10-Q 1 mcs-20240328.htm 10-Q mcs-20240328
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 2024
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-12604
THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin39-1139844
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
100 East Wisconsin Avenue, Suite 1900
Milwaukee ,Wisconsin
53202-4125
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (414) 905-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valueMCSNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.
Yesx Noo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesxNoo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check One).
Large accelerated fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesoNox
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
COMMON STOCK OUTSTANDING AT APRIL 30, 2024 – 25,170,383
CLASS B COMMON STOCK OUTSTANDING AT APRIL 30, 2024 –6,984,584


THE MARCUS CORPORATION
INDEX
2

PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
March 28,
2024
December 28,
2023
ASSETS
Current assets:
Cash and cash equivalents$17,258 $55,589 
Restricted cash3,295 4,249 
Accounts receivable, net of reserves of $199 and $115, respectively
13,425 19,703 
Assets held for sale2,980  
Other current assets24,589 22,175 
Total current assets61,547 101,716 
Property and equipment:
Land and improvements130,977 131,833 
Buildings and improvements715,849 719,521 
Leasehold improvements166,450 166,245 
Furniture, fixtures and equipment399,117 397,150 
Finance lease right-of-use assets30,106 30,106 
Construction in progress21,703 11,432 
Total property and equipment1,464,202 1,456,287 
Less accumulated depreciation and amortization786,004 774,025 
Net property and equipment678,198 682,262 
Operating lease right-of-use assets173,068 179,788 
Other assets:
Investments in joint ventures5,451 1,718 
Goodwill74,996 74,996 
Deferred incomes taxes728  
Other24,147 24,623 
Total other assets105,322 101,337 
TOTAL ASSETS$1,018,135 $1,065,103 
See accompanying condensed notes to consolidated financial statements.
3

THE MARCUS CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share data)
March 28,
2024
December 28,
2023
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$29,574 $37,384 
Taxes other than income taxes15,785 18,585 
Accrued compensation12,704 22,598 
Other accrued liabilities56,899 57,685 
Current portion of finance lease obligations2,602 2,579 
Current portion of operating lease obligations14,061 15,290 
Current maturities of long-term debt10,273 10,303 
Total current liabilities141,898 164,424 
Finance lease obligations12,129 12,753 
Operating lease obligations172,985 178,582 
Long-term debt159,506 159,548 
Deferred income taxes25,311 32,235 
Other long-term obligations46,988 46,389 
Shareholders’ Equity:
Preferred Stock, $1 par; authorized 1,000,000 shares; none issued
  
Common Stock, $1 par; authorized 50,000,000 shares; issued 25,237,374 shares at March 28, 2024 and 24,691,548 shares at December 28, 2023
25,237 24,692 
Class B Common Stock, $1 par; authorized 33,000,000 shares; issued and outstanding 6,984,584 shares at March 28, 2024 and 7,078,410 shares at December 28, 2023
6,985 7,078 
Capital in excess of par162,638 160,642 
Retained earnings267,524 281,599 
Accumulated other comprehensive loss(1,348)(1,336)
461,036 472,675 
Less cost of Common Stock in treasury (67,052 shares at March 28, 2024 and 47,916 shares at December 28, 2023)
(1,718)(1,503)
Total shareholders’ equity459,318 471,172 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,018,135 $1,065,103 
See accompanying condensed notes to consolidated financial statements.
4

THE MARCUS CORPORATION
Consolidated Statements of Earnings (Loss)
(in thousands, except per share data)
13 Weeks Ended
March 28,
2024
March 30,
2023
Revenues:
Theatre admissions$40,596 $47,635 
Rooms18,213 17,857 
Theatre concessions34,695 42,375 
Food and beverage16,163 15,193 
Other revenues19,702 19,688 
129,369 142,748 
Cost reimbursements9,178 9,528 
Total revenues138,547 152,276 
Costs and expenses:
Theatre operations44,985 51,069 
Rooms9,411 9,278 
Theatre concessions14,886 15,730 
Food and beverage13,863 13,568 
Advertising and marketing5,301 5,065 
Administrative21,402 19,851 
Depreciation and amortization16,015 15,876 
Rent6,347 6,493 
Property taxes3,931 4,757 
Other operating expenses9,870 9,651 
Loss on disposition of property, equipment and other assets23 398 
Reimbursed costs9,178 9,528 
Total costs and expenses155,212 161,264 
Operating loss(16,665)(8,988)
Other income (expense):
Investment income692 260 
Interest expense(2,534)(3,008)
Other income (expense)(341)(401)
Equity losses from unconsolidated joint ventures(387)(171)
(2,570)(3,320)
Loss before income taxes(19,235)(12,308)
Income tax benefit(7,369)(2,842)
Net loss$(11,866)$(9,466)
Net loss per share - basic:
Common Stock$(0.38)$(0.31)
Class B Common Stock$(0.34)$(0.28)
Net loss per share - diluted:
Common Stock$(0.38)$(0.31)
Class B Common Stock$(0.34)$(0.28)
See accompanying condensed notes to consolidated financial statements.
5

THE MARCUS CORPORATION
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
13 Weeks Ended
March 28,
2024
March 30,
2023
Net loss$(11,866)$(9,466)
Other comprehensive loss, net of tax:
Amortization of the net actuarial loss and prior service credit related to the pension, net of tax benefit of $4 and $5, respectively
(12)(11)
Fair market value adjustment of interest rate swap, net of tax benefit of $0 and $8, respectively
 (22)
Reclassification adjustment on interest rate swap included in interest expense, net of tax benefit of $0 and $20, respectively
 (58)
Other comprehensive loss(12)(91)
Comprehensive loss$(11,878)$(9,557)













