The Marcus Corporation

10/29/2026 | Press release | Distributed by Public on 10/29/2026 06:49

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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 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 or epidemics 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 tariffs or 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 tariffs that are implemented or merely threatened on our costs; (12) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (13) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (14) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or other incidents of violence in public venues such as hotels and movie theatres; and (15) 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
For fiscal 2024 and prior periods, we reported our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December, dividing our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Fiscal 2024 was a 52-week year with 364 operating days, beginning on December 29, 2023 and ending on December 26, 2024.
Beginning on December 27, 2024, our fiscal year changed to a calendar fiscal year ending on December 31 of each year. Accordingly, effective for our fiscal year ending December 31, 2025, our quarterly results were three month periods ending March 31, June 30, September 30 and December 31. Fiscal 2025 was a 370 operating day year beginning on December 27, 2024 and ending on December 31, 2025 (comprised of five operating days between December 27-31, 2024, plus 365 operating days in calendar year 2025). Fiscal 2026 is a 365 operating day year beginning on January 1, 2026 and ending on December 31, 2026.
The third quarter of 2026 and 2025 consisted of the three month periods beginning on July 1 and ended on September 30. The first three quarters of fiscal 2026 consisted of the nine month period beginning on January 1, 2026 and ended on September 30, 2026 and included five fewer operating days compared to the prior year fiscal first three quarters. The first three quarters of fiscal 2025 consisted of the period beginning on December 27, 2024 and ended on September 30, 2025 (comprised of five operating days between December 27-31, 2024, plus 273 operating days in the calendar first three quarters of 2025).
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.
Overall Results
The following table sets forth revenues, operating income, other income (expense), net earnings, and net earnings per diluted common share for the third quarter and first three quarters of fiscal 2026 and fiscal 2025 (in millions, except for per share and variance percentage data):
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Revenues $ 237.8 $ 210.2 $ 27.6 13.1 % $ 623.9 $ 565.0 $ 58.9 10.4 %
Operating income 30.3 22.7 7.6 33.2 % 38.1 15.3 22.8 148.5 %
Other income (expense) (2.4) 1.5 (3.9) (265.6) % (9.2) (5.2) (4.0) (75.9) %
Net earnings $ 18.8 $ 16.2 $ 2.5 15.6 % $ 19.2 $ 6.7 $ 12.5 185.8 %
Net earnings per common share - diluted $ 0.60 $ 0.52 $ 0.08 15.4 % $ 0.62 $ 0.21 $ 0.41 195.2 %
Revenues increased during the third quarter and first three quarters of fiscal 2026 compared to the third quarter and first three quarters of fiscal 2025 due to increased revenues from both our theatre division and hotels and resorts division. Revenues during the first three quarters of fiscal 2026 included five less operating days compared to the first three quarters of fiscal 2025, negatively impacting revenue growth by approximately $15.3 million.
Operating income during the third quarter of fiscal 2026 improved by $7.6 million compared to the third quarter of fiscal 2025, primarily due to increased revenues before cost reimbursements from both our theatre division and hotels and resorts division, partially offset by an increase in corporate expenses, a $0.3 million increase in depreciation expense, and $0.2 million in impairment charges related to the planned closure of one theatre location. Operating income during the third quarter of fiscal 2026 was negatively impacted by a $0.1 million loss on disposition of property, equipment and other assets, compared to a $0.1 million gain on disposition of property, equipment and other assets during the third quarter of fiscal 2025.
Operating income during the first three quarters of fiscal 2026 improved by $22.8 million compared to the first three quarters of fiscal 2025 due to increased revenues from both our theatre and hotels and resorts divisions, partially offset by increased corporate expenses, and a $5.3 million unfavorable impact as a result of five fewer operating days. Operating income during the first three quarters of fiscal 2026 was negatively impacted by a $0.3 million loss on disposition of property, equipment and other assets, compared to a $1.3 million gain on disposition of property, equipment and other assets related to the sale of surplus land during the first three quarters of fiscal 2025.
