker Change: Yes, I'll take that one Jim.

Jim: So just to clarify when we talk about our growth rates.

Jim: Our comparisons year over year those are same store numbers.

Jim: So I'll start with that then Jen.

Chad M. Paris: Generally in the locations that we've closed we often have other theaters in the market and.

Chad M. Paris: What we're really doing is consolidating customers.

Chad M. Paris: Customers into other capacity in the market now is there are there are some customers, who who may not come anymore because of the theater that we closed was really close to them and they have to drive another five miles to get to our next closest theater. Yes. There is some there may be some level of that but our our general view is that our recapture of displaced customers.

Chad M. Paris: But our general view is that our recapture of displaced customers is quite good. So that all goes into our analysis as we think about pruning the portfolio and looking at under-performing locations. And our conclusion on the bottom line is that it's accretive to earnings and a bit of a headwind, perhaps top line revenue, but we try to recapture as many of those customers as we can. And generally, remember the stuff that we're closing

Chad M. Paris: Is is quite good so that all goes into our analysis as we think about.

Chad M. Paris: Pruning the portfolio and looking at our performing locations.

Chad M. Paris: And our our conclusion on the bottom line is that it's accretive to earnings.

Chad M. Paris: And a bit of a headwind, perhaps topline revenue, but we try to recapture as many of those customers as we can.

Chad M. Paris: And generally the stuff that were closing not exactly robust numbers that there's not a lot, but that generally now out to capture it.

Chad M. Paris: Remember, the stuff that we're closing, not exactly robust numbers, but there's not a lot, and there's generally not a lot to cap.

James Charles Goss: Okay, and one last one. A number of the companies in your sector have been talking more about alternative content. And I'm just wondering, in terms of your particular markets, if there are any particular types of content that you might put on, say, during the week in particular, that might resonate best with your particular customers.

Chad M. Paris: Okay.

Speaker Change: One last one.

James Charles Goss: A number of.

James Charles Goss: <unk>.

James Charles Goss: Companies in your sector have been talking more more about alternative content.

James Charles Goss: And I'm just wondering in terms of your particular markets.

James Charles Goss: Is there any particular types of patch.

James Charles Goss: Intent that you might put on.

James Charles Goss: During the week in particular.

James Charles Goss: <unk> best with your particular customers.

Gregory S. Marcus: You know, again, Midwest, the Faith Faith stuff works better with our customers. You know, some of the retro stuff, like we did a Harry Potter series that really performed nicely on our new Passport.

James Charles Goss: Yeah.

James Charles Goss: Again Midwest the faith based stuff works better with our customers.

Gregory S. Marcus: Some of the retro stuff like we did a Harry Potter series.

Gregory S. Marcus: That really that really performed nicely.

Gregory S. Marcus: New passport.

Gregory S. Marcus: And we talked about that in a previous call. So it really depends, but that tends to be what performs better for us. But we've, you know, we've had some, we're playing more stuff. We're throwing a lot of spaghetti at the wall right now to find out what sticks. And stuff will stick. And some stuff is sticking.

Gregory S. Marcus: And we talked about that in a prior call. So.

Gregory S. Marcus: It depends but that tends to be.

Gregory S. Marcus: What does perform better for us.

Gregory S. Marcus: But.

Gregory S. Marcus: We've had some.

Gregory S. Marcus: Played more stuff, we heard about a lot of spaghetti at the wall right now to find out what's next and stuff and stuff some stuff is sticky.

James Charles Goss: Alright, thanks very much. I appreciate it.

Speaker Change: Alright, thanks very much appreciate it.

Speaker Change: Thank you.

Operator: As a reminder, if you would like to ask a question, then please press star floating by one on your telephone keypad. Our next question comes from Mike Hickey from The Benchmark Company. Mike, please go ahead.

James Charles Goss: As a reminder, if you would like to ask a question. Please press star one on your part.

Operator: Pat.

Operator: Our next question comes from Mike Hickey from Benchmark Company, Mike. Please go ahead.

Michael Joseph Hickey: Thank you Greg.

Michael Joseph Hickey: Thank you. Thank you, Greg. Chad, good afternoon, guys.

Operator: Thanks for taking our questions. Greg, you mentioned... maybe some softening on the hotel side, tying into weakness in ADR, and you said it wasn't really going to be a trend here. And I get the seasonality piece, but obviously, you're probably adjusting for that. But could you just sort of give us a little bit more insight into what part of that market is softening and what implications it could have and adjustments you would make if it does become more of a trend?