See accompanying condensed notes to consolidated financial statements.
6

THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
13 Weeks Ended
March 28, 2024March 30, 2023
OPERATING ACTIVITIES:
Net loss$(11,866)$(9,466)
Adjustments to reconcile net loss to net cash used in operating activities:
Losses on investments in joint ventures387 171 
Loss on disposition of property, equipment and other assets23 398 
Depreciation and amortization16,015 15,876 
Amortization of debt issuance costs352 367 
Share-based compensation2,514 2,172 
Deferred income taxes(7,647)(3,117)
Other long-term obligations1,037 771 
Contribution of the Company’s stock to savings and profit-sharing plan 1,259 
Changes in operating assets and liabilities:
Accounts receivable6,277 1,910 
Other assets(1,485)(2,130)
Operating leases (106)(285)
Accounts payable(7,330)(2,501)
Income taxes223 265 
Taxes other than income taxes(2,800)(1,665)
Accrued compensation(9,894)(9,891)
Other accrued liabilities(798)(1,868)
Total adjustments(3,232)1,732 
Net cash used in operating activities(15,098)(7,734)
INVESTING ACTIVITIES:
Capital expenditures(15,440)(8,921)
Proceeds from disposals of property, equipment and other assets8  
Capital contribution in joint venture(5,620) 
Subscription and sale of joint venture interests1,500  
Proceeds from sale of trading securities7 9 
Purchase of trading securities(1,148)(514)
Other investing activities(65)(105)
Net cash used in investing activities(20,758)(9,531)
FINANCING ACTIVITIES:
Debt transactions:
Proceeds from borrowings on revolving credit facility5,000 29,000 
Repayment of borrowings on revolving credit facility(5,000)(20,000)
Principal payments on long-term debt(338)(431)
Debt issuance costs (50)
Principal payments on finance lease obligations(601)(556)
Equity transactions:
Treasury stock transactions, except for stock options(281)(292)
Exercise of stock options 2 
Dividends paid(2,209)(1,548)
Distributions to noncontrolling interest (550)
Net cash provided by (used in) financing activities(3,429)5,575 
Net decrease in cash, cash equivalents and restricted cash(39,285)(11,690)
Cash, cash equivalents and restricted cash at beginning of period59,838 24,506 
Cash, cash equivalents and restricted cash at end of period$20,553 $12,816 
Supplemental Information:
Interest paid, net of amounts capitalized$5,137 $4,356 
Income taxes paid, including interest earned54 11 
Change in accounts payable for additions to property, equipment and other assets(480)(588)
See accompanying condensed notes to consolidated financial statements.
7

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)


1. General
Basis of Presentation - The unaudited consolidated financial statements for the 13 weeks ended March 28, 2024 and March 30, 2023 have been prepared by the Company. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the unaudited interim financial information at March 28, 2024, and for all periods presented, have been made. The results of operations during the interim periods are not necessarily indicative of the results of operations for the entire year or other interim periods. However, the unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2023.
Accounting Policies - Refer to the Company’s audited consolidated financial statements (including footnotes) for the fiscal year ended December 28, 2023, contained in the Company’s Annual Report on Form 10-K for such year, for a description of the Company’s accounting policies.
Depreciation and Amortization - Depreciation and amortization of property and equipment are provided using the straight-line method over the shorter of the estimated useful lives of the assets or any related lease terms. Depreciation expense totaled $16,014 and $15,868 for the 13 weeks ended March 28, 2024, and March 30, 2023, respectively.
Assets Held for Sale – Long-lived assets that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as assets held for sale and included within current assets on the consolidated balance sheet. Assets held for sale are measured at the lower of their carrying value or their fair value less costs to sell the asset. As of March 28, 2024, assets held for sale consisted of one closed theatre that was sold subsequent to March 28, 2024.
Long-Lived Assets – The Company periodically considers whether indicators of impairment of long-lived assets held for use are present. This includes quantitative and qualitative factors, including evaluating the historical actual operating performance of the long-lived assets and assessing the potential impact of recent events and transactions impacting the long-lived assets. If such indicators are present, the Company determines if the long-lived assets are recoverable by assessing whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. If the long-lived assets are not recoverable, the Company recognizes any impairment losses based on the excess of the carrying amount of the assets over their fair value.
Goodwill – The Company reviews goodwill for impairment annually or more frequently if certain indicators arise. The Company performs its annual impairment test on the first day of the fiscal fourth quarter. There were no indicators of impairment identified during the 13 weeks ended March 28, 2024 or March 30, 2023.
Earnings (Loss) Per Share - Net earnings (loss) per share (EPS) of Common Stock and Class B Common Stock is computed using the two class method. Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units, performance stock units and convertible debt instruments using the if-converted method. Convertible Class B Common Stock and convertible debt instruments are reflected on an if-converted basis when dilutive to Common Stock. The computation of the diluted net earnings (loss) per share of Common Stock assumes the conversion of Class B Common Stock in periods that have net earnings since it would be dilutive to Common Stock earnings per share, while the diluted net earnings (loss) per share of Class B Common Stock does not assume the conversion of those shares.
Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of Class B Common Stock. As such, the undistributed earnings (losses) for each period are allocated based on the proportionate share of entitled cash dividends.

The following table illustrates the computation of Common Stock basic and diluted net loss per share, provides a reconciliation of the number of weighted-average basic and diluted shares outstanding, when applicable, and provides the weighted-average number of anti-dilutive shares excluded from the computation of diluted weighted-average shares outstanding:
13 Weeks Ended
March 28, 2024March 30, 2023
Net loss per share - basic:
Common Stock$(0.38)$(0.31)
Class B Common Stock$(0.34)$(0.28)
Net loss per share - diluted:
Common Stock$(0.38)$(0.31)
Class B Common Stock$(0.34)$(0.28)
Numerator:
Net loss $(11,866)$(9,466)
Denominator (in thousands):
Basic and diluted weighted-average shares outstanding31,892 31,572 
Weighted-average number of anti-dilutive shares excluded from denominator:
Employee stock options2,973,626 3,081,729 
Restricted stock units49,505  
Performance stock units143,305  
Convertible senior notes9,331,461 9,170,800 
Total12,497,897 12,252,529 
For the periods when the Company reports a net loss, common stock equivalents, restricted stock units, performance stock units, and shares related to the convertible senior notes are excluded from the computation of diluted loss per share as their inclusion would have an anti-dilutive effect. Performance stock units are considered anti-dilutive if the performance targets upon which the issuance of the shares are contingent have not been achieved and the respective performance period has not been completed as of the end of the current period. Shares related to the convertible senior notes are excluded from the computation of diluted earnings per share in periods when the effect would have been anti-dilutive using the if-converted method.
Shareholders’ Equity - Activity impacting total shareholders’ equity attributable to The Marcus Corporation and noncontrolling interest for the 13 weeks ended March 28, 2024 and March 30, 2023 was as follows:
Common
Stock
Class B
Common
Stock
Capital
in Excess
of Par
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total Shareholders’
Equity
BALANCES AT DECEMBER 28, 2023$24,692 $7,078 $160,642 $281,599 $(1,336)$(1,503)$471,172 
Cash dividends:
$0.064 per share Class B Common Stock
— — — (449)— — (449)
$0.07 per share Common Stock
— — — (1,760)— — (1,760)
Purchase of treasury stock— — — — — (301)(301)
Reissuance of treasury stock— — (3)— — 23 20 
Issuance of non-vested stock452 — (515)— — 63  
Shared-based compensation— — 2,514 — — — 2,514 
Conversions of Class B Common Stock93 (93)— — — —  
Comprehensive loss— — — (11,866)(12)— (11,878)
BALANCES AT MARCH 28, 2024$25,237 $6,985 $162,638 $267,524 $(1,348)$(1,718)$459,318 
Common
Stock
Class B
Common
Stock
Capital
in Excess
of Par
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Shareholders’
Equity
Attributable
to The
Marcus
Corporation
Non-
controlling
Interest
Total
Equity
BALANCES AT DECEMBER 29, 2022$24,498 $7,111 $153,794 $274,254 $(1,694)$(1,866)$456,097 $824 $456,921 
Cash dividends:
$0.045 per share Class B Common Stock
— — — (319)— — (319)— (319)
$0.05 per share Common Stock
— — — (1,229)— — (1,229)— (1,229)
Exercise of stock options— — (1)— — 3 2 — 2 
Purchase of treasury stock— — — — — (313)(313)— (313)
Savings and profit-sharing contribution79 — 1,180 — — — 1,259 — 1,259 
Reissuance of treasury stock— — (3)— — 24 21 — 21 
Issuance of non-vested stock82 — (143)— — 61  —  
Shared-based compensation— — 2,172 — — — 2,172 — 2,172 
Other— — 1 (1)— —  —  
Conversions of Class B Common Stock33 (33)— — — —  —  
Distribution to noncontrolling interest— — — — — —  (550)(550)
Comprehensive loss— — — (9,466)(91)— (9,557)— (9,557)
BALANCES AT MARCH 30, 2023$24,692 $7,078 $157,000 $263,239 $(1,785)$(2,091)$448,133 $274 $448,407 