Corporate expenses during the third quarter of fiscal 2026 increased $1.3 million compared to the third quarter of fiscal 2025, primarily due to increased incentive compensation, insurance, non-cash stock compensation, and personnel cost and benefits inflation. Corporate expenses during the first three quarters of fiscal 2026 increased $1.1 million compared to the first three quarters of fiscal 2025 due to increased incentive compensation, insurance, director compensation, non-cash stock compensation, and personnel and benefits cost inflation, partially offset by decreased professional fees related to tax, audit, and legal services.
Other income (expense), net earnings, and net earnings per diluted common share during the third quarter and first three quarters of fiscal 2026 were impacted by decreased interest expense, fluctuations in investment income, and decreased
other income compared to the third quarter of fiscal 2025. Other income during the third quarter and first three quarters of fiscal 2025 included a $4.5 million gain from a property insurance settlement.
Our interest expense totaled $2.5 million and $7.9 million for the third quarter and first three quarters of fiscal 2026, respectively, compared to $2.8 million and $8.6 million for the third quarter and first three quarters of fiscal 2025, respectively. The decrease in interest expense during the third quarter and first three quarters of fiscal 2026 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 recognized investment income of $0.4 million during the third quarter and first three quarters of fiscal 2026, compared to $0.0 million and $0.5 million during the third quarter and first three quarters of fiscal 2025, respectively. Variations in investment income were due to changes in the value of marketable securities.
We did not have any significant variations in equity losses from unconsolidated joint ventures during the third quarter and first three quarters of fiscal 2026, compared to the third quarter and first three quarters of fiscal 2025.
Net earnings and net earnings per diluted common share improved during the third quarter and first three quarters of fiscal 2026 compared to the third quarter and first three quarters of fiscal 2025, resulting primarily from an increase in operating income as described above, partially offset by increased other expense which was favorably impacted by a $4.5 million gain on insurance settlement during the third quarter of fiscal 2025.
We reported income tax expense of $9.1 million for the third quarter of fiscal 2026 compared to expense of $8.0 million for the third quarter of fiscal 2025. We reported income tax expense of $9.6 million for the first three quarters of fiscal 2026 compared to an expense of $3.3 million for the first three quarters of fiscal 2025. Our fiscal 2026 first three quarters effective income tax rate was 33.3% compared to our fiscal 2025 first three quarters effective income tax rate of 33.2%. The effective income tax rate in both fiscal 2026 first three quarters and fiscal 2025 first three quarters was negatively impacted by excess compensation subject to deduction limitations. We anticipate that our effective income tax rate for fiscal 2026 may be in the 32% to 34% range, excluding any potential changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal 2026 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.
Theatres
The following table sets forth revenues, operating income, operating margin, Adjusted EBITDA and Adjusted EBITDA margin for our theatre division for the third quarter and first three quarters of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage, operating margin and Adjusted EBITDA margin):
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Total revenues $ 145.0 $ 119.9 $ 25.1 20.9 % $ 388.6 $ 338.9 $ 49.6 14.6 %
Total revenues before cost reimbursements 144.0 119.1 24.9 20.9 % 386.0 336.6 49.4 14.7 %
Operating income 22.2 12.3 9.9 79.9 % 46.0 21.8 24.3 111.6 %
Operating margin(1)
15.4 % 10.4 % 11.9 % 6.5 %
Adjusted EBITDA(2)
32.3 22.1 10.2 46.3 % 76.7 52.3 24.3 46.5 %
Adjusted EBITDA margin(2)
22.5 % 18.6 % 19.9 % 15.6 %
(1)Operating margin is defined as operating income divided by total revenues before cost reimbursements.
(2)Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenues before cost reimbursements. See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations.
Revenues and operating income for the Theatre division improved during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, primarily due to increased attendance driven by stronger performances from films.
Additionally, operating income in the third quarter of fiscal 2026 was favorably impacted by a $0.4 million decrease in depreciation expense and was unfavorably impacted by impairment charges of $0.2 million, and a $0.1 million loss on disposition of property, equipment and other assets compared to a $0.3 million gain on disposition of property, equipment and other assets in third quarter of fiscal 2025.
