Marcus Q2 2025 Earnings Report

Marcus EPS Results

• Actual EPS: $0.23
• Consensus EPS: $0.19
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

Marcus Revenue Results

• Actual Revenue: $206.04 million
• Expected Revenue: $192.79 million
• Beat/Miss: Beat by +$13.25 million
• YoY Revenue Growth: N/A

Marcus Announcement Details

• Quarter: Q2 2025
• Date: 8/1/2025
• Time: Before Market Opens
• Conference Call Date: Friday, August 1, 2025
• Conference Call Time: 11:00AM ET

The Marcus (NYSE:MCS) Corporation, together with its subsidiaries, owns and operates movie theatres, and hotels and resorts in the United States. It operates a family entertainment center and multiscreen motion picture theatres under the Big Screen Bistro, Big Screen Bistro Express, BistroPlex, and Movie Tavern by Marcus brand names. The company also owns and operates full-service hotels and resorts, as well as manages full-service hotels, resorts, and other properties. In addition, it provides hospitality management services, including check-in, housekeeping, and maintenance for a vacation ownership development; and manages condominium hotels under long-term management contracts. The Marcus Corporation was founded in 1935 and is headquartered in Milwaukee, Wisconsin.

Marcus Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Consolidated revenues rose 17% to $206 M, adjusted EBITDA grew 47%, and the company reported net earnings of $7.3 M versus a prior-year loss.
• Positive Sentiment: The Theater division saw total revenue climb 30% to $131.7 M, comparable attendance up 26.7%, and segment adjusted EBITDA jumped 76%.
• Negative Sentiment: Hotel division RevPAR fell 2.9% as occupancy dipped during the Hilton Milwaukee guestroom renovation, though all rooms returned to service by June.
• Positive Sentiment: Group room revenue pace for 2026 is running 20% ahead of last year and hotel banquet and catering revenues increased 10.5%, reflecting strong bookings momentum.
• Neutral Sentiment: The balance sheet ended Q2 with $15 M in cash, $214 M in total liquidity, a 29% debt-to-capital ratio and net leverage of 1.6x, with full-year CapEx guidance of $70–85 M stepping down in 2026.

Presentation

[Operator]

Good morning, everyone, and welcome to Marcus Corporation's Second Quarter Earnings Conference Call. My name is Bailey, and I will be your operator for today. At this time, all participants are in listen only mode. We will conduct a question and answer session towards the end of this conference. As a reminder, this conference is being recorded.

[Operator]

Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer and Chad Paris, Chief Financial Officer and Treasurer of 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 Paris, CFO & Treasurer at The Marcus]

Good morning, and welcome to our fiscal twenty twenty five second quarter conference call. I need to begin by stating that we plan to make a number of forward looking statements on our call today, which may be identified by our use of words such as believe, anticipate, expect or other similar words. Our forward looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected or projected in our forward looking statements. These statements 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. 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 twenty twenty five second quarter results and in the Risk Factors section of our fiscal twenty twenty four annual report on Form 10 ks, which you can access on the SEC's website.

[Chad Paris, CFO & Treasurer at The Marcus]

Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non GAAP financial measure in evaluating our performance and its limitations, a copy of which is available on the Investor Relations page of our website at investors.marcuscorp.com. All right. With that behind us, let's begin. I'll start this morning by spending a few minutes sharing the results from our second quarter and discuss our balance sheet and liquidity. I'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead.

[Chad Paris, CFO & Treasurer at The Marcus]

We'll then open up the call for questions. As we shared on our last call, the second quarter began with strong performances from several blockbuster films that exceeded expectations in April. This strong momentum in our Theater division continued into the summer with a significantly improved film slate bringing a string of great box office performances that delivered year over year growth for the second quarter. In our hotel division, we executed on strong group bookings that drove overall revenue growth even with the disruptions from hotel renovations. I'll start with a few highlights from our consolidated results for the 2025.