Accumulated Other Comprehensive LossAccumulated other comprehensive loss presented in the accompanying consolidated balance sheets consists of the following, all presented net of tax:
March 28,
2024
December 28,
2023
Net unrecognized actuarial loss for pension obligation$(1,348)$(1,336)
$(1,348)$(1,336)

Fair Value Measurements - Certain financial assets and liabilities are recorded at fair value in the consolidated financial statements. Some are measured on a recurring basis while others are measured on a non-recurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. A fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.
The Company’s assets and liabilities measured at fair value are classified in one of the following categories:
Level 1 - Assets or liabilities for which fair value is based on quoted prices in active markets for identical instruments as of the reporting date. At March 28, 2024 and December 28, 2023, the Company’s $6,821 and $5,364 respectively, of debt and equity securities classified as trading were valued using Level 1 pricing inputs and were included in other current assets. At December 28, 2023, the Company’s $37,018 of investments in money market funds were valued using Level 1 pricing inputs and were included in cash and cash equivalents.
Level 2 - Assets or liabilities for which fair value is based on pricing inputs that were either directly or indirectly observable as of the reporting date. At each of March 28, 2024 and December 28, 2023, none of the Company’s recorded assets or liabilities were measured using Level 2 pricing inputs.
Level 3 - Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. At each of March 28, 2024 and December 28, 2023, none of the Company’s recorded assets or liabilities that are measured on a recurring basis at fair market value were valued using Level 3 pricing inputs.
The carrying value of the Company’s financial instruments (including cash and cash equivalents, restricted cash, accounts receivable and accounts payable) approximates fair value. The fair value of the Company’s $70,000 of senior notes, valued using Level 2 pricing inputs, is approximately $66,833 at March 28, 2024, determined based upon discounted cash flows using current market interest rates for financial instruments with a similar average remaining life. The fair value of the Company's $100,050 of convertible senior notes, valued using Level 2 pricing inputs, is approximately $144,371 at March 28, 2024, determined based on market rates and the closing trading price of the convertible senior notes as of March 28, 2024. The carrying amounts of the Company’s remaining long-term debt approximate their fair values, determined using current rates for similar instruments, or Level 2 pricing inputs.
Defined Benefit Plan - The components of the net periodic pension cost of the Company’s unfunded nonqualified, defined-benefit plan are as follows:
13 Weeks Ended
March 28, 2024March 30, 2023
Service cost$62 $122 
Interest cost444 453 
Net amortization of prior service cost and actuarial loss(16)(16)
Net periodic pension cost$490 $559 
Service cost is included in Administrative expense while all other components are recorded within Other expense outside of operating income in the consolidated statements of earnings.
Revenue RecognitionThe disaggregation of revenues by business segment for the 13 weeks ended March 28, 2024 is as follows:
13 Weeks Ended March 28, 2024
TheatresHotels/Resorts CorporateTotal
Theatre admissions$40,596 $ $ $40,596 
Rooms 18,213  18,213 
Theatre concessions34,695   34,695 
Food and beverage 16,163  16,163 
Other revenues(1)
5,979 13,643 80 19,702 
Cost reimbursements 9,178  9,178 
Total revenues$81,270 $57,197 $80 $138,547 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
The disaggregation of revenues by business segment for the 13 weeks ended March 30, 2023 is as follows:
13 Weeks Ended March 30, 2023
TheatresHotels/ResortsCorporateTotal
Theatre admissions$47,635 $ $ $47,635 
Rooms 17,857  17,857 
Theatre concessions42,375   42,375 
Food and beverage 15,193  15,193 
Other revenues(1)
6,366 13,233 89 19,688 
Cost reimbursements 9,528  9,528 
Total revenues$96,376 $55,811 $89 $152,276 
(1)Included in other revenues is an immaterial amount related to rental income that is not considered revenue from contracts with customers.
The Company had deferred revenue from contracts with customers of $36,320 and $38,034 as of March 28, 2024 and December 28, 2023, respectively. The Company had no contract assets as of March 28, 2024 and December 28, 2023. During the 13 weeks ended March 28, 2024, the Company recognized revenue of $7,548 that was included in deferred revenues as of December 28, 2023. During the 13 weeks ended March 30, 2023, the Company recognized revenue of $6,276 that was included in deferred revenues as of December 29, 2022. The majority of the Company’s deferred revenue relates to non-redeemed gift cards, advanced ticket sales and the Company’s loyalty program.
As of March 28, 2024, the amount of transaction price allocated to the remaining performance obligations under the Company’s advanced ticket sales was $2,031 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues, which is included in other accrued liabilities. As of March 28, 2024, the amount of transaction price allocated to the remaining performance obligations related to the amount of Theatres non-redeemed gift cards was $16,055 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the tickets and gift cards are redeemed, which is expected to occur within the next two years.
As of March 28, 2024, the amount of transaction price allocated to the remaining performance obligations related to the amount of Hotels and Resorts non-redeemed gift cards was $4,282 and is reflected in the Company’s consolidated balance sheet as part of deferred revenues. The Company recognizes revenue as the gift cards are redeemed, which is expected to occur within the next two years.
The majority of the Company’s revenue is recognized in less than one year from the original contract.
New Accounting Pronouncements - In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280: Improvements to Reportable Segment Disclosures (ASU No. 2023-07), which requires disclosure of incremental segment information on an annual and interim basis. ASU No 2023-07 will be effective for the Company’s fiscal year ending December 26, 2024, and the Company’s interim periods beginning in fiscal 2025. The Company is evaluating the effect that the guidance will have on its consolidated financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740: Improvements to Income Tax Disclosures (ASU No. 2023-09), which requires improvements to income tax disclosures primarily related to rate reconciliation and income taxes paid information. ASU No. 2023-09 will be effective for the Company in fiscal 2025 and must be applied prospectively with retrospective application permitted. The Company is evaluating the impact that ASU No. 2023-09 will have on its consolidated financial statement disclosures.
2. Long-Term Debt
Long-term debt is summarized as follows:
March 28, 2024December 28, 2023
Senior notes$70,000 $70,000 
Unsecured term note due February 2025, with monthly principal and interest payments of $39, bearing interest at 5.75%
418 528 
Convertible senior notes100,050 100,050 
Payroll Protection Program loans1,004 1,233 
Revolving credit agreement  
Debt issuance costs(1,693)(1,960)
Total debt, net of debt issuance costs169,779 169,851 
Less current maturities, net of issuance costs10,273 10,303 
Long-term debt$159,506 $159,548 
Credit Agreement
As of March 28, 2024, the Company has a five year Credit Agreement that provides for a revolving credit facility that matures on October 16, 2028 with an initial maximum aggregate amount of availability of $225,000. At March 28, 2024, there were no borrowings outstanding on the revolving credit facility, which when borrowed, bear interest at the secured overnight financing rate (SOFR) plus a margin (as discussed further below), effectively 9.05% at March 28, 2024. Availability under the $225,000 revolving credit facility was $220,185 as of March 28, 2024 after taking into consideration outstanding letters of credit that reduce revolver availability.
Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) the term SOFR, plus a credit spread adjustment of 0.10%, subject to a 0% floor, plus a specified margin based upon the Company’s net leverage ratio as of the most recent determination date, or (ii) the alternate base rate (“ABR”) (which is the highest of (a) the prime rate, (b) the greater of the federal funds rate and the overnight bank funding rate plus 0.50% or (c) the sum of 1% plus one-month SOFR plus a credit spread adjustment of 0.10%), subject to a 1% floor, plus a specified margin based upon the Company’s net leverage ratio as of the most recent determination date. The revolving credit facility also requires an annual facility fee equal to 0.175% to 0.275% of the total revolving commitments depending on the Company’s consolidated net leverage ratio.
8