During the first three quarters of fiscal 2026, revenues and operating income increased compared to the same period in fiscal 2025 driven primarily by stronger performances from films resulting in increased attendance, partially offset by five fewer operating days in the first three quarters of fiscal 2026 compared to the first three quarters of fiscal 2025. The five fewer operating days in the first three quarters of fiscal 2026 (which occurred between the Christmas and New Year's holidays in the prior year period) negatively impacted revenue growth by $12.2 million and the change in operating income by approximately $5.0 million. Additionally, operating income in the first three quarters of fiscal 2026 was favorably impacted by a $1.6 million decrease in depreciation expense, and was unfavorably impacted by $0.2 million impairment charges, and a $0.2 million gain on disposition of property, equipment and other assets compared to a $1.5 million gain on disposition of property, equipment and other assets in the first three quarters of fiscal 2025, primarily due to sales of surplus land.
Our theatre division Adjusted EBITDA and Adjusted EBITDA margin increased during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 driven by improved operating leverage from increased revenues and higher labor efficiency, partially offset by increased cost of concessions products driven largely by higher transportation fuel costs, increased repairs and maintenance, utilities, property taxes, and general and administrative expenses. During the first three quarters of fiscal 2026, theatre division Adjusted EBITDA and Adjusted EBITDA margin increased compared to the first three quarters of fiscal 2025, due to increased revenues and improved labor efficiency, partially offset by a $5.0 million unfavorable impact from five fewer operating days and increases in insurance and general and administrative expenses.
The following table provides a further breakdown of the components of revenues for the theatre division for the third quarter and first three quarters of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Admission revenues $ 70.1 $ 57.7 $ 12.4 21.5 % $ 187.5 $ 161.0 $ 26.5 16.5 %
Concession revenues 61.9 51.2 10.7 20.8 % 166.8 146.9 19.9 13.5 %
Other revenues 11.9 10.1 1.8 17.5 % 31.8 28.8 3.0 10.4 %
Total revenues before cost
reimbursements
144.0 119.1 24.9 20.9 % 386.0 336.6 49.4 14.7 %
Cost reimbursements 1.0 0.8 0.2 n/m 2.6 2.3 0.2 n/m
Total revenues 145.0 119.9 25.1 20.9 % 388.6 338.9 49.6 14.6 %
According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal 2026 third quarter and first three quarters results, U.S. box office receipts increased 27.0% during our fiscal 2026 third quarter compared to our fiscal 2025 third quarter, indicating that our increase in admission revenues for comparable theatres (excluding theatres closed during the past year) of 21.8% during the third quarter of fiscal 2026 underperformed the industry by 5.2 percentage points. When compared to reported national box office growth, Marcus Theatres' admission revenue growth during our 2026 third quarter compared to our fiscal 2025 third quarter was negatively impacted by 2.8 percentage points due to box office grosses from films not reported to Comscore by certain streaming content providers that we played during the third quarter of fiscal 2025. We believe our underperformance in the third quarter of fiscal 2026 was largely attributable to unfavorable film mix, that included films such as The Odyssey, Resident Evil, and The End of Oak Street, that were more appealing and played stronger in other parts of the U.S. than our Midwestern markets. Additionally, during our fiscal 2026 third quarter we made the strategic decision to not show two films due to distributor terms, which we believe negatively impacted our admissions growth by approximately 1.0 percentage point.
Data received and compiled by us from Comscore also indicates that U.S. box office receipts increased 15.4% during our fiscal 2026 first three quarters compared to the first three quarters of fiscal 2025, indicating that our increase of 16.7% in admission revenues for comparable theatres (excluding theatres closed during the past year) during the first three quarters
of fiscal 2026, outperformed the industry by 1.3 percentage points. When compared to reported national box office growth, Marcus Theatres' admission revenue growth during our fiscal 2026 first three quarters compared to the first three quarters of fiscal 2025 was negatively impacted by 1.0 percentage points due to box office grosses from films not reported to Comscore by certain streaming content providers that we played during the first three quarters of fiscal 2025. On a calendar date basis (January 1st through September 30th), U.S. box office receipts increased 19.4%, indicating that our increase in admissions revenues for our comparable theatres of 21.3%, outperformed the industry by 1.9 percentage points during the first three quarters of 2026 compared to the first three quarters of 2025, with strategic ticket price changes and a favorable film mix contributing to this year-to-date outperformance.
