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The Marcus Corporation Reports Record Revenues, Operating Income and Earnings for the Second Quarter of Fiscal 2018

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Marcus Theatres® achieves best quarter on
record; significantly outperformed the industry

The
Marcus Corporation
(NYSE:MCS) today reported record revenues,
operating income and net earnings for the second quarter of fiscal 2018
ended June 28, 2018.

Second Quarter Fiscal 2018 Highlights

  • Total revenues for the second quarter of fiscal 2018 were a record
    $193,298,000, a 20.7% increase from revenues of $160,140,000 for the
    second quarter of fiscal 2017.
  • Operating income for the second quarter of fiscal 2018 was a record
    $29,107,000, a 51.8% increase from operating income of $19,169,000 for
    the second quarter of fiscal 2017.
  • Net earnings attributable to The Marcus Corporation were a record
    $18,619,000 for the second quarter of fiscal 2018, an 83.9% increase
    from net earnings attributable to The Marcus Corporation of
    $10,124,000 for the second quarter of fiscal 2017.
  • Net earnings per diluted common share attributable to The Marcus
    Corporation were a record $0.65 for the second quarter of fiscal 2018,
    an 80.6% increase from net earnings per diluted common share
    attributable to The Marcus Corporation of $0.36 for the second quarter
    of fiscal 2017.

First Half Fiscal 2018 Highlights

  • Total revenues for the first half of fiscal 2018 were a record
    $361,489,000, an 11.0% increase from revenues of $325,596,000 for the
    first half of fiscal 2017.
  • Operating income was a record $46,123,000 for the first half of fiscal
    2018, a 22.6% increase from operating income of $37,622,000 for the
    first half of fiscal 2017.
  • Net earnings attributable to The Marcus Corporation were a record
    $28,440,000 for the first half of fiscal 2018, a 45.3% increase from
    net earnings attributable to The Marcus Corporation of $19,577,000 for
    the first half of fiscal 2017.
  • Net earnings per diluted common share attributable to The Marcus
    Corporation were a record $1.00 for the first half of fiscal 2018, a
    44.9% increase from net earnings per diluted common share attributable
    to The Marcus Corporation of $0.69 for the first half of fiscal 2017.

"The second quarter of 2018 was again another record quarter for The
Marcus Corporation, with record revenues, operating income and net
earnings. In fact, revenues in the quarter were the highest for any
quarter in our history," said Gregory S. Marcus, president and chief
executive officer of The Marcus Corporation. "Not only did Marcus
Theatres achieve its best quarter on record with significant increases
in both revenues and operating income, it also considerably outperformed
the industry, which also had a record quarter. While our theatre
division drove our strong second quarter performance, revenues and
operating income also improved for Marcus Hotels & Resorts.

"We are pleased to have had such a strong first half of the year,
achieving two consecutive record quarters. Net earnings again benefitted
from a lower income tax rate, which we expect will continue to
positively impact the company over the long-term," said Marcus.

Marcus
Theatres
®

Marcus Theatres reported its strongest quarter on record, with a 33.0%
increase in revenues and a 54.9% increase in operating income for the
second quarter of 2018 compared to the prior year period. The division
outperformed the change in national box office revenues by more than 10
percentage points compared to the same corresponding weeks in the prior
year, according to Rentrak.

"This was an exceptional quarter for Marcus Theatres, driven by both a
blockbuster film slate and continued operational excellence across our
circuit," said Rolando Rodriguez, chairman, president and chief
executive officer of Marcus Theatres. "The division far outperformed the
industry thanks in part to a strong consumer response to the significant
investments we have made to our theatres over the past year. This is
especially true at our Marcus Wehrenberg theatres, which significantly
outperformed the industry, according to Rentrak, and continues to
meaningfully contribute to our results."

Investments during the second quarter include adding the division's
signature DreamLoungerSM recliner seating to four existing
locations, with additional DreamLounger upgrades currently underway at
two more locations. In addition, the division converted an additional
five auditoriums to its UltraScreen DLX® and SuperScreen
DLX® formats, and added two new Zaffiro's® Express
locations and one new Take FiveSM Lounge during the quarter.
Preliminary work at Marcus Theatres' second BistroPlexSM
location in Brookfield, Wisconsin has begun.

"As expected, the summer film slate included a number of highly
anticipated movies, including several blockbusters that were very well
received by movie-goers," said Rodriguez. "We significantly outperformed
the industry as a result of our strong movie slate, innovative operating
and marketing strategies, successful loyalty program and continued focus
on creating the ultimate movie going experience, with DreamLounger
recliners, premium large format screens and exciting food and beverage
concepts."

The five top-performing films for Marcus Theatres in the second quarter
of fiscal 2018 were Avengers: Infinity War; Incredibles 2; Deadpool
2; Solo: A Star Wars Story
and A Quiet Place.