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)

The Credit Agreement includes, among other restrictions and covenants applicable to the Company, a requirement that the Company’s consolidated net leverage ratio not exceed 3.50:1.00, provided that, with some limitations, such ratio may be increased to 4.00:1:00 for the full fiscal quarter in which a material acquisition (in which aggregate consideration equals or exceeds $30,000) is consummated and the three fiscal quarters immediately thereafter, and a requirement that the Company’s interest coverage ratio at the end of any fiscal quarter not be less than 3.00:1.00.
In connection with the Credit Agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the Credit Agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the Credit Agreement.
The Credit Agreement contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral.
Note Purchase Agreements
At March 28, 2024 and December 28, 2023, the Company’s $70,000 of senior notes consist of two Note Purchase Agreements maturing in 2025 through 2027, require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 4.32%.
Convertible Senior Notes
On September 17, 2020, the Company entered into a purchase agreement to issue and sell $100,050 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee.
The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradeable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Upon conversion, the Convertible Notes may be settled, at the Company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate was 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020. The conversion rate is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At March 28, 2024, the applicable conversion rate is 93.2680 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an applicable conversion price of approximately $10.72 per share of Common Stock). If the Company undergoes certain
9

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)

fundamental changes, holders of Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, the Company will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. The Company may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable.
Since the Company’s fiscal 2021 second quarter through the Company’s fiscal 2024 second quarter, the Company’s Convertible Notes were (are) eligible for conversion at the option of the holders as the last reported sale price of the Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days during the last 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. The Company has the ability to settle the conversion in Company stock. As such, the Convertible Notes will continue to be classified as long-term. Future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s Common Stock during the prescribed measurement period. No Convertible Notes have been converted to date and the Company does not expect any to be converted within the next 12 months.
In connection with the pricing of the Convertible Notes on September 17, 2020, and in connection with the exercise by the Initial Purchasers (as defined in the Convertible Notes purchase agreement) of their option to purchase additional Convertible Notes on September 18, 2020, the Company entered into privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with certain of the Initial Purchasers and/or their respective affiliates and/or other financial institutions (the “Capped Call Counterparties”). The Capped Call Transactions are expected generally to reduce potential dilution of the Company’s common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions, which initially corresponds to the conversion price of the Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution to the extent that such market price exceeds the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions was initially $17.98 per share (in no event shall the cap price be less than the strike price of $11.0128), which represents a premium of 100% over the last reported sale price of the Common Stock of $8.99 per share on The New York Stock Exchange on September 17, 2020. Under the terms of the Capped Call Transactions, the cap price is subject to adjustment for certain events, including distributions and dividends paid to holders of Common Stock. At March 28, 2024, the adjusted cap price is approximately $17.51 per share. The Capped Call Transactions are separate transactions entered into by the Company with the Capped Call Counterparties, are not part of the terms of the Convertible Notes and will not change the rights of holders of the Convertible Notes under the Convertible Notes and the Indenture.
3. Leases
The Company determines if an arrangement is a lease at inception. The Company evaluates each lease for classification as either a finance lease or an operating lease according to Accounting Standards Codification No. 842, Leases. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. The Company leases real estate and equipment with lease terms of one year to 45 years, some of which include options to extend and/or terminate the lease.
The majority of the Company’s lease agreements include fixed rental payments. For those leases with variable payments based on increases in an index subsequent to lease commencement, such payments are recognized as variable lease expense
10