Operator: Ed.

Michael Joseph Hickey: Good afternoon, guys. Thanks for taking my questions Greg mentioned.

Operator: Maybe some softening.

Operator: On the hotel side.

Speaker Change: Hi, Keith.

Operator: <unk>.

Operator: Weakness in ADR.

Operator: It wasn't.

Operator: Too early to be a trend here and I get the seasonality piece, obviously, youre, probably adjusting for that but could you just sort of.

Operator: Yes.

Operator: A little bit more insight into.

Operator: What piece of that market is softening and what.

Operator: Implications it could have some adjustments you would make if it does become.

Operator: More of a trend.

Gregory S. Marcus: Well, you know, let me be careful, you know, one of the things I think that we may not have been, I mean, not been as clear when I say we were when we changed some strategy. I would potentially say, at least my revenue management people would say to me that maybe we got a little too aggressive with some things last year that we sort of re-strategized and changed our approach in a few places. That's not really reacting to the market so much as reacting to what we did last year and looking back and saying, gee, in a low-demand period, we probably were too aggressive, so we altered our strategy, and it paid off. The other thing, as we said in the remarks, part of it's a mixed issue.

Speaker Change: Well let.

Speaker Change: Let me be careful what are the things I think.

Gregory S. Marcus: May have not been have not been as clear.

Gregory S. Marcus: When I say, we were when we changed the strategy I would potentially say at least my revenue management people would say to me that maybe we got a little too aggressive with some things last year that we sort of we re.

Gregory S. Marcus: We re re re strategize and changed our approach on a few places.

Gregory S. Marcus: That's not really reacting to the market so much as opposed to reacting to what we had done last year look back and say Gee in a low demand period, we probably werent, we probably were too aggressive so we altered our strategy that paid off.

Gregory S. Marcus: The.

Gregory S. Marcus: And the other thing as we said in the call as we've said in the remarks part of it is a mix issue if were going to if we're going to see it.

Gregory S. Marcus: If we're going to see a move from transient, leisure transient to more of a group mix, we are going to sacrifice a little bit of rate, but we're going to also pick up ancillary revenue from banquets and catering, things like that. So those are trades that we're making that are really strategic, not so much saying that we're seeing a weakness in the customer. But look, if there's a weakness in the customer, you know; we're going to react to what's going on in the market.

Gregory S. Marcus: A move from transient.

Gregory S. Marcus: Leisure transient to more of a group mix, we are going to sacrifice a little bit of rate, but we're going to also pick up the ancillary revenue banquets and catering things like that so those are those are trades that we're making that a really strategic not so much saying that we're seeing a weakness in the customer, but there is a weakness in the customer.

Gregory S. Marcus: We're going to react to what's going on in the market, we're going to watch what's happening I think historically, we've looked back over time and cutting rates generally does not solve the problem because it does it doesn't generate more demand and just share shift so and one of the things that the industry seem to be very good about.

Gregory S. Marcus: We're going to watch what's happening. I think historically, we've looked back over time. And cutting rates generally does not solve the problem because it doesn't generate more demand. It just shifts the load. So one of the things that the industry seemed to be very good about, uh, through the pandemic was that he didn't just cut rates. And so, because it ended up being a zero-sum game, and my hope would be if there is a softening, it's not then the responses, and let's all just cut rates, But we'll have to, we'll have to go back to the Mark.

Gregory S. Marcus: Through the pandemic was.

Gregory S. Marcus: Didn't just cut rates.

Gregory S. Marcus: And so because it ended up being a zero sum game and my hope would be if there was a softening its not then the responses and let's all just cut rates and to try it because it won't be it won't drive demand.

Gregory S. Marcus: But we'll have to look at what's the risk to the market.

Gregory S. Marcus: Yeah, so it sounds like the, I mean, it's a weird quarter, like you said, I mean, a winter in Milwaukee is not maybe the best time of year for leisure travel, but that said, is it the leisure, is it the leisure piece that was sort of holding and then group was picking up, or is it just leisure was down a bit in the quarter? Is that sort of the takeaway?

Speaker Change: Yes, so it sounds like I mean, it's a weird quarter like you said.

Gregory S. Marcus: When our Milwaukee, maybe the best leisure travel.

Gregory S. Marcus: But that said is it leisure.

Gregory S. Marcus: Yes.