Rodriguez said the third quarter is off to a good start, thanks to the
continued success of Incredibles 2 and Jurassic World: Fallen
Kingdom
, as well as recently opened films such as Ant-Man and the
Wasp; Skyscraper; Hotel Transylvania 3: Summer Vacation; Mamma Mia! Here
We Go Again
and The Equalizer 2. Additional films opening
through the end of the third quarter include Mission-Impossible:
Fallout; Christopher Robin; The Meg; Crazy Rich Asians; The Nun; The
Predator;
and The House with a Clock in Its Walls.

Marcus®
Hotels & Resorts

Marcus Hotels & Resorts' revenue per available room (RevPAR) for
comparable company-owned properties was essentially even in the second
quarter. "Increased food and beverage revenues, higher management fees
and improved operating margins were the primary contributors to the
division's improved second quarter results," said Marcus. He noted that
the prior year's results included preopening expenses and startup losses
related to the opening of the SafeHouse® Chicago, which is
now fully operational.

During the quarter, the division announced that it has assumed
management of the DoubleTree
by Hilton Hotel El Paso Downtown
in El Paso, Texas. It will also
assume management of the newly constructed Courtyard
by Marriott El Paso Downtown/Convention Center
later this summer.
This will bring Marcus Hotels & Resorts' portfolio to 21 owned and/or
managed properties across the country.

In May 2018, the division also announced that it has selected two
nationally recognized firms to lead the reinvention of the 221-room
InterContinental Milwaukee into an immersive arts-focused hotel, which
is scheduled to be completed in mid-2019.

Conference Call and Webcast

Marcus Corporation management will hold a conference call today,
Thursday, July 26, 2018, at 10:00 a.m. Central/11:00 a.m. Eastern time
to discuss the second quarter results. Interested parties may listen to
the call live on the Internet through the investor relations section of
the company's website: www.marcuscorp.com,
or by dialing 1-574-990-3059 and entering the passcode 2180519.
Listeners should dial in to the call at least 5-10 minutes prior to the
start of the call or should go to the website at least 15 minutes prior
to the call to download and install any necessary audio software.

A telephone replay of the conference call will be available through
Thursday, August 2, 2018, by dialing 1-855-859-2056 and entering
passcode 2180519. The webcast will be archived on the company's website
until its next earnings release.

About The Marcus Corporation

Headquartered in Milwaukee, The
Marcus Corporation
is a leader in the lodging and entertainment
industries, with significant company-owned real estate assets. The
Marcus Corporation's theatre division, Marcus
Theatres®
, is the fourth largest theatre circuit in the
U.S. and currently owns or operates 890 screens at 68 locations in eight
states. The company's lodging division, Marcus®
Hotels & Resorts
, owns and/or manages 20 hotels, resorts and
other properties in nine states, with another property opening in El
Paso, Texas during the summer of 2018. For more information, please
visit the company's website at www.marcuscorp.com.

Certain matters discussed in this press release are "forward-looking
statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may generally be identified as such
because the context of such statements include words such as we
"believe," "anticipate," "expect" or words of similar import. Similarly,
statements that describe our future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject
to certain risks and uncertainties which may cause results to differ
materially from those expected, including, but not limited to, the
following: (1) the availability, in terms of both quantity and audience
appeal, of motion pictures for our theatre division, as well as other
industry dynamics such as the maintenance of a suitable window between
the date such motion pictures are released in theatres and the date they
are released to other distribution channels; (2) the effects of adverse
economic conditions in our markets, particularly with respect to our
hotels and resorts division; (3) the effects on our occupancy and room
rates of the relative industry supply of available rooms at comparable
lodging facilities in our markets; (4) the effects of competitive
conditions in our markets; (5) our ability to achieve expected benefits
and performance from our strategic initiatives and acquisitions; (6) the
effects of increasing depreciation expenses, reduced operating profits
during major property renovations, impairment losses, and preopening and
start-up costs due to the capital intensive nature of our businesses;
(7) the effects of weather conditions, particularly during the winter in
the Midwest and in our other markets; (8) our ability to identify
properties to acquire, develop and/or manage and the continuing
availability of funds for such development; (9) the adverse impact on
business and consumer spending on travel, leisure and entertainment
resulting from terrorist attacks in the United States or other incidents
of violence in public venues such as hotels and movie theatres; and (10)
a disruption in our business and reputational and economic risks
associated with civil securities claims brought by shareholders.
Shareholders, potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements made herein
are made only as of the date of this press release and we undertake no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.