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)

as they occur. Variable lease payments that do not depend on an index or rate, including those that depend on the Company’s performance or use of the underlying asset, are also expensed as incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
Total lease cost consists of the following:
13 Weeks Ended
Lease CostClassificationMarch 28, 2024March 30, 2023
Finance lease costs: 
Amortization of finance lease assetsDepreciation and amortization$615 $691 
Interest on lease liabilitiesInterest expense175 198 
$790 $889 
Operating lease costs:
Operating lease costsRent expense$5,985 $6,044 
Variable lease costRent expense312 416 
Short-term lease costRent expense50 33 
$6,347 $6,493 
Additional information related to leases is as follows:
13 Weeks Ended
Other InformationMarch 28, 2024March 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases$601 $556 
Operating cash flows from finance leases175 198 
Operating cash flows from operating leases6,282 6,430 
Right of use assets obtained in exchange for new lease obligations:
Finance lease liabilities  
Operating lease liabilities  
March 28, 2024December 28, 2023
Finance leases:
Property and equipment – gross$30,106 $30,106 
Accumulated depreciation and amortization(18,571)(17,956)
Property and equipment - net$11,535 $12,150 
11

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)

Remaining lease terms and discount rates are as follows:
Lease Term and Discount RateMarch 28, 2024December 28, 2023
Weighted-average remaining lease terms:
Finance leases6 years7 years
Operating leases11 years12 years
Weighted-average discount rates:
Finance leases4.64 %4.62 %
Operating leases4.67 %4.52 %
Deferred rent payments of approximately $647 for the Company’s operating leases have been included in the total operating lease obligations as of March 28, 2024, of which approximately $197 is included in long-term operating lease obligations.
4. Share Based Compensation
During the 13 weeks ended March 28, 2024, the Company granted restricted stock, restricted stock units (RSUs) and performance stock units (PSUs) to certain executives and associates.

Restricted Stock and Restricted Stock Units
During the 13 weeks ended March 28, 2024, the Company granted (i) an annual award of restricted stock and RSUs with a vesting period of 50% after two years and 100% after three years, and (ii) a special long-term incentive and retention award of restricted stock to certain executives with a vesting period of 100% after four years, or upon retirement after three years. Restricted stock awards are issued and outstanding common stock at the time of the grant and become unrestricted upon the vesting date. RSU awards are payable in common stock upon vesting. The Company expenses the cost of restricted stock and RSU awards over the vesting period based on the fair value of the award at the date of grant.

Performance Stock Units
During the 13 weeks ended March 28, 2024, the Company granted PSUs with vesting subject to the Company’s achievement of performance goals expressed in terms of (i) earnings before interest, taxes, depreciation and amortization, or EBITDA, growth rate ranking relative to the Russell 2000 Index with respect to 25% of the total number of performance stock unit awards, and (ii) the Company’s average return on invested capital, or ROIC, ranking relative to the Russell 2000 Index with respect to 75% of the total number of performance stock unit awards. For grants awarded in fiscal 2024, the PSU performance goals relate to the three-year performance period from fiscal 2024-2026. PSUs are payable at the end of their respective performance period in common stock, and the number of PSUs awarded can range from zero to 150% depending on the Company’s achievement of the relative performance metrics. The Company expenses the cost of PSUs based on the fair value of the awards at the date of grant and the estimated achievement of the performance metric, ratable over the performance period of three fiscal years.
12

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)

A summary of the Company’s stock option, restricted stock and RSU and PSU activity and related information follows, with PSUs reflected at the target achievement percentage until the completion of the performance period (shares in thousands):
Stock OptionsRestricted Stock & RSUsPSUs
OptionsWeighted-Average Exercise PriceShares / UnitsWeighted-Average Fair ValueUnitsWeighted-Average Fair Value
December 28, 20233,173 $22.69 238 $17.41  $ 
Granted  501 14.84 143 14.84 
Exercised (1)
      
Vested (2)
  (47)21.37   
Forfeited(7)23.16     
March 28, 20243,166 $22.69 692 $15.28 143 $14.84 
(1)Exercise activity only applicable to stock options.
(2)Vesting activity not applicable to stock options.
Share-based compensation expense was $2,514 and $2,172 during the 13 weeks ended March 28, 2024 and March 30, 2023, respectively. As of March 28, 2024, total unrecognized share-based compensation expense related to stock options was $3,385, which will be amortized to expense over the weighted-average remaining life of 2.3 years. As of March 28, 2024, total unrecognized share-based compensation expense related to non-vested restricted stock, RSUs and PSUs was $9,736 which will be amortized over the weighted-average remaining service period of 3.2 years.
At March 28, 2024, there were 420,766 shares available for grants of additional stock options, restricted stock, RSUs, PSUs and other types of equity awards under the current plan.
5. Income Taxes
The Company’s effective income tax rate for the 13 weeks ended March 28, 2024 and March 30, 2023 was 38.3% and 23.1%, respectively. The fiscal 2024 first quarter effective income tax rate was negatively impacted by excess compensation subject to deduction limitations. The fiscal 2023 first quarter effective income tax rate was favorably impacted by a decrease in valuation allowances related to deferred tax assets for state net operating loss carryforwards.
6. Joint Venture Transactions
In March 2024, the Company formed a joint venture with Hempel Real Estate (“Hempel”) and Robinson Park (“RP”) to acquire the Loews Minneapolis Hotel, a 251 guest room and suite full-service lifestyle hotel located in downtown Minneapolis, Minnesota. The acquired hotel was rebranded as The Lofton Hotel (“Lofton”) under the Tapestry Collection by Hilton flag. The Company invested $5,620 for a 33.3% equity interest in the Lofton joint venture and entered into a management agreement for the hotel. Subsequent to its initial investment in the joint venture, the Company sold an 8.6% interest to a minority investor for $1,500, reducing its equity interest in the Lofton joint venture to 24.7%. The Company accounts for its investment in the Lofton joint venture on the equity method.
A wholly-owned subsidiary of the Lofton joint venture entity, as the borrower, financed the acquisition of and future improvements to the hotel with a mortgage loan. In connection with this mortgage loan, the Company provided an environmental indemnity and a several payment guaranty that provides that the lender can recover losses from the Company, a principal in Hempel, and a principal in RP for certain events of default of the borrower up to $6.2 million for the Company. Under the terms of a cross-indemnity agreement among the guarantors, the other two guarantors have fully indemnified the Company under the guarantees for any losses in excess of its proportionate liability under the several payment guaranty and environmental indemnity.
13

THE MARCUS CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 WEEKS ENDED MARCH 28, 2024
(in thousands, except share and per share data)