Gregory S. Marcus: Is it the leisure piece that was sort of holding in that group was picking up or is it just leisure was down a bit quarter.

Gregory S. Marcus: The takeaway.

Chad M. Paris: My goal is C. You know, certainly Leisure was down in our overall mix because just how much more group we were driving into the middle of the week. In terms of the demand side, you know, Leisure was holding, but if you think about the last couple of years, we've had really strong rate growth, particularly being driven by Leisure customers. And those growth rates are sequentially coming down as we kind of normalize here.

Gregory S. Marcus: I mean.

Speaker Change: Mike I would say.

Chad M. Paris: Certainly leisure was down in our overall mix because just of how much more group, we were driving into the end of the middle of the week in terms of demand side.

Chad M. Paris: Leisure leisure was was holding.

Chad M. Paris: But.

Chad M. Paris: If you think about the last couple of years, we've had really strong rate growth, particularly being driven by leisure customers and those growth those growth rates are sequentially coming down as we kind of normalize here so our.

Chad M. Paris: So our expectation for the year was for low single-digit kind of overall REVPAR growth, and it's probably going to come more from a little bit of occupancy this year than it is going to be the ADR that's driving it as it has the last couple of years. But yeah, leisure is the pocket that is probably not going to be as strong as it was, not saying that it's worse.

Chad M. Paris: <unk> for the year was low single digit kind of Av.

Chad M. Paris: Overall, revpar growth and it's probably going to come more from from a little bit of occupancy than this year than it is going to be the ADR. That's driving it as it has the last couple of years, but yes leisure leisure as the pocket that that is probably not going to be as strong as it was not not saying that it's weak.

Chad M. Paris: Okay.

Michael Joseph Hickey: The, um, and then on your gross profit within your concession business, looks like sort of you and your peers that are showing some some pressure there. It looks like you're down nearly six percentage points in your concession gross profit for the quarter. So just curious if you could sort of..., dig in there and if what that means, I guess, is a trend moving forward, and I guess you look at your hotel food and beverage, and it looks like your margin there is actually holding up really well year over year.

Chad M. Paris: Yes.

Chad M. Paris: And then on your.

Michael Joseph Hickey: Gross profit.

Michael Joseph Hickey: Yes.

Michael Joseph Hickey: Your <unk> session.

Michael Joseph Hickey: Looks like sort of.

Michael Joseph Hickey: You and your peer set are showing some.

Michael Joseph Hickey: Pressure there.

Michael Joseph Hickey: And it looks like you're down nearly six percentage points.

Michael Joseph Hickey: Concession growth gross profit.

Michael Joseph Hickey: In the quarter. So just curious if you can sort of.

Michael Joseph Hickey: Dig in there.

Michael Joseph Hickey: What that means I guess.

Michael Joseph Hickey: Moving forward and I guess, you look at your hotel food and beverage lagged here.

Michael Joseph Hickey: The margin there is actually holding up really well year over year I think maybe it expanded so it looks like just longer theater concession side, where you saw some pressure just curious with that why.

Michael Joseph Hickey: I think maybe it expanded. So it looks like it's sort of just on your feet or concession side where you're feeling some pressure. Just curious about that. Why and what sort of trend we should extrapolate from that?

Michael Joseph Hickey: What sort of change we should extrapolate if any from that.

Chad M. Paris: You should not extrapolate a trend from that. The way we report the theater concessions numbers, we did make some immaterial changes to how we classify some of those expenses and other areas of the P&L and just lined them up better with how we think they should be reported. And again, immaterial, but that's really all that's driving the change. It's not an underlying change in the profitability of our concessions.

Speaker Change: You should not extrapolate a trend from that.

Chad M. Paris: <unk>.

Chad M. Paris: The theater the way we report the theater concessions numbers, we did make some.

Chad M. Paris: Immaterial changes on how we classify some of those expenses in other areas of the P&L and and just line them up better with with how we think they should be reported and again immaterial, but that's really all that's driving the change it's not an underlying change in the in the profitability of our concession of the business.

Gregory S. Marcus: By the way, on the hotel side, you get a mixed FYI, that's the benefit of a mixed shift too, because you know, the leisure customer is eating in our outlets. When you get to more of a group mix, you're getting more in the banquets and catering business, which is just a more profitable food and beverage opportunity.