     
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(Unaudited)
(in thousands, except per share data)
 
13 Weeks Ended 26 Weeks Ended
June 28, June 29, June 28, June 29,

2018

2017

2018

2017

Revenues:
Theatre admissions $ 69,607 $ 52,135 $ 132,613 $ 115,976
Rooms 29,118 29,125 49,789 50,059
Theatre concessions 46,798 35,179 88,211 76,075
Food and beverage 18,836 18,777 34,639 33,817
Other revenues   20,023     17,559     39,549     34,802  
184,382 152,775 344,801 310,729
Cost reimbursements   8,916     7,365     16,688     14,867  
Total revenues 193,298 160,140 361,489 325,596
 
Costs and expenses:
Theatre operations 61,153 46,756 115,808 101,441
Rooms 10,567 10,261 20,068 19,459
Theatre concessions 12,976 9,981 24,937 21,099
Food and beverage 14,899 15,501 28,964 28,968
Advertising and marketing 6,025 6,022 11,139 11,584
Administrative 18,558 17,393 35,840 33,922
Depreciation and amortization 14,426 12,303 28,330 24,551
Rent 2,585 3,332 5,536 6,605
Property taxes 4,779 4,445 9,993 9,523
Other operating expenses 9,307 7,612 18,063 15,955
Reimbursed costs   8,916     7,365     16,688     14,867  
Total costs and expenses   164,191     140,971     315,366     287,974  
 
Operating income 29,107 19,169 46,123 37,622
 
Other income (expense):
Investment income (loss) 27 38 (9 ) 110
Interest expense (3,511 ) (3,163 ) (6,820 ) (6,087 )
Other expense (496 ) (428 ) (992 ) (856 )
Gain (loss) on disposition of property, equipment and other assets (408 ) 428 (408 ) 29
Equity earnings from unconsolidated joint ventures, net   200     32     252     87  
  (4,188 )   (3,093 )   (7,977 )   (6,717 )
 
Earnings before income taxes 24,919 16,076 38,146 30,905
Income taxes   6,207     5,951     9,628     11,663  
Net earnings 18,712 10,125 28,518 19,242
Net earnings (loss) attributable to noncontrolling interests   93     1     78     (335 )
Net earnings attributable to The Marcus Corporation $ 18,619   $ 10,124   $ 28,440   $ 19,577  
 
Net earnings per common share attributable to
The Marcus Corporation - diluted $ 0.65 $ 0.36 $ 1.00 $ 0.69
 
Weighted average shares outstanding - diluted 28,621 28,486 28,534 28,435
   
THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
 
(Unaudited) (Audited)
June 28, December 28,

2018

2017

 
Assets:
 
Cash, cash equivalents and restricted cash $ 18,542 $ 20,747
Accounts and notes receivable 30,992 27,230
Refundable income taxes 3,400

 

15,335
Other current assets 14,369 13,409
Property and equipment, net 852,596 860,064
Other assets   82,327   81,012
 
Total Assets $ 1,002,226 $ 1,017,797
 
Liabilities and Shareholders' Equity:
Accounts payable $ 37,704 $ 51,541
Taxes other than income taxes 19,536 19,638
Other current liabilities 62,905 68,918
Current portion of capital lease obligations 7,262 7,570
Current maturities of long-term debt 10,065 12,016
Capital lease obligation 24,777 28,282
Long-term debt 275,321 289,813
Deferred income taxes 38,279 38,233
Deferred compensation and other 59,285 56,662
Equity   467,092   445,124
 
Total Liabilities and Shareholders' Equity $ 1,002,226 $ 1,017,797
       
THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)
 
Theatres Hotels/ Resorts Corporate Items Total
13 Weeks Ended June 28, 2018
Revenues(1) $ 125,453 $ 67,713 $ 132 $ 193,298
Operating income (loss) 27,877 6,362 (5,132 ) 29,107
Depreciation and amortization 9,656 4,684 86 14,426
 
13 Weeks Ended June 29, 2017
Revenues(1) $ 94,357 $ 65,611 $ 172 $ 160,140
Operating income (loss) 17,992 5,819 (4,642 ) 19,169
Depreciation and amortization 7,808 4,401 94 12,303
 
26 Weeks Ended June 28, 2018
Revenues(1) $ 238,388 $ 122,881 $ 220 $ 361,489
Operating income (loss) 51,860 3,713 (9,450 ) 46,123
Depreciation and amortization 18,884 9,274 172 28,330
 
26 Weeks Ended June 29, 2017
Revenues(1) $ 206,363 $ 118,951 $ 282 $ 325,596
Operating income (loss) 42,715 3,144 (8,237 ) 37,622
Depreciation and amortization 15,601 8,758 192 24,551
 
 
Corporate items include amounts not allocable to the business
segments. Corporate revenues consist principally of rent and the
corporate operating loss includes general corporate expenses.
Corporate information technology costs and accounting shared
services costs are allocated to the business segments based upon
several factors, including actual usage and segment revenues.
 

(1) Revenues include cost reimbursements of $8,916 for
the 13 weeks ended June 28, 2018 (Theatres - $387, Hotels/Resorts
- $8,529), $7,365 for the 13 weeks ended June 29, 2017 (Theatres -
$541, Hotels/Resorts - $6,824), $16,688 for the 26 weeks ended
June 28, 2018 (Theatres - $866, Hotels/Resorts - $15,822) and
$14,867 for the 26 weeks ended June 29, 2017 (Theatres - $1,159,
Hotels/Resorts - $13,708).

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