7. Business Segment Information
The Company’s primary operations are reported in the following business segments: Theatres and Hotels/Resorts. 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.
Following is a summary of business segment information for the 13 weeks ended March 28, 2024 and March 30, 2023:
13 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
March 28, 2024
Revenues$81,270 $57,197 $80 $138,547 
Operating loss(5,739)(5,162)(5,764)(16,665)
Depreciation and amortization11,033 4,864 118 16,015 
13 Weeks EndedTheatresHotels/
Resorts
Corporate
Items
Total
March 30, 2023
Revenues$96,376 $55,811 $89 $152,276 
Operating income (loss)1,519 (5,032)(5,475)(8,988)
Depreciation and amortization11,488 4,301 87 15,876 
14

THE MARCUS CORPORATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q and the accompanying annual report to shareholders, particularly in the Shareholders’ Letter and Management’s Discussion and Analysis, 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 adverse effects future pandemics may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (including disruptions in the production of films due to events such as a strike by actors, writers or directors or future pandemics); (3) the effects of theatre 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; (4) the effects of adverse economic conditions in our markets; (5) the effects of adverse economic conditions on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) 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 business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (12) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (13) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States, other incidents of violence in public venues such as hotels and movie theatres or epidemics; and (14) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Our forward-looking statements are based upon our assumptions, which are based upon currently available information. 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 Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
RESULTS OF OPERATIONS
General
We report our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December. Fiscal 2024 is a 52-week year beginning on December 29, 2023 and ending on December 26, 2024. Fiscal 2023 was a 52-week year that began on December 30, 2022 and ended on December 28, 2023.
We divide our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. The first quarter of fiscal 2024 consisted of the 13-week period beginning on December 29, 2023 and ended on March 28, 2024. The first quarter of fiscal 2023 consisted of the 13-week period beginning December 30, 2022 and ended on March 30, 2023. Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts. Within this MD&A, amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.
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Overall Results
The following table sets forth revenues, operating income (loss), other income (expense), net earnings (loss) and net earnings (loss) per diluted common share for the first quarter of fiscal 2024 and fiscal 2023 (in millions, except for per share and variance percentage data):
First Quarter
Variance
F2024F2023Amt.Pct.
Revenues$138.5 $152.3 $(13.7)(9.0)%
Operating loss(16.7)(9.0)(7.7)(85.4)%
Other income (expense)(2.6)(3.3)0.8 22.6 %
Net loss$(11.9)$(9.5)$(2.4)(25.4)%
Net loss per common share - diluted$(0.38)$(0.31)$(0.07)(22.6)%
Revenues decreased and operating loss, net loss and net loss per diluted common share increased during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. The decline in our overall operating results was primarily due to a decrease in revenues and operating income from our theatre division during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. Revenues from our hotels and resorts division increased during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023, while operating loss increased primarily due to an increase in depreciation expense during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. Our first quarter is typically the seasonally weakest quarter of our fiscal year due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned hotels. Our first quarter also often has fewer blockbuster films released by studios compared to the other quarters of our fiscal year.
Net loss during the first quarter of fiscal 2024 was favorably impacted by decreased interest expense compared to the first quarter of fiscal 2023 and increased investment income during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023.
We recognized investment income of $0.7 million during the first quarter of fiscal 2024 compared to $0.3 million during the first quarter of fiscal 2023. Variations in investment income were due to changes in the value of marketable securities.
Our interest expense totaled $2.5 million for the first quarter of fiscal 2024 compared to $3.0 million for the first quarter of fiscal 2023. The decrease in interest expense in fiscal 2024 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.
We reported an income tax benefit for the first quarter of fiscal 2024 of $7.4 million compared to an income tax benefit of $2.8 million during the first quarter of fiscal 2023. Our fiscal 2024 first quarter effective income tax rate was 38.3%, and was negatively impacted by excess compensation subject to deduction limitations. Our fiscal 2023 first quarter effective income tax rate was 23.1%, and was favorably impacted by a decrease in valuation allowances related to deferred tax assets for state net operating loss carryforwards. We anticipate that our effective income tax rate for fiscal 2024 may be in the 36-38% range, excluding any potential changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal 2024 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.
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Theatres
The following table sets forth revenues, operating income (loss) and operating margin for our theatre division for the first quarter of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage and operating margin):
First Quarter
Variance
F2024F2023Amt.Pct.
Revenues$81.3 $96.4 $(15.1)(15.7)%
Operating income (loss)(5.7)1.5 (7.3)(477.8)%
Operating margin (% of revenues)(7.1)%1.6 % 
Our theatre division revenues and operating income decreased with weaker performances from films carrying over from the holiday season into the first quarter of fiscal 2024, compared to the first quarter of fiscal 2023 which benefited from a strong carryover performance from Avatar: The Way of Water. In addition, the film slate in the first quarter of fiscal 2024 was negatively impacted by the content supply chain disruption from the shutdown of movie production during the WGA and SAG-AFTRA labor strikes in 2023, which contributed to a weaker slate of available films compared to the first quarter of fiscal 2023. Our operating income during the first quarter of fiscal 2024 decreased compared to the first quarter of fiscal 2023 as a result of decreased theatre attendance.
The following table provides a further breakdown of the components of revenues for the theatre division for the first quarter of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage):
First Quarter
Variance
F2024F2023Amt.Pct.
Admission revenues$40.6 $47.6 $(7.0)(14.8)%
Concession revenues34.7 42.4 (7.7)(18.1)%
Other revenues6.0 6.4 (0.4)(6.1)%
Total revenues81.3 96.4 (15.1)(15.7)%
According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal 2024 first quarter results, U.S. box office receipts decreased 9.0% during our fiscal 2024 first quarter compared to the same comparable weeks in fiscal 2023, indicating that our decrease in admission revenues for comparable theatres (excluding theatres closed during the past year) during the first quarter of fiscal 2024 of 13.8% underperformed the industry by 4.8 percentage points. We believe our underperformance during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 is attributable to an unfavorable film mix during the first quarter of fiscal 2024 that was more appealing to audiences in other parts of the U.S. than in our Midwestern markets, compared to a favorable film mix during the first quarter of fiscal 2023 that included Avatar: The Way of Water, which played well in our Midwestern markets. In addition, the top performing film in the first quarter of fiscal 2024 (Dune: Part Two) significantly outperformed on IMAX screens, which represent only approximately 2% of our premium large format screens, resulting in IMAX screens taking market share from our UltraScreen and SuperScreen premium large format screens in certain markets.
Additional data received and compiled by us from Comscore indicates our admission revenues during the first quarter of fiscal 2024 represented approximately 3.0% of the total admission revenues in the U.S. during the periods (commonly referred to as market share in our industry). Our goal is to continue our historical long-term pattern of outperforming the industry, but our ability to do so in any given quarter will likely be partially dependent upon film mix, weather and the competitive landscape in our markets.
Total theatre attendance for our comparable theatres decreased 17.5% during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023, which was primarily attributable to a weaker film slate and lower box office performance from the top film during the first quarter of fiscal 2024 (Dune: Part Two) versus the top film last fiscal year during the first quarter (Avatar: The Way of Water). During the first quarter of fiscal 2024 there were 24 wide-release films (films showed in over approximately 1,500 theatres in the U.S.) compared to 23 wide-release films during the first quarter of fiscal 2023.
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While the number of wide-release films during the first quarter of fiscal 2024 was similar compared to the prior fiscal year period, the average opening weekend U.S. box office gross per wide release was approximately 25% lower, reflecting a weaker film slate with fewer significant franchises and a generally lower quality of product.
Our highest grossing films during the fiscal 2024 first quarter included Dune: Part Two, Kung Fu Panda 4, Wonka, Bob Marley: One Love, and Migration. Our top five films during our fiscal 2024 first quarter accounted for 41% of our total box office results, compared to 49% (including event cinema) for the top five films during the first quarter of fiscal 2023, both expressed as a percentage of the total admission revenues for the relevant period. A decreased concentration of blockbuster films during a given quarter often has the effect of lowering our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. As a result of a less concentrated film slate, our overall film cost as a percentage of admission revenues decreased during the first quarter of fiscal 2024 compared to the same period in the prior fiscal year.