[Chad Paris, CFO & Treasurer at The Marcus]

Consolidated revenues of $2.00 $6,000,000 were up 17% compared to the prior year quarter with revenue before cost reimbursements growing in both divisions. Operating income for the quarter was $13,000,000 an increase of $10,800,000 compared to the prior year quarter. Consolidated adjusted EBITDA for the second quarter was $32,300,000 a nearly 47% increase over the 2024. Net earnings for the quarter was $7,300,000 or $0.23 per share compared to a net loss of $5,200,000 or $0.17 per share excluding the impacts of our convertible debt repurchases in the second quarter last year. Change in our fiscal year and quarters did not impact our second quarter results with a comparable number of operating days during the quarter in both fiscal twenty twenty five and fiscal twenty twenty four. Turning to our segment results, I'll begin this morning with our theater division. Second quarter fiscal twenty twenty five total revenue of $131,700,000 increased nearly 30% compared to the prior year second quarter. Comparable theater admission revenue for the second quarter increased 29.3% and comparable theater attendance increased 26.7% compared with our fiscal second quarter twenty twenty four.

[Chad Paris, CFO & Treasurer at The Marcus]

When using our comparable fiscal days according to data received from comScore and compiled by us to evaluate our second quarter results, U. S. Box office receipts increased 36.5% during our fiscal twenty twenty five second quarter compared to U. S. Box office receipts during the second quarter last year indicating our admissions revenue performance trailed the industry by approximately seven percentage points.

[Chad Paris, CFO & Treasurer at The Marcus]

We believe that our lower box office performance during the second quarter was primarily attributable to two factors. First, while the other major exhibitors implemented blockbuster pricing surcharges on many films during the quarter, our pricing strategies during the quarter continue to focus on driving attendance and the ancillary revenue that goes with it. We continue to optimize pricing with a variety of promotions for different types of customers while capturing a premium for peak days of the week, show times and holiday periods. And second, several films including F1, The Final Reckoning, Ballerina and Karate Kid did not perform as well in our Midwestern markets as in other parts of the country. The total box office in our top markets underperformed the overall increase in the national box office.

[Chad Paris, CFO & Treasurer at The Marcus]

We believe this is partially attributable to the stronger relative performance of these films in markets where we do not have a presence, particularly on the coasts. Average admission price increased 2% during the 2025 compared to last year, which was impacted by a favorable mix of films that attracted audiences to PLF screens and by headwinds from our strategies to drive attendance through various value oriented programs and promotions that are designed to encourage repeat moviegoing. Our Everyday Matinee program was introduced at the May 2024 and will no longer be a headwind to our admission per cap growth beginning in the third quarter this year. This program recently moved from the initial $7 pricing to $7.5 and on some films $8.5 In addition, we began implementing pricing surcharges on select high demand summer blockbuster films at the end of the second quarter, which we expect will benefit our admission per cap growth going forward. Our average concession food and beverage revenues per person at our comparable theaters increased by 3.1% during the 2025 compared to last year's second quarter, which was driven by an increase in merchandise sales and pricing.

[Chad Paris, CFO & Treasurer at The Marcus]

Merchandise sales which are included in our concession food and beverage revenues are typically at lower margins than our traditional concessions offerings due to the higher cost of product. While merchandise sales are dilutive to concessions margins, they have resulted in incremental revenue and earnings. Our top 10 films for the quarter represented approximately 76% of the box office in the 2025 compared to 73% for the top 10 films in the second quarter last year. The more concentrated film slate featuring more blockbuster films compared to a weaker slate in the second quarter last year resulted in an approximately two percentage point increase in overall film cost as a percentage of admission revenues. Finally, Theatre division adjusted EBITDA during the 2025 was 26,500,000 a 76% increase over the prior year quarter.

[Chad Paris, CFO & Treasurer at The Marcus]

Turning to our Hotels and Resorts division. Total revenues before cost reimbursements were $64,600,000 for the 2025, a 1.2% increase compared to the prior year. RevPAR for our comparable owned hotels decreased 2.9% during the second quarter compared to the prior year, which resulted from an overall occupancy rate decrease of 5.4 percentage points, partially offset by a 5% increase in our average daily rate or ADR. Our average occupancy rate for our owned hotels was 67.3% during the 2025. Our occupancy rate decrease was impacted by the Hilton Milwaukee renovation while guest rooms were out of service.

[Chad Paris, CFO & Treasurer at The Marcus]

As the summer travel and convention season ramped up generating higher demand for rooms throughout the week, As expected, the impact of having rooms out of service and turning business away to competitors in the market during the renovation was more pronounced. While we were able to shift business to our two other hotels, The Pfister and St. Kate, to mitigate the impact of the renovation on the overall portfolio, there was occupancy displacement from business turned away due to the reduced available rooms. As we recently announced, the guest room renovation portion of the project was completed at the June with all rooms returned to service. While the renovation of the meeting and common space will continue over the next several months, we expect a more limited impact to room sales beginning in the third quarter.

