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| 8-K - FORM 8-K - MARCUS CORP | tv486626_8k.htm |
Exhibit 99.1
THE MARCUS CORPORATION REPORTS RECORD REVENUE, OPERATING INCOME AND NET EARNINGS FOR FOURTH QUARTER AND FISCAL 2017
Total assets cross $1 billion threshold for first time; Marcus Theatres® achieves a record fourth quarter and year, continues to outperform the industry
Milwaukee, February 22, 2018… The Marcus Corporation (NYSE: MCS) today reported results for the fourth quarter and fiscal year ended December 28, 2017.
Fourth Quarter Fiscal 2017 Highlights
| · | Total revenues for the fourth quarter of fiscal 2017 were a record $158,167,000, a 14.0% increase from revenues of $138,747,000 for the fourth quarter of fiscal 2016. |
| · | Operating income for the fourth quarter of fiscal 2017 was a record $17,394,000, an 11.0% increase from operating income of $15,664,000 for the fourth quarter of fiscal 2016. |
| · | Net earnings attributable to The Marcus Corporation were a record $34,441,000 for the fourth quarter of fiscal 2017, a 294.0% increase from net earnings attributable to The Marcus Corporation of $8,742,000 for the fourth quarter of fiscal 2016. |
| · | Net earnings per diluted common share attributable to The Marcus Corporation were $1.21 for the fourth quarter of fiscal 2017, a 290.3% increase from net earnings per diluted common share attributable to The Marcus Corporation of $0.31 for the fourth quarter of fiscal 2016. |
| · | Net earnings attributable to The Marcus Corporation for the fourth quarter of fiscal 2017 were favorably impacted by a one-time reduction of deferred income taxes of $21.2 million related to the future lower federal tax rate resulting from the December 22, 2017 signing of the Tax Cuts and Jobs Act of 2017. The one-time adjustment increased fiscal 2017 net earnings attributable to The Marcus Corporation by approximately $0.75 per diluted common share. |
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Fiscal 2017 Highlights
| · | Total revenues were a record $622,714,000 for fiscal 2017, a 14.5% increase from revenues of $543,864,000 for fiscal 2016. |
| · | Operating income was a record $75,595,000 for fiscal 2017, an 8.1% increase from operating income of $69,954,000 for fiscal 2016. |
| · | Net earnings attributable to The Marcus Corporation were $64,996,000 for fiscal 2017, a 71.5% increase from net earnings attributable to The Marcus Corporation of $37,902,000 for fiscal 2016. |
| · | Net earnings per diluted common share attributable to The Marcus Corporation were $2.29 for fiscal 2017, a 68.4% increase from net earnings per diluted common share attributable to The Marcus Corporation of $1.36 for fiscal 2016. |
| · | Net earnings attributable to The Marcus Corporation for fiscal 2017 were favorably impacted by the one-time reduction of deferred income taxes described above. |
“Strong contributions from both divisions resulted in record revenues, operating income and net earnings for both the fourth quarter and full year 2017,” said Gregory S. Marcus, president and chief executive officer of The Marcus Corporation. “Our company obviously benefited from the one-time income tax adjustment during the fourth quarter, but it is important to note that our net earnings for the fourth quarter and full year 2017 were still an all-time record even without the benefit of the tax adjustment. Moreover, we achieved another important milestone, with total assets crossing over the $1.0 billion threshold for the first time. Marcus Theatres continued to outperform the industry and achieved record revenues and operating income for the fourth quarter and the year. Marcus Hotels & Resorts also outperformed its competitive set, with increased revenues for both periods and increased operating income during the fourth quarter. Long term, we expect the impact from the tax reform legislation to be meaningful for the company by reducing our effective tax rate and freeing up additional cash to invest in our businesses, associates, shareholders and community.”
Marcus Theatres®
Revenues for Marcus Theatres increased 19.0% for the fourth quarter and 22.3% for fiscal 2017, while operating income was up 8.0% in the fourth quarter and 11.9% for fiscal 2017. On a comparable theatre
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basis, the division outperformed national box office revenues by 5.2 percentage points in the fourth quarter and 1.6 percentage points for the full year, according to Rentrak.