Our average ticket price increased 4.9% during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023, and was favorably impacted by general admission ticket price increases that we implemented during the first quarter of fiscal 2023 in response to increases in labor and supply costs, pricing changes to our Value Tuesday promotion that were implemented during the last week of the first quarter of fiscal 2023, and an increase in the percentage of our weekly attendance on days other than Value Tuesday. Our average ticket price was negatively impacted by a lower percentage of ticket sales for 3D films during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. The overall increase in average ticket price favorably impacted our admission revenues of our comparable theatres by $1.8 million during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023.
Our average concession revenues per person increased by 0.8% during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023, respectively, primarily due to inflationary increases in concessions prices in response to increases in food and labor costs and due to the net positive impact of changes to our Value Tuesday promotion. The increase in concession pricing was partially offset by a decrease in the number of concession items purchased per customer, which we believe is attributable to an unfavorable film mix during the first quarter of fiscal 2024 that included fewer large blockbuster films that tend to result in more concession sales per customer. The overall increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $0.1 million during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023.
Other revenues during the first quarter of fiscal 2024 decreased by $0.4 million compared to the first quarter of fiscal 2023. The decline was primarily due to the impact of decreased attendance on internet surcharge ticketing fees and preshow and in-app advertising revenue.
The quantity of films available for theatrical exhibition, including wide-release films, was negatively impacted during fiscal 2024 by the shutdown of movie production resulting from the WGA and SAG-AFTRA labor strikes that occurred during fiscal 2023. While the labor strikes were resolved in the fourth quarter of fiscal 2023 with film production resuming thereafter, we expect the quantity of new film releases available for theatrical exhibition during fiscal 2024 to be negatively impacted by the prolonged shutdown of movie production resulting in several film release dates shifting to fiscal 2025. While lead times for movie production to theatrical release are lengthy, based upon projected film and alternate content availability, we currently estimate that we may once again show an increased number of films and alternate content events on our screens during fiscal 2025 compared to fiscal 2024, but we expect the number of wide-release films shown during fiscal 2024 to decrease compared to fiscal 2023.
We ended the first quarter of fiscal 2024 with a total of 993 company-owned screens in 79 theatres, compared to 1,053 company-owned screens in 84 theatres at the end of the first quarter of fiscal 2023. We made decisions to close several underperforming theatres during fiscal 2023, including one of our owned theatres in the first quarter of fiscal 2023, two owned theatres in the second quarter of fiscal 2023, and two owned theatres and one leased theatre in the third quarter of fiscal 2023.
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Hotels and Resorts
The following table sets forth revenues, operating loss and operating margin for our hotels and resorts division for the first quarter of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage and operating margin):
First Quarter
Variance
F2024F2023Amt.Pct.
Revenues$57.2 $55.8 $1.4 2.5 %
Operating loss(5.2)(5.0)(0.1)(2.6)%
Operating margin (% of revenues)(9.0)%(9.0)% 
Hotels and resorts revenues increased 2.5% during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. Our hotels and resorts division operating loss during the first quarter of fiscal 2024 increased compared to the first quarter of fiscal 2023 primarily due to an increase in depreciation expense from hotel renovations placed in service during fiscal 2023, offsetting the incremental profit on higher revenues.
The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the first quarter of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage):
First Quarter
Variance
F2024F2023Amt.Pct.
Room revenues$18.2 $17.9 $0.4 2.0 %
Food/beverage revenues16.2 15.2 1.0 6.4 %
Other revenues13.6 13.2 0.4 3.1 %
Total revenues before cost reimbursements48.0 46.3 1.7 3.8 %
Cost reimbursements9.2 9.5 (0.4)(3.7)%
Total revenues$57.2 $55.8 $1.4 2.5 %
Division total revenues before cost reimbursements increased $1.7 million, or 3.8%, during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 due to growth in food and beverage revenues and increased occupancy at four of our seven owned hotels.
The following table sets forth certain operating statistics for the first quarter of fiscal 2024 and fiscal 2023, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for comparable company-owned properties:
First Quarter
Variance
F2024F2023Amt.Pct.
Occupancy pct.53.7 %50.8 %2.9 pts5.6 %
ADR$150.11 $155.35 $(5.24)(3.4)%
RevPAR$80.57 $78.95 $1.62 2.1 %
Note: These operating statistics represent averages of our seven distinct comparable company-owned hotels and resorts, branded and unbranded, in different geographic markets with a wide range of individual hotel performance. The statistics are not necessarily representative of any particular hotel or resort.
RevPAR increased at three of our seven comparable company-owned properties during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023. Group demand continued to grow during the fiscal 2024 first quarter, with weekday growth increasing group business as a percentage of our overall business mix. During the first quarter of fiscal 2024, our group business represented approximately 34.5% of our total rooms revenue, compared to approximately 28.9% during the first quarter of fiscal 2023. An increase in group business as a percentage of our overall business mix generally
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increases overall occupancy while negatively impacting ADR. Non-group pricing generally decreased in some of our major markets during the first quarter of fiscal 2024, due to generally lower transient travel demand and due to a shift in pricing strategy as we optimized pricing to drive higher occupancy and overall RevPAR through lower daily rate offerings.
According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2024 first quarter results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increase in RevPAR of 2.0% during our fiscal 2024 first quarter compared to the same period during fiscal 2023, leading us to believe we slightly outperformed the industry during the fiscal 2024 first quarter by approximately 0.1 percentage points.
Data received from Smith Travel Research for our various “competitive sets”—hotels identified in our specific markets that we deem to be competitors to our hotels—indicates that these hotels experienced an increase in RevPAR of 0.1% during our first quarter, again compared to the same period in fiscal 2023. Therefore, we believe we outperformed our competitive sets during the first quarter of fiscal 2024 by approximately 2.0 percentage points. We believe our outperformance to our competitive sets during the first quarter of fiscal 2024 results primarily from our strong performance in the group customer segment as well as improved revenue management and rate optimization resulting in higher occupancy growth compared to the competitive sets.
Looking to future periods, overall occupancy in the U.S. is expected to continue to slowly increase. In the near term, we expect leisure travel demand to normalize and we expect our group business to remain strong. Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as children return to school and the weather turns colder in our primarily midwestern markets. We expect gradual increases in business travel as corporate training events, meetings, and conferences return and office occupancy increases. As of the date of this report, our group room revenue bookings for the remainder of fiscal 2024 - commonly referred to in the hotels and resorts industry as “group pace” - is running approximately 11% ahead of where we were at the same time last year, excluding bookings related to the July 2024 Republican National Convention in Milwaukee. Group room revenue bookings for fiscal 2025 is running over 60% ahead of where we were at the same time in fiscal 2023 for fiscal 2024. Banquet and catering revenue pace for fiscal 2024 and fiscal 2025 is similarly running ahead of where we were at this same time last year. We are encouraged by continuing positive trends in group bookings for the remainder of fiscal 2024, fiscal 2025 and beyond.
Adjusted EBITDA
Adjusted EBITDA is a measure used by management and our board of directors to assess our financial performance and enterprise value. We believe that Adjusted EBITDA is a useful measure for us and investors, as it eliminates certain expenses that are not indicative of our core operating performance and facilitates a comparison of our core operating performance on a consistent basis from period to period. We also use Adjusted EBITDA as a basis to determine certain annual cash bonuses and long-term incentive awards, to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Adjusted EBITDA is also used by analysts, investors and other interested parties as a performance measure to evaluate industry competitors.
Adjusted EBITDA is a non-GAAP measure of our financial performance and should not be considered as an alternative to net earnings (loss) as a measure of financial performance, or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of liquidity or free cash flow for management’s discretionary use. Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
We define Adjusted EBITDA as net earnings (loss) attributable to The Marcus Corporation before investment income or loss, interest expense, other expense, gain or loss on disposition of property, equipment and other assets, impairment charges, equity earnings or losses from unconsolidated joint ventures, net earnings or losses attributable to noncontrolling interests, income taxes, depreciation and amortization and non-cash share-based compensation expense, adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the items eliminated in the adjustments made to determine Adjusted EBITDA, such as acquisition expenses, preopening expenses, accelerated depreciation, impairment charges and other adjustments. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Definitions and calculations of Adjusted EBITDA differ among companies in our
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industries, and therefore Adjusted EBITDA disclosed by us may not be comparable to the measures disclosed by other companies.
The following table sets forth Adjusted EBITDA by reportable operating segment for the first quarter of fiscal 2024 and fiscal 2023 (in millions, except for variance percentage):
First Quarter
Variance
F2024F2023Amt.Pct.
Theatres$6.2 $13.8 $(7.6)(55.4)%
Hotels and resorts— (0.4)0.4 97.3 %
Corporate items(3.9)(3.9)0.1 2.1 %
Total Adjusted EBITDA$2.3 $9.5 $(7.2)(75.8)%