Additional data received and compiled by us from Comscore indicates our admission revenues (excluding films not reported to Comscore by certain distributors) at comparable theatres during the third quarter and first three quarters of fiscal 2026 represented approximately 2.8% and 3.0%, respectively, of the total admission revenues in the U.S. (commonly referred to as market share in our industry), compared to 2.9% during the third quarter and first three quarters of fiscal 2025. Our goal is to outperform the industry, but our ability to do so in any given quarter will likely be partially dependent upon film mix, pricing strategies, weather and the competitive landscape in our markets.
Total theatre attendance for our comparable theatres increased 16.8% during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, which was primarily attributable to stronger performances from films. During the third quarter of fiscal 2026, there were 32 wide-release films (films shown in over approximately 1,500 theatres in the U.S., excluding re-release films) compared to 30 wide-release films during the third quarter of fiscal 2025.
During the first three quarters of fiscal 2026, total theatre attendance for our comparable theatres increased 10.6% compared to the first three quarters of fiscal 2025, which was primarily attributable to stronger performances from films as well as an increase in the number of wide-release films, and negatively impacted by five less operating days described above. During the first three quarters of fiscal 2026, there were 93 wide-release films, compared to 86 wide-release films during the first three quarters of fiscal 2025. On a calendar date basis (January 1st through September 30th), total theatre attendance for our comparable theatres increased 15.0% during the first three quarters of 2026 compared to the first three quarters of 2025.
Our highest grossing films during the fiscal 2026 third quarter included Spider-man: Brand New Day, The Odyssey, Toy Story 5, Minions & Monsters, and Moana. Our top five films during our fiscal 2026 third quarter accounted for 68% of our total box office results, compared to 53% for the top five films during the third quarter of fiscal 2025, both expressed as a percentage of the total admission revenues for the relevant period. An increased reliance on just a few blockbuster films during a given quarter often has the effect of increasing 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 the more concentrated film slate, our overall film cost as a percentage of admission revenues during the third quarter of fiscal 2026 increased compared to the same period in the prior fiscal year.
Our average ticket price increased 4.3% and 5.6% during the third quarter and first three quarters of fiscal 2026, respectively, compared to the third quarter and first three quarters of fiscal 2025. Our average ticket price during the third quarter of fiscal 2026 was favorably impacted by strategic pricing changes, an increase in the percentage of of our ticket sales coming from premium large format (PLF) screens, and a decrease in the percentage our of attendance coming from Value Tuesday due to one less Tuesday in the third quarter of 2026 compared to the third quarter of fiscal 2025. Our average ticket price during the first three quarters of fiscal 2026 was favorably impacted by strategic pricing changes, and a decrease in the percentage of attendance coming from Value Tuesday, partially offset by other changes in ticket mix. The overall change in average ticket price favorably impacted our admission revenues of our comparable theatres by $2.9 million and $9.8 million during the third quarter and first three quarters of fiscal 2026, respectively, compared to the third quarter and first three quarters of fiscal 2025.
Our average concession revenues per person increased by 3.8% and 2.9% during the third quarter and first three quarters of fiscal 2026, respectively, compared to the third quarter and first three quarters of fiscal 2025, resulting from increases in movie-themed merchandise sales and concessions menu prices. The overall increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $2.2 million and $4.7 million during the third quarter and first three quarters of fiscal 2026, respectively, compared to the third quarter and first three quarters of fiscal 2025.
Other revenues during the third quarter and first three quarters of fiscal 2026 increased by $1.8 million and $3.0 million, respectively, compared to the third quarter and first three quarters of fiscal 2025, due largely to the impact of increased attendance on internet surcharge ticketing fees and preshow and in-app advertising revenue.