[Chad Paris, CFO & Treasurer at The Marcus]

According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced RevPAR growth of 2.9 for the 2025 compared to the second quarter last year, indicating that our hotels underperformed the competitive set by 5.8 percentage points. Our lower performance relative to the competitive sets results primarily from displacement at the Hilton Milwaukee while under renovation which we believe unfavorably impacted our RevPAR growth by nearly four percentage points, while favorably impacting competing hotels RevPAR growth by approximately one percentage point. After adjusting for the impact of the Hilton Milwaukee renovation, we believe our hotels RevPAR growth was within less than one percentage point of the competitive set and attribute this slightly lower performance to new hotel room supply within one of our markets. When comparing our RevPAR results to comparable upper upscale hotels throughout The United States, the upper upscale segment experienced effectively flat RevPAR growth during our second quarter compared to the second quarter last year, indicating that our hotels underperformed the industry by 2.9 percentage points, but outperformed the industry by approximately one percentage point when adjusting for the estimated impact of the Hilton Milwaukee renovation. With the strong growth in group business and events, our banquet and catering operations continue to grow with food and beverage revenues up 10.5% in the 2025 compared to the prior year.

[Chad Paris, CFO & Treasurer at The Marcus]

Finally, hotels adjusted EBITDA decreased $200,000 in the 2025 compared to the prior year quarter and was impacted by changes in our revenue mix with a decrease in higher margin rooms revenue due to the impact of the Hilton Milwaukee renovation offsetting the increase in comparatively lower margin food and beverage revenue. Shifting to cash flow and the balance sheet. Our cash flow from operations was $31,600,000 in the 2025 compared to cash flow from operations of $36,000,000 in the prior year quarter with the decrease in cash flow primarily attributed to timing of accounts payable and certain annual payments. Total capital expenditures during the 2025 were $16,900,000 compared to $19,800,000 in the 2024. A large portion of our capital expenditures during the second quarter were invested in the Hilton Milwaukee renovation with the balance going to maintenance projects in both businesses.

[Chad Paris, CFO & Treasurer at The Marcus]

Our capital investments and renovations projects have progressed as planned and we continue to expect capital expenditures for fiscal twenty twenty five of 70,000,000 to $85,000,000 The timing of several projects will impact our final capital expenditure number for the year and we will update our estimates as the year progresses. We ended the second quarter with approximately 15,000,000 in cash and over $214,000,000 in total liquidity with a debt to capitalization ratio of 29% and net leverage of 1.6 times. With that, I will now turn the call over to Greg.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Thanks, Chad, and good morning, everyone. When we spoke at this time last year, we were reporting a quarter that was impacted by the lingering effects of content supply challenges created by the Hollywood strikes in our theater business. What a difference a year makes. Today, we are thrilled to report second quarter results with significant growth that was driven by a high quality and diverse film slate, coupled with strong consumer demand to experience these blockbuster films in the big screen. This was a quarter that showcased the enduring appeal of the theatrical experience and the remarkable resilience of our industry.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

In hotels, while the second quarter got off to a slower start, it picked up momentum and delivered results that were in line with our expectations overall. We completed major milestones on schedule in our renovation and construction projects, while minimizing the impact on operations and still delivering exceptional experiences for our guests. Overall, we are pleased with the results for the quarter and we entered the third quarter with solid momentum. I'll start with our theater division. The most encouraging aspect of this quarter's success was the sheer diversity of the films that drove our performance.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

This wasn't a story about a single genre or franchise carrying the market. It was about multiple films from different studios with different target audiences, all succeeding at the same time. As we shared in our last call, the second quarter got off to an incredible start with the record breaking a Minecraft movie creating a cultural phenomenon that became a must see film in theaters. With a total domestic gross of over 423,000,000, this film improved its ability to mobilize a massive, passionate, and youthful fan base, creating an electric atmosphere in our auditorium simply could never happen at home and living rooms. Lilo and Stitch captured the hearts of families and grossed over 420,000,000 domestically, While Sinners delivered a triumph of originality in an era often dominated by sequels and established IP, Sinners proved that a bold original r rated film can become both a critical and commercial success.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