The following table sets forth our reconciliation of Adjusted EBITDA (in millions):
First Quarter
F2024F2023
Net earnings (loss)$(11.9)$(9.5)
Add (deduct):
Investment (income) loss(0.7)(0.3)
Interest expense2.5 3.0 
Other (income) expense0.3 0.4 
Loss (gain) on disposition of property, equipment and other assets— 0.4 
Equity (earnings) losses from unconsolidated joint ventures0.4 0.2 
Income tax expense (benefit)(7.4)(2.8)
Depreciation and amortization16.0 15.9 
Share-based compensation expenses (1)
2.5 2.2 
Insured losses (2)
0.4 — 
Total Adjusted EBITDA$2.3 $9.5 
The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):
First Quarter, F2024
TheatresHotels & ResortsCorp. ItemsTotal
Operating income (loss)$(5.7)$(5.2)$(5.8)$(16.7)
Depreciation and amortization11.0 4.9 0.1 16.0 
Loss (gain) on disposition of property, equipment and other assets— — — — 
Share-based compensation (1)
0.4 0.3 1.8 2.5 
Insured losses (2)
0.4 — — 0.4 
Total Adjusted EBITDA$6.2 $— $(3.9)$2.3 
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First Quarter, F2023
TheatresHotels & ResortsCorp. ItemsTotal
Operating loss$1.5 $(5.0)$(5.5)$(9.0)
Depreciation and amortization11.5 4.3 0.1 15.9 
Loss (gain) on disposition of property, equipment and other assets0.3 0.1 — 0.4 
Share-based compensation (1)
0.5 0.2 1.5 2.2 
Total Adjusted EBITDA$13.8 $(0.4)$(3.9)$9.5 
(1)Non-cash expense related to share-based compensation programs.
(2)Repair costs related to insured property damage at one theatre location that are non-operating in nature.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our movie theatre and hotels and resorts businesses each generate significant and consistent daily amounts of cash, subject to previously-noted seasonality, because each segment’s revenue is derived predominantly from consumer cash purchases. We believe that these relatively consistent and predictable cash sources, as well as the availability of unused credit lines, would be adequate to support the ongoing operational liquidity needs of our businesses.
Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our 88-year history and our financial position remains strong. As of March 28, 2024, we had a cash balance of approximately $17.3 million, $220.2 million of availability under our $225 million revolving credit facility, our debt-to-capitalization ratio was 0.27, and our net leverage ratio was 1.65x net debt to Adjusted EBITDA. With our strong liquidity position combined with cash generated from operations, we believe we are positioned to have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements, as well as our longer-term capital requirements.
The following table sets forth our reconciliations of Net Debt and Net Leverage (Net Debt to Adjusted EBITDA) (in millions, except leverage ratio):
March 28, 2024December 28, 2023
Long-term debt (GAAP measure) (1)
$169.8