We ended the third quarter of fiscal 2026 with a total of 961 company-owned screens in 76 theatres and 14 managed screens at one theatre, compared to 971 company-owned screens in 77 theatres and 14 managed screens at one theatre, at the end of the third quarter of fiscal 2025. We made the decision to close underperforming theatres during fiscal 2025 and 2026, including one leased theatre during first quarter of fiscal 2025, and one owned theatre during the second quarter of fiscal 2026.
Hotels and Resorts
The following table sets forth revenues, operating income, operating margin, Adjusted EBITDA and Adjusted EBITDA margin for our hotels and resorts division for the third quarter and first three quarters of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage, operating margin and Adjusted EBITDA margin):
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Total revenues $ 92.7 $ 90.1 $ 2.5 2.8 % $ 235.1 $ 225.7 $ 9.3 4.1 %
Total revenues before cost reimbursements 82.0 80.3 1.6 2.0 % 204.4 197.2 7.2 3.7 %
Operating income 15.3 16.4 (1.0) (6.2) % 14.1 14.5 (0.4) (2.7) %
Operating margin(1)
18.7 % 20.4 % 6.9 % 7.4 %
Adjusted EBITDA(2)
22.6 23.1 (0.6) (2.4) % 37.0 35.4 1.6 4.6 %
Adjusted EBITDA margin(2)
27.6 % 28.8 % 18.1 % 17.9 %
(1)Operating margin is defined as operating income divided by total revenues before cost reimbursements.
(2)Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenues before cost reimbursements. See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations.
Hotels and resorts division revenues increased 2.8% during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Division operating income during the third quarter of fiscal 2026 decreased $1.0 million compared to the third quarter of fiscal 2025 primarily due to increased repair costs related to storm property damage at one hotel property, increased utilities, property taxes, and labor expenses due to a higher mix of contract labor, partially offset by decreased consulting fees and increased revenues. Additionally, operating income during the third quarter of fiscal 2026 was unfavorably impacted by a $0.7 million increase in depreciation expense.
During the first three quarters of fiscal 2026, Hotels and resorts division revenues increased 4.1% compared to the first three quarters of fiscal 2025. Results were negatively impacted by five fewer operating days during the first three quarters of fiscal 2026 compared to the first three quarters of fiscal 2025. The five fewer operating days during the first three quarters of fiscal 2026 negatively impacted revenue growth by approximately $3.1 million and operating income by approximately $0.4 million. Operating income decreased $0.4 million during the first three quarters of fiscal 2026, compared to the first three quarters of fiscal 2025, due primarily to increased labor expenses, property taxes, utilities, and repair costs related to storm property damage at one hotel property. Operating income during the first three quarters of fiscal 2026 was negatively impacted by a $1.7 million increase in depreciation expense, and a $0.2 million increased loss on disposition of property, equipment and other assets.
Our Hotels and resorts division Adjusted EBITDA and Adjusted EBITDA margin decreased during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 due primarily to increased repair costs following storm damage at one hotel property, increased labor costs as a result of a higher mix of contract labor, and increased property taxes.
During the first three quarters of fiscal 2026, Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to increased revenues compared to the first three quarters of fiscal 2025. Adjusted EBITDA during the first three quarters of fiscal 2026 was negatively impacted by approximately $0.4 million due to five fewer operating days, a change in revenue
mix resulting from a decrease in certain group business at one of our condo hotel properties, and increases in personnel, labor, and other costs.
The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the third quarter and first three quarters of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Room revenues $ 40.7 $ 39.9 $ 0.8 2.0 % $ 94.9 $ 88.8 $ 6.1 6.8 %
Food/beverage revenues 23.8 24.1 (0.3) (1.4) % 63.8 63.3 0.5 0.8 %
Other revenues 17.5 16.3 1.1 7.0 % 45.8 45.2 0.6 1.4 %
Total revenues before cost reimbursements 82.0 80.3 1.6 2.0 % 204.4 197.2 7.2 3.7 %
Cost reimbursements 10.7 9.8 0.9 9.3 % 30.6 28.5 2.1 7.3 %
Total revenues $ 92.7 $ 90.1 $ 2.5 2.8 % $ 235.1 $ 225.7 $ 9.3 4.1 %
Division total revenues before cost reimbursements increased 2.0% during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025 due to increased occupancy at five of our seven comparable owned hotels (excluding The Marc which opened in the first quarter of 2026), and strong golf revenues at Grand Geneva Resort & Spa, partially offset by lower food and beverage revenues resulting from a decreased mix of group banquet and catering business.