This historical horror film earned both critical and audience acclaim, driving incredible word-of-mouth to become the highest grossing original horror film in North American history while demonstrating a strong market appetite for fresh stories aimed at an adult audience. This trio of our top films in the quarter was supported by the steady, reliable performance of beloved franchises, Mission Impossible The Final Reckoning and live action adaptation of How to Train Your Dragon delivered the blockbuster action and adventure that audiences expect from summer tentpoles, rounding out a truly robust and varied slate. The film slate was stronger both in terms of the quantity of wide release films, which grew from 28 in the second quarter last year to 32 this year, and also in terms of a steady cadence of quality releases with a diverse slate of films that brought audiences back to our theaters. Chad discussed the factors we believe are impacting our box office performance relative to the nation and I'd like to expand on this a bit. As we shared the last few quarters, our strategy has been focused on driving long term attendance, total revenue and overall profitability.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Box office growth relative to the nation is one of several measures we look at to evaluate our performance, but we're really focused on optimizing total revenue growth including ancillary revenue and the ultimate contribution that each incremental customer brings to the bottom line. While our pricing strategies and promotional programs over the last year created a short term headwind to our admission forecast, we believe they are important drivers of long term future attendance. Over the last year since introducing these programs, we've seen attendance growth rates that have outperformed other major exhibitors in three out of the last four quarters and we believe these attendance gains help build our base of regular moviegoing customers. As we pass the one year mark for these changes, we expect improved admission per cap growth in the second half of this year. The competitive pricing environment in our industry continues to change with several exhibitors experimenting with different strategies.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

We continue to optimize our regular ticket prices in our markets to ensure we remain competitive and offer attractive value to all types of customers while capturing a premium during our peak demand periods. Last quarter, shared that we were working on several investment projects focused on increasing per capita revenues. I'm pleased to provide an update that in June we completed projects to add concession stands, two of our formerly dine in only Movie Tavern locations in New York and Pennsylvania with a third location in Kentucky completed in July. These locations previously only offered customers concessions, food and beverage ordering through our mobile app or at the bar for delivery to your seat By adding walk up concession stands where customers can order all food and concession items as well as pickup for mobile concessions orders and self serve soda, we expect to capture higher per capita concession sales while streamlining labor from our service delivery model at these locations. Looking ahead to the third quarter, the summer movie season continued in July with solid performances from Jurassic World Rebirth, Superman, and last weekend's opening of the Fantastic Four.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

The remainder of the summer includes the Naked Gun, the Bad Boys two, Freakier Friday, The Conjuring Last Rites, Downton Abbey, the grand finale. We're looking forward to an exciting fall and holiday film slate with Tron Aries, Wicked For Good, Zootopia two, and Avatar Fire and Ash, just to name a few. There are many more great films coming noted in today's earnings release. Looking even further ahead, 2026 film slate also looks strong with major franchises, including Spider Man, Brand New Day, Super Mario Brothers movie two, Moana, Jumanji three, Toy Story five, Mega Minions, The Mandalorian and Grogu in the Avengers Doomsday, just to name a few. In summary, we continue to see improvements in content supply, and this quarter of growth was another significant step forward.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Moving to our Hotel and Resorts division, you've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our strong average daily rate growth. I'll start with an update on the Hilton Milwaukee renovation. As we planned this project, we intentionally scheduled as much of the S room renovation work as possible during our seasonally slower winter months in our fourth quarter last year and first quarter this year to minimize disruption. As we expected and planned for, some of the work trailed into the spring and resulted in room displacement while rooms were out of service during the second quarter. I'm pleased to share that our team executed the largest renovation project in our company's history on schedule and all of the guestrooms are back in service at the June.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

As planned, the meeting space, ballrooms and common area renovations will continue for the next several months, but the most significant work and disruptions are behind us. I want to thank our outstanding project management team and the team at Milwaukee Hilton or Hilton Milwaukee for successfully completing the most operationally difficult phase of the project. I would also like to thank our teams to Pfister and St. Kate Hotels in Milwaukee for accommodating customers and delivering exceptional services as we shifted business between the hotels during the project. There were several other notable items in the quarter that I'd like to highlight.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