“As expected, the holiday film slate proved to be very strong for Marcus Theatres. Rebounding from a weak summer movie season, the fourth quarter of fiscal 2017 was the division’s best fourth quarter ever, helping to drive record results for the full year. This was on top of our previous record performance in fiscal 2016,” said Marcus.
During 2017, Marcus Theatres opened two new theatres, including our first BistroPlexSM dining and movie concept, and added DreamLoungerSM recliner seating to 15 additional theatres, including six Marcus Wehrenberg locations. Additional DreamLounger conversions are currently under construction at three existing locations, including two more Marcus Wehrenberg theatres, with more conversions planned for 2018. The division opened two new UltraScreen DLX® auditoriums, two SuperScreen DLX® auditoriums and converted 16 additional screens to SuperScreen DLX auditoriums in 2017. New Take FiveSM Lounge, Zaffiro’s® Express and Reel Sizzle® locations were also added to multiple theatres during the year.
“Our record results in 2017 were a direct result of the investments we continue to make in our theatres, including our DreamLounger recliners, premium large-format auditoriums and variety of food and beverage concepts. In addition, our innovative pricing strategies and Magical Movie RewardsSM loyalty program, now with nearly 2.6 million members, set Marcus Theatres apart as the premier destination for an exceptional moviegoing experience,” said Rolando B. Rodriquez, chairman, president and chief executive officer of Marcus Theatres. “Our strong team and focused execution, coupled with innovative concepts and marketing programs, continue to delight our guests, drive strong results and enable us to outperform the industry.”
The five top-performing films for Marcus Theatres in the fourth quarter were Star Wars: The Last Jedi, Thor: Ragnarok, Justice League, Wonder and Coco. For the full year 2017, the five top-performing
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movies were Star Wars: The Last Jedi, Beauty and the Beast, Guardian of the Galaxy Vol. 2, It and Wonder Woman.
“The first quarter is off to a good start. Popular films including Star Wars: The Last Jedi, Jumanji: Welcome to the Jungle and The Greatest Showman have carried over from the fourth quarter, and new films such as Fifty Shades Freed and this past week’s huge blockbuster, Black Panther, have been well received. A number of additional films, including Red Sparrow, A Wrinkle in Time and Tomb Raider will open in the next few weeks and are also expected to perform well,” said Rodriguez.
Marcus® Hotels & Resorts
Marcus Hotels & Resorts’ revenue per available room (RevPAR) for comparable company-owned properties increased 2.7% in the fourth quarter, outperforming both the industry and the division’s competitive set in its markets. For the full year, RevPAR increased 0.9%, outperforming our competitive set by nearly four percentage points. An increased average daily rate was the primary contributor to our fourth quarter RevPAR growth, with results also benefiting from guest bookings at the 29 new all-season villas that opened at the Grand Geneva Resort & Spa in May. Stronger group sales helped to drive increased operating income in the fourth quarter as well.
Early in the fourth quarter of fiscal 2017, Marcus Hotels & Resorts ceased management of The Westin® Atlanta Perimeter North in Atlanta, Ga. and sold its 11% minority ownership interest in the property for a substantial gain, which favorably impacted fiscal 2017 fourth quarter net earnings. During 2017, the company celebrated the opening of the Omaha Marriott Downtown at the Capitol District in Omaha, Nebraska, a new property where Marcus Hotels & Resorts is a minority investor and property manager, began management of the Sheraton Chapel Hill in Chapel Hill, North Carolina, and opened SafeHouse® Chicago, an experiential, spy-themed restaurant in the River North neighborhood.
Numerous Marcus Hotels & Resorts hotels and restaurants were recognized by prestigious organizations for their commitment to excellence in 2017. Among the recognitions include four properties being
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recognized as top hotels in Condé Nast Traveler’s 30th annual Readers’ Choice Awards, and 23 hotels and restaurants receiving the TripAdvisor® 2017 Certificate of Excellence.