Division total revenues before cost reimbursements increased 3.7% during the first three quarters of fiscal 2026, compared to the first three quarters of fiscal 2025, due to increased occupancy at five of our seven comparable owned hotels, increased golf revenues at Grand Geneva Resort & Spa, partially offset by the negative impact of five fewer operating days due to the change in fiscal year described above. Division total revenues before cost reimbursements during the first three quarters of fiscal 2026 were favorably impacted by the Hilton Milwaukee being fully operational compared to the prior year period when the hotel had rooms out of service while undergoing significant renovations. The increase in other revenues was negatively impacted by a group buyout of one condo hotel property during a portion of the first three quarters of 2025 that did not reoccur in the current year.
The following table sets forth certain operating statistics for the third quarter and first three quarters of fiscal 2026 and fiscal 2025, 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:
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Occupancy pct. 77.5 % 78.4 % (0.9) pts (1.1) % 70.0 % 65.1 % 4.9 pts 7.5 %
ADR $ 232.43 $ 224.91 $ 7.52 3.3 % $ 202.06 $ 198.69 $ 3.37 1.7 %
RevPAR $ 180.04 $ 176.32 $ 3.72 2.1 % $ 141.51 $ 129.42 $ 12.09 9.3 %
Note: These operating statistics represent averages of our eight distinct 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 six of our seven comparable company-owned properties during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, driven by increased average daily rates. Group business as a percentage of our mix of business represented approximately 39.3% of our total rooms revenue in the third quarter of fiscal 2026, compared to approximately 42.5% during the third quarter of fiscal 2025. Non-group transient pricing increased in most of our major markets during the third quarter of fiscal 2026, driven by strong leisure demand which offset some of decline in group business.
According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2026 third quarter and first three quarters results, comparable "upper upscale" hotels-hotels identified as our industry- throughout
the United States experienced increases in RevPAR of 7.8% during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, leading us to believe that our increase in RevPAR of 2.1%, underperformed the industry during the third quarter of fiscal 2026 by approximately 5.7 percentage points. We believe our underperformance during the third quarter of fiscal 2026 was driven by transient demand from major events, particularly the World Cup, that occurred in markets in which we do not have a presence, coupled with softer demand from our group customer segment, particularly in our Milwaukee market. During the first three quarters of fiscal 2026, comparable "upper upscale" hotels experienced RevPAR growth of 5.8% compared to the first three quarters of fiscal 2025, leading us to believe our increase in RevPAR of 9.3% outperformed the industry during the first three quarters of fiscal 2026 by approximately 3.5 percentage points. We believe our outperformance during the first three quarters of fiscal 2026 was driven by the favorable impact of the Hilton Milwaukee hotel being fully operational, compared to the first three quarters of 2025 when the hotel was undergoing significant renovations, partially offset by softer demand from our group customer segment during the third quarter of fiscal 2026.
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 6.2% during our fiscal 2026 third quarter, again compared to our fiscal 2025 third quarter, leading us to believe that our increase in RevPAR of 7.4% (excluding The Marc which opened in the first quarter of 2026), outperformed the competitive sets during the third quarter of fiscal 2026 by approximately 1.2 percentage points. We believe the outperformance to our competitive sets during the third quarter of fiscal 2026 resulted from strong transient demand, partially offset by softer demand in our group customer segment. During the first three quarters of fiscal 2026, hotels in our competitive sets experienced an increase in RevPAR of 6.2%, indicating that our increase in RevPAR of 14.3% (excluding The Marc) outperformed our competitive set hotels by approximately 8.1 percentage points. We believe the outperformance to our competitive sets during the first three quarters of fiscal 2026 was partially attributable to the renovation of Hilton Milwaukee in the prior year period which we believe unfavorably impacted our RevPAR in the first half of fiscal 2025 while favorably impacting competitive hotels. After adjusting for the estimated impact of the Hilton Milwaukee renovation on the prior year, we believe our hotels outperformed their competitive sets during the first three quarters of fiscal 2026 by approximately 4.4 percentage points.
We generally expect our revenue trends to track or exceed the overall industry trends for our segment of the industry, particularly in our respective markets. Hotel revenues have historically tracked very closely with traditional macroeconomic statistics, such as the Gross Domestic Product. The U.S. economic outlook remains in a period of heightened uncertainty. In the near term, we expect business travel demand and our group business to remain stable. Leisure travel demand has softened in the economy segment of the market and shown some recent improvement in the midscale segment of the market, while generally remaining stable in the upper upscale segment of the market that includes most of our properties. 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.
As of the date of this report, our group room revenue bookings for fiscal 2026 - commonly referred to in the hotels and resorts industry as "group pace" - is running approximately 5% ahead of where we were at the same time last year. Group room revenue bookings for fiscal 2027 is running approximately 10% ahead of where we were at the same time in fiscal 2025 for fiscal 2026. Banquet and catering revenue pace for fiscal 2026 is running consistent with where we were at the same time last year. Banquet and catering revenue pace for fiscal 2027 is running approximately 14% ahead of where we were at the same time in fiscal 2025 for fiscal 2026.
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 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 third quarter and first three quarters of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):
Third Quarter First Three Quarters
Variance Variance
F2026 F2025 Amt. Pct. F2026 F2025 Amt. Pct.
Theatres $ 32.3 $ 22.1 $ 10.2 46.3 % $ 76.7 $ 52.3 $ 24.3 46.5 %
Hotels and resorts 22.6 23.1 (0.6) (2.4) % 37.0 35.4 1.6 4.6 %
Corporate items (5.8) (4.8) (1.0) (20.9) % (15.8) (15.3) (0.5) (3.5) %
Total Adjusted EBITDA $ 49.1 $ 40.4 $ 8.7 21.5 % $ 97.9 $ 72.5 $ 25.4 35.1 %
The following table sets forth our reconciliation of Adjusted EBITDA (in millions):
Third Quarter First Three Quarters
F2026 F2025 F2026 F2025
Net earnings (loss) $ 18.8 $ 16.2 $ 19.2 $ 6.7
Add (deduct):
Investment (income) (0.4) - (0.4) (0.5)
Interest expense 2.5 2.8 7.9 8.6
Other (income) expense (1)
0.3 (4.2) 1.2 (3.3)
Loss (gain) on disposition of property, equipment and other assets 0.1 (0.1) 0.3 (1.3)
Equity (earnings) losses from unconsolidated joint ventures (0.1) (0.1) 0.6 0.4
Income tax expense (benefit) 9.1 8.0 9.6 3.3
Depreciation and amortization 17.1 16.8 52.3 52.3
Share-based compensation expenses (2)
1.6 1.2 7.0 6.2
Impairment charges (3)
0.2 - 0.2 -
Theatre exit costs (4)
- - - 0.1
Insured losses (recoveries) (5)
(0.1) (0.3) (0.1) (0.2)
Other non-recurring (6)
- - 0.1 -
Total Adjusted EBITDA $ 49.1 $ 40.4 $ 97.9 $ 72.5
The following tables set forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):
Third Quarter, F2026 First Three Quarters, F2026
Theatres Hotels & Resorts Corp. Items Total Theatres Hotels & Resorts Corp. Items Total
Operating income (loss) $ 22.2 $ 15.3 $ (7.2) $ 30.3 $ 46.0 $ 14.1 $ (22.0) $ 38.1
Depreciation and amortization 9.7 7.0 0.4 17.1 29.7 21.5 1.2 52.3
Loss (gain) on disposition of property, equipment and other assets 0.1 - - 0.1 (0.2) 0.5 - 0.3
Share-based compensation (2)
0.2 0.3 1.0 1.6 0.9 1.0 5.1 7.0
Impairment charges (3)
0.2 - - 0.2 0.2 - - 0.2
Insured losses (recoveries) (5)
- (0.1) - (0.1) - (0.1) - (0.1)
Other non-recurring (6)
- - - - - 0.1 - 0.1
Total Adjusted EBITDA $ 32.3 $ 22.6 $ (5.8) $ 49.1 $ 76.7 $ 37.0 $ (15.8) $ 97.9
Third Quarter, F2025 First Three Quarters, F2025
Theatres Hotels & Resorts Corp. Items Total Theatres Hotels & Resorts Corp. Items Total
Operating income (loss) $ 12.3 $ 16.4 $ (6.0) $ 22.7 $ 21.8 $ 14.5 $ (20.9) $ 15.3
Depreciation and amortization 10.2 6.3 0.4 16.8 31.3 19.8 1.2 52.3
Loss (gain) on disposition of property, equipment and other assets (0.3) 0.2 - (0.1) (1.5) 0.2 - (1.3)
Share-based compensation (2)
0.2 0.3 0.8 1.2 0.9 0.9 4.5 6.2
Theatre exit costs (4)
- - - - 0.1 - - 0.1
Insured losses (recoveries) (5)
(0.3) - - (0.3) (0.2) - - (0.2)
Total Adjusted EBITDA $ 22.1 $ 23.1 $ (4.8) $ 40.4 $ 52.3 $ 35.4 $ (15.3) $ 72.5
(1)Includes a gain from an insurance settlement of $4.5M related to insured property damage at one theatre location in the third quarter of fiscal 2025.
(2)Non-cash expense related to share-based compensation programs.
(3)Non-cash impairment charges in the third quarter of fiscal 2026 related to one operating theatre.
(4)Reflects non-recurring costs related to the closure and exit of one theatre location in the first quarter of fiscal 2025.
(5)Repair costs and insurance recoveries related to insured property damage at one hotel property during the third quarter of fiscal 2026, and one theatre location during fiscal 2025.
(6)Other non-recurring includes professional fees related to the sale of historic tax credits resulting from the renovation at Hilton Milwaukee.
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. However, our cash position may fluctuate from time-to-time based on seasonality of our businesses, the timing of interest payments on our debt as well as timing of payment of other operating expenses that are paid on an infrequent basis.
Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our over 90-year history and our financial position remains strong. As of September 30, 2026, we had a cash balance of approximately $60.2 million, $219.3 million of availability under our $225 million revolving credit facility, our debt-to-capitalization ratio was 0.24, and our net leverage ratio was 0.79x net debt to Adjusted EBITDA. With our strong liquidity
position combined with cash generated from operations, we believe we 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 fund 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):
September 30, 2026 December 31, 2025
Long-term debt (GAAP measure) (1)
$ 149.2 $ 159.0
Finance lease obligations (GAAP measure) (2)
9.8 11.3
Less: Cash and cash equivalents (60.2) (23.4)
Net Debt $ 98.7 $ 146.8
Net Debt $ 98.7 $ 146.8
LTM Adjusted EBITDA (3)
124.7 99.3
Net Leverage (Net Debt to Adjusted EBITDA) 0.79x 1.48x
(1)Represents total long-term debt, including the current portion of long-term debt.
(2)Represents total finance lease obligations, including the current portion of finance lease obligations.
(3)LTM Adjusted EBITDA is Adjusted EBITDA as reconciled and defined above for the last four fiscal quarters.
We believe Net Leverage is a useful measure, as it provides management and investors an indication of our indebtedness less unrestricted cash relative to our earnings performance.
Financial Condition
Net cash provided by operating activities totaled $77.2 million during the first three quarters of fiscal 2026, compared to net cash provided by operating activities of $35.4 million during the first three quarters of fiscal 2025. The $41.8 million increase in net cash provided by operating activities was primarily due to a $12.5 million increase in net earnings, a $7.6 million increase in accrued compensation, a $5.9 million increase in accrued liabilities, a $4.3 million decrease in prepaid and other assets, $3.0 million in proceeds from the sale of historic tax credits, and a $1.4 million favorable impact from the timing of payments of accounts payable.