We continue to drive rate growth with average daily rate growth at five of our seven hotels. In addition to our focus on optimizing revenue management, our rate growth has benefited from our ability to command higher rates at our hotels with newly renovated room product, including the Pfister, Grand Geneva and the newly renovated rooms at Hilde Milwaukee. Group business during the quarter was stable and we continue to win in the market. Once again helped by our newly renovated meeting space and ballroom at several properties, the bookings continue to look solid with our group room revenue bookings for fiscal twenty twenty five, a group pace in the year for the year running slightly ahead of where we were at this time last year, even when including the RNC group business in the third quarter last year. Even more encouraging group room pace for 2026 continues to run 20% ahead of where we were at this time last year for the next year out with banquet and catering revenues similarly running ahead of last year's pace.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

While some industry surveys have seen a pullback in consumer spending on travel nationally and some markets have seen more significant leisure softening, our own portfolio has generally performed well. We believe our upper upscale positioning and drive to market locations and a broad segmentation lessening our exposure to any one type of customer we'll see less volatility if further economic softening occurs. The current state of our hotel business remains stable and consistent with our view last quarter. While we've not yet seen any meaningful change in transient demand or significant cancellations of group business at our portfolio hotels, there remains an increased level of economic uncertainty compared to where we were a year ago. If we begin to see softness, we are prepared to react and adjust quickly.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Finally, I'd like to briefly comment on capital allocation. Chad reiterated our capital expenditure guidance earlier in the call. While we still have a lot of work remaining on our capital projects this year, as we start to think about 2026, we do see a meaningful step down in capital expenditures as we get past the heavy part of the reinvestment cycle and we are in this that we are in this year with our current hotel portfolio. We continue to look for opportunities to deploy capital to grow both of our businesses with value accretive investments. We have confidence in our businesses and a strong balance sheet that allows us to move quickly when we see good opportunities.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

And we have a history of executing when they arise. To the extent that we don't see attractive investments that are actionable, we expect to return excess capital to shareholders through share repurchases or dividends. Before we open up the call for questions, I want to once again thank all the people that work so hard every single day making our ordinary days extraordinary for our guests. We talk a lot about the investments that we make in our businesses. We can never lose sight of the fact that our people are our most important asset And they proved that once again this quarter.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

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

[Operator]

Thank you. You. We'll go first to Eric Rolle with Texas Capital Securities. Please go ahead. Your line is now open.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

Thank you. Good morning, both of you. One question on each of the two segments. I guess, on hotel segment, as you dig into the 20% gain that you're seeing in group pace looking out into 2026, is there any way you can separate the group pace between the Milwaukee area and outside of Milwaukee? Just trying to get a sense of kind of maybe what impact you're seeing from the convention center expansion and maybe what that may be driving in terms of group pace versus maybe kind of just the overall, kind of business environment outside of Milwaukee.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

And then on the theater side, you noted that you're now starting to take kind of that blockbuster kind of surcharge, after the start after the end of the second quarter. How large of a surcharge, are you starting to implement? And any way to gauge, kind of what percentage of your tickets, that may impact kind of on a on a going forward basis?

[Chad Paris, CFO & Treasurer at The Marcus]

Sure, Eric. I'll I'll start with the question on hotels, and then I'll let let Greg comment on on what we're seeing with the convention center. Look. I think it's important perspective. We have seven seven hotels, five of them in Wisconsin, three of them in in Milwaukee.

[Chad Paris, CFO & Treasurer at The Marcus]

And it our group pace gains have in part been because we've got renovated meeting space. And we've got it at three of the of the, the Wisconsin properties, two of them in Milwaukee and then Grand Geneva. And so we're winning in the market, for group events, with meeting planners because of the quality of the assets and the positioning. I think as as we look out to '26, there's there's certainly some positive benefits of the convention center in the market. I don't have specific splits between how much is Milwaukee versus the rest of our portfolio.

[Chad Paris, CFO & Treasurer at The Marcus]

Maybe Greg can add some commentary anecdotally on what we're seeing with the convention center.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

It is very anecdotal. It's just that it's going it's going it I think government is pleased with the trajectory. I mean, it's it's it's we're definitely seeing increased activity because of the center now that it's open and people are coming to see it. But I don't have the specific numbers on where we are right this second.

[Chad Paris, CFO & Treasurer at The Marcus]

Yeah. And then I'll take the second I'll take the second question on theaters with the pricing. A couple of things. So I mentioned the changes to everyday matinee and the and the magnitude on those. Those will start to come through in q three.