“In 2017, we continued to deliver memorable experiences for our guests, while maintaining our focus on improving operating efficiency. Our growth strategy includes pursuing strategic opportunities to enhance our existing properties while also adding new management contracts to our portfolio. We were thrilled to kick off 2018 by announcing our plans to rebrand the InterContinental Milwaukee into a creatively bold independent arts hotel, and to assume management of The Murieta Inn & Spa in Rancho Murieta, California. We look forward to adding additional management contracts as the year progresses,” said Marcus.
Return of Capital to Shareholders
“Yesterday, we announced a 20% increase in the cash dividend rate, our fourth dividend increase in the last three years. Our strong balance sheet gives us the ability to return capital to shareholders, while at the same time continuing to invest in our two businesses and pursue potential growth opportunities,” said Douglas A. Neis, chief financial officer and treasurer of The Marcus Corporation.
Conference Call and Webcast
Marcus Corporation management will hold a conference call today, Thursday, February 22, 2018, at 10:00 a.m. Central/11:00 a.m. Eastern time to discuss the fourth 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 7487235. 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, March 1, 2018, by dialing 1-855-859-2056 and entering passcode 7487235. The webcast will be archived on the company’s website until its next earnings release.
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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 895 screens at 69 locations in eight states. The company’s lodging division, Marcus® Hotels & Resorts, owns and/or manages 19 hotels, resorts and other properties in nine states. 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 adverse 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; and (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. 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.
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THE MARCUS CORPORATION
Consolidated Statements of Earnings
(Unaudited)
(in thousands, except per share data)
| 13 Weeks Ended | 52 Weeks Ended | |||||||||||||||
| Dec. 28, | Dec. 29, | Dec. 28, | Dec. 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Theatre admissions | $ | 60,869 | $ | 48,985 | $ | 227,091 | $ | 186,768 | ||||||||
| Rooms | 24,032 | 23,183 | 106,876 | 105,167 | ||||||||||||
| Theatre concessions | 39,624 | 32,331 | 148,989 | 120,975 | ||||||||||||
| Food and beverage | 18,140 | 16,767 | 70,627 | 67,551 | ||||||||||||
| Other revenues | 15,502 | 17,481 | 69,131 | 63,403 | ||||||||||||
| Total revenues | 158,167 | 138,747 | 622,714 | 543,864 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Theatre operations | 51,426 | 42,681 | 197,270 | 160,729 | ||||||||||||
| Rooms | 10,169 | 9,804 | 40,286 | 40,213 | ||||||||||||
| Theatre concessions | 12,968 | 7,967 | 43,634 | 32,407 | ||||||||||||
| Food and beverage | 15,282 | 13,729 | 59,375 | 55,526 | ||||||||||||
| Advertising and marketing | 6,080 | 5,549 | 23,960 | 21,582 | ||||||||||||
| Administrative | 17,012 | 17,982 | 68,666 | 63,620 | ||||||||||||
| Depreciation and amortization | 14,175 | 10,807 | 51,719 | 41,832 | ||||||||||||
| Rent | 2,151 | 2,107 | 11,869 | 8,384 | ||||||||||||
| Property taxes | 4,240 | 3,951 | 18,815 | 16,257 | ||||||||||||
| Other operating expenses | 7,270 | 8,506 | 31,525 | 33,360 | ||||||||||||
| Total costs and expenses | 140,773 | 123,083 | 547,119 | 473,910 | ||||||||||||
| Operating income | 17,394 | 15,664 | 75,595 | 69,954 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Investment income | 359 | 273 | 588 | 298 | ||||||||||||