Chad M. Paris: By the way on the hotel side I mean on the hotel side, you get a mix just FYI. That's the benefit of a mix shift too because you know the leisure the leisure customer is eating in our outlets.

Gregory S. Marcus: When you get to more of a group mix youre getting more in the banquets and catering business, which is just a more profitable food and beverage operation.

Michael Joseph Hickey: All right, just to confirm, your gross profit margin in concessions in 1Q was 57%. That's down from 63 in the prior year, and your average margin prior year was 61.5. So should we model that closer to 57 moving forward, given the category shift here, or is that going to go back up to above? You, again, can.

Gregory S. Marcus: Yes.

Gregory S. Marcus: Right.

Michael Joseph Hickey: Confirm.

Michael Joseph Hickey: Your gross profit margin in concessions <unk> 67 per se.

Michael Joseph Hickey: That's down 63 prior year and your average margin prior year was.

Michael Joseph Hickey: 61, 25, so should we model that.

Michael Joseph Hickey: Closer to the 57 moving forward given the category shift here or is that going to go back up to above 60%.

Chad M. Paris: You can you can model it at the 57 because that's where it'll continue to come through going forward, but there there is an offset in other operating expenses that will run at a lower rate.

Speaker Change: You can you can model it at the at the 57, because thats, where it will continue to come through going forward, but there is an offset in other operating expenses that will run rate at a lower number.

Chad M. Paris: Okay.

Michael Joseph Hickey: But it should be about the net neutral, then, you're saying, or is there a questionary question? Exactly. Net neutral. Okay, last question, just on your convertible note. You have some time to deal with that, but I was just curious about the scenarios you're thinking through and how you think about, you know, managing the potential deletion of that note.

Chad M. Paris: But it should be about neutral and then you are saying or is <unk>.

Larry: Larry Thanks, Jack.

Michael Joseph Hickey: Net neutral profit.

Michael Joseph Hickey: Okay.

Michael Joseph Hickey: Last question just on your convertible note you have some time to deal with that but just curious the scenarios you're thinking through.

Michael Joseph Hickey: And how you think about.

Michael Joseph Hickey: Yes.

Michael Joseph Hickey: Managing the potential dilution from on that note.

Chad M. Paris: Yeah, so you're right. We do have some time, a year and a half until we really have to move on this. Although, you know, I'll On dilution, I don't think people should be really worried about it, because we've got a cap-call transaction, a derivative over the convert that mitigates the dilution below $1,775, I think is where it is currently, that number changes a little bit as we pay dividends, but at the current share price, investors should not be expecting dilution from that, and I think, We'll we'll continue to look at what's the right time to take it out, Mike, but it will high level thinking on it is it'll be it'll be cash rather than shares in terms of how we settle.

Speaker Change: Yeah. So you're right. We do have some time here in a half until we really have to move on this.

Chad M. Paris: Although.

Chad M. Paris: On dilution I don't think people should be really worried about it because we've got a a.

Chad M. Paris: Cap call transaction derivative over the over the convert that mitigates the dilution.

Chad M. Paris: Low $17 75, I think is where it is currently that number changes a little bit as we pay dividends, but at the current share price.

Chad M. Paris: Investors should not be expecting dilution from from that end.

Chad M. Paris: Yes, I think.

Chad M. Paris: We'll continue to look at what's the right time to take it out Mike, but it will.

Chad M. Paris: High level thinking on it is it'll be it'll be cash rather than shares in terms of how we settle this.

Michael Joseph Hickey: Okay, great. All right. Thanks, guys. Thanks a lot.

Speaker Change: Okay, Great Alright, thanks, guys best of luck.

Operator: Thank you. At this time, it appears there are no other questions. I'd like to turn the call back to Mr Paris for any additional or closing remarks.

Speaker Change: Thank you.

Speaker Change: Thomas Hayes Nomura and they've all quick question would like to turn the call back to Mr. Paris for any additional or closing remarks.

Chad M. Paris: Great. Thanks, Laura. And we'd like to thank everybody for joining us again today, and we look forward to talking to you once again in early August when we release our second quarter results. Until then, thank you, and have a great day.

Paris: Great. Thanks, Lauren we'd like to thank everybody for joining US again today and we look forward to talking to you. Once again in early August when we release, our second quarter results until then thank you and have a great day.

Operator: That concludes today's call. You may disconnect your line at any time.

Speaker Change: That concludes today's call you may disconnect your lines anytime.

Operator: [music].

Operator: Okay.