[Chad Paris, CFO & Treasurer at The Marcus]

That's moving that program. So from $7 to $7.50 and on certain films, $8.50. And that that $1 delta on certain films is what we're doing with, generally with blockbuster pricing, across a number of different films. And we're still gonna be thoughtful about what types of films and what audiences we're going to put blockbuster pricing on. As you know, our approach on this has been pretty cautious, and we're still very much committed to driving attendance because getting people in the door is is really paramount to driving overall total revenue and the ancillary revenues that go with it.

[Chad Paris, CFO & Treasurer at The Marcus]

But we will provide uplift to admission per caps in the second half of the year.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Yeah. Because one thing we do know is movie going is habitual. You come, you see trailers, and you come again. So that invest we view it as an investment to build that attendance.

[Eric Wold, Executive Director, Equity Research at Texas Capital Securities]

Got it. Thank you both.

[Operator]

The next question today comes from the line of Drew Crum from B. Riley Securities. Please go ahead. Your line is now open.

[Drew Crum, Managing Director at B Riley Financial]

Okay. Thanks. Hey, guys.

[Drew Crum, Managing Director at B Riley Financial]

Good morning. Wondering if you're willing to share some preliminary thoughts for the domestic box office going into the second half. It looks like July ended down about 7%. The industry is going to be lapping a tough comparison in 4Q against what looks to be a pretty good slate for the holidays. So a lot of moving pieces there, but, you know, how do you see the second half shaking out for domestic box office?

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Man, you know, it's it's you you're right. We're we're lapping some tough comparisons. But, you know, we also have some we we also have some good film coming certainly at the end of the year with Wicked and then and then the Avatar. You know, that should be very those should be very strong. You know, which we it's I I find it very hard to predict how the box office is gonna do in any period of any short period of time.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

It just it's you just don't know. But but it looks very it looks very positive, and we should end up strong.

[Chad Paris, CFO & Treasurer at The Marcus]

Yeah. And and

[Drew Crum, Managing Director at B Riley Financial]

Fair enough.

[Chad Paris, CFO & Treasurer at The Marcus]

Drew, I would just I would just add to that one one housekeeping item. So as as you may know, we've got a change in our our fiscal year this year. And so last year, the year ended on December 26. This year, we will pick up the full week between Christmas and New Year's. And so for us, that fourth quarter growth will will benefit from that.

[Chad Paris, CFO & Treasurer at The Marcus]

So, you know, we're gonna have a a good quality slate and a good number of films, and we're going to have a few more days.

[Drew Crum, Managing Director at B Riley Financial]

Yep. Okay. Helpful. And then on the hotel segment, I think a number of puts and takes on 3Q revenue. Can you address those and how you see that netting out for the current period? Thanks.

[Chad Paris, CFO & Treasurer at The Marcus]

Yeah. I mean, so we've done extremely well with our banquet and catering business, and that really stems from the growth in group that we've seen over the last year and talked about for the last year coming into the bookings. And now those bookings are converting into business. And along with the rooms business for groups, get the banquet and catering. It does come at a bit lower margins.

[Chad Paris, CFO & Treasurer at The Marcus]

And so that's a bit of the trade off that we have going on there. And then added into a take for the quarter was the impact of the Hilton renovation. And when you strip that out, I think all things considered, we're we're pretty happy with the overall performance in the environment. And and as Greg commented, we see stability in continuing bookings in the group business, and our transient business is doing pretty well relative to other parts of the nation. So we'll see where the economy goes overall over the second half of the year, but at least we'll the headwind of the Hilton renovation will be behind us, and we should have a little bit easier path operationally.

[Drew Crum, Managing Director at B Riley Financial]

Got it. Okay. Thanks guys.

[Chad Paris, CFO & Treasurer at The Marcus]

Thanks Drew and welcome.

[Operator]

The next question today comes from Brighton Shoal from Barrington Research. Please go ahead. Your line is now open.

[Patrick Sholl, Vice President at Barrington Research Associates]

Hi. Thanks for taking the question. I just had a another question on capital allocation. As we move past the reinvestment cycle in hotels, I guess, how long should we think of this kind of being in a low maybe perhaps a lower, CapEx level? Or is there, like, additional investments within the theater side that would look to step up? And maybe just for the some of the properties outside of, Wisconsin and how we should think about, like, the timing of of reinvestment cycle for, like, the Chicago hotel and the, Nebraska hotel.

[Chad Paris, CFO & Treasurer at The Marcus]

Yeah, Pat. So, you know, the last three years really, we've been going through this heavy reinvestment period coming out of the pandemic in in CapEx and reinvesting into the hotels. You know, a bit of that we would have done during the pandemic, but it just got deferred. And and so we're catching up. The Hilton Milwaukee is by far the the biggest project of the various things that we've done over the last three years, and it's a $40,000,000 project with about three fourths of that falling into into this year.

[Chad Paris, CFO & Treasurer at The Marcus]

And then we we go into a more normal run rate for CapEx in the hotel business. I would just say there's always some level of refresh or renovations going on across the portfolio with smaller projects, but nothing like the magnitude of what we've just gone through. And so I'm not going to provide a specific guide on a number next year. I think if you look at the big step up here in '25 and '24 and then you go back and look at where we were in hotels pre pandemic, you could probably triangulate around what that might be. But I I, I think point being, we're gonna see a big step in the run rate down next year.

[Chad Paris, CFO & Treasurer at The Marcus]

In the theater business, you know, pretty close to the run rate that we've been at. We've done some ROI projects within that, call it 20,000,025 million dollars that we're doing this year, and I I don't see that range shifting very much going forward, with the current footprint of theaters that we have today.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

And and I just even would add on the on the hotel side. We talked about this before. In addition to just being having deferred and bumping into a bunch of of maintenance that came up I mean, not maybe CapEx that came up. The nature of some of this CapEx, you know, I mean, as we talk, there's seven year CapEx, which is soft goods. There's fifteen to twenty year CapEx, which is gonna be more your case goods, you know, your nightstand, things like that.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

And then you've got your, I would call it, thirty to forty year CapEx. And that things like gutting bathrooms and redoing those. And it it's at the Pfister, at the Grand Geneva, and at the Hilton, we all had all had these significant bathroom projects that really even exacerbated, which would have been a high, you know, a high CapEx period anyway. So it's not even even as you think out even more long term, it's just not that we won't have those again.

[Patrick Sholl, Vice President at Barrington Research Associates]

Okay.

[Patrick Sholl, Vice President at Barrington Research Associates]

On with with on theaters, just with your, value matinee pricing, with with the increase that you implemented, where is that relative to where it had been before you, implemented the value matinee program?

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Can you can you ask that question again? What what what period are we trying to compare?

[Patrick Sholl, Vice President at Barrington Research Associates]

I guess maybe, like, comparing the value match and a pricing compared to before instituting the $7 everyday match and a.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

Oh, what was our pricing before the seventh? You know, it really was very market specific. It was sort of all over the place. And, and so we you know, moving it to seniors and to to kids seven days a week, that was, that was pretty broad. We did that.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

I have to go back and look and see exactly where we're all these.

[Patrick Sholl, Vice President at Barrington Research Associates]

Okay.

[Patrick Sholl, Vice President at Barrington Research Associates]

And then, I guess, lastly, on, you know, the the theater footprint. I guess, can you maybe talk about the opportunities for new build or the acquisition market and how you're kind of seeing that evolve with the maybe a stable stabilizing box office?

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

You know, I I think that the the let's take the new build. I don't think there's a lot of new build opportunities. You know, there's gonna be some here and there as markets grow and mark you know, markets will will will demand, you know, in terms of well, there'll be demand in new in new growth markets. So I don't think that's a huge thing. But there we we do see we are looking at a few here and there.

[Gregory S. Marcus, Founder, President, CEO, Chairman & Director at The Marcus]

And then on the m and a side, again, it's so hard to predict what's gonna happen there. You know, it's not it it's very sporadic. These are not owned generally by funds that have, you know, five and seven year hold periods. They're for my families who sort of they march to beat their own drummers.

[Patrick Sholl, Vice President at Barrington Research Associates]

Okay. Thank you.

[Operator]

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

[Chad Paris, CFO & Treasurer at The Marcus]

All right. Well, we'd like to thank everyone for joining us once again today, and we look forward to talking with you in early November when we release our third quarter results. Until then, thank you and have a great day.

[Operator]

That concludes today's call. You may disconnect your lines at any time.

Participants

Executives

• Chad Paris, CFO & Treasurer
• Gregory S. Marcus, Founder, President, CEO, Chairman & Director

Analysts

• Eric Wold, Executive Director, Equity Research at Texas Capital Securities
• Drew Crum, Managing Director at B Riley Financial
• Patrick Sholl, Vice President at Barrington Research Associates