| Interest expense | (2,646 | ) | (2,183 | ) | (12,100 | ) | (9,176 | ) | ||||||||
| Gain (loss) on disposition of property, equipment and other assets | 4,401 | (366 | ) | 3,981 | (844 | ) | ||||||||||
| Equity earnings (losses) from unconsolidated joint ventures, net | (29 | ) | 31 | 46 | 301 | |||||||||||
| 2,085 | (2,245 | ) | (7,485 | ) | (9,421 | ) | ||||||||||
| Earnings before income taxes | 19,479 | 13,419 | 68,110 | 60,533 | ||||||||||||
| Income taxes (benefit) | (14,946 | ) | 4,758 | 3,625 | 22,994 | |||||||||||
| Net earnings | 34,425 | 8,661 | 64,485 | 37,539 | ||||||||||||
| Net loss attributable to noncontrolling interests | (16 | ) | (81 | ) | (511 | ) | (363 | ) | ||||||||
| Net earnings attributable to The Marcus Corporation | $ | 34,441 | $ | 8,742 | $ | 64,996 | $ | 37,902 | ||||||||
| Net earnings per common share attributable to | ||||||||||||||||
| The Marcus Corporation - diluted | $ | 1.21 | $ | 0.31 | $ | 2.29 | $ | 1.36 | ||||||||
| Weighted average shares outstanding - diluted | 28,385 | 28,235 | 28,393 | 27,957 | ||||||||||||
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THE MARCUS CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
| (Unaudited) | (Audited) | |||||||
| December 28, | December 29, | |||||||
| 2017 | 2016 | |||||||
| Assets: | ||||||||
| Cash, cash equivalents and restricted cash | $ | 20,747 | $ | 8,705 | ||||
| Accounts and notes receivable | 27,230 | 14,761 | ||||||
| Refundable income taxes | 15,335 | 1,672 | ||||||
| Other current assets | 13,409 | 11,005 | ||||||
| Property and equipment, net | 860,064 | 789,198 | ||||||
| Other assets | 81,012 | 85,925 | ||||||
| Total Assets | $ | 1,017,797 | $ | 911,266 | ||||
| Liabilities and Shareholders' Equity: | ||||||||
| Accounts payable | $ | 51,541 | $ | 31,206 | ||||
| Taxes other than income taxes | 19,638 | 17,261 | ||||||
| Other current liabilities | 68,918 | 63,568 | ||||||
| Current portion of capital lease obligation | 7,570 | 6,598 | ||||||
| Current maturities of long-term debt | 12,016 | 12,040 | ||||||
| Capital lease obligation | 28,282 | 26,106 | ||||||
| Long-term debt | 289,813 | 271,343 | ||||||
| Deferred income taxes | 38,233 | 46,433 | ||||||
| Deferred compensation and other | 56,662 | 45,064 | ||||||
| Equity | 445,124 | 391,647 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 1,017,797 | $ | 911,266 | ||||
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THE MARCUS CORPORATION
Business Segment Information
(Unaudited)
(In thousands)
| Theatres | Hotels/Resorts | Corporate Items | Total | |||||||||||||
| 13 Weeks Ended December 28, 2017 | ||||||||||||||||
| Revenues | $ | 106,314 | $ | 51,728 | $ | 125 | $ | 158,167 | ||||||||
| Operating income (loss) | 21,838 | 55 | (4,499 | ) | 17,394 | |||||||||||
| Depreciation and amortization | 9,448 | 4,642 | 85 | 14,175 | ||||||||||||
| 13 Weeks Ended December 29, 2016 | ||||||||||||||||
| Revenues | $ | 89,328 | $ | 49,291 | $ | 128 | $ | 138,747 | ||||||||
| Operating income (loss) | 20,224 | (469 | ) | (4,091 | ) | 15,664 | ||||||||||
| Depreciation and amortization | 6,395 | 4,313 | 99 | 10,807 | ||||||||||||
| 52 Weeks Ended December 28, 2017 | ||||||||||||||||
| Revenues | $ | 401,291 | $ | 220,866 | $ | 557 | $ | 622,714 | ||||||||
| Operating income (loss) | 80,319 | 12,748 | (17,472 | ) | 75,595 | |||||||||||
| Depreciation and amortization | 33,448 | 17,912 | 359 | 51,719 | ||||||||||||
| 52 Weeks Ended December 29, 2016 | ||||||||||||||||
| Revenues | $ | 328,165 | $ | 215,171 | $ | 528 | $ | 543,864 | ||||||||
| Operating income (loss) | 71,754 | 14,604 | (16,404 | ) | 69,954 | |||||||||||
| Depreciation and amortization | 24,570 | 16,895 | 367 | 41,832 | ||||||||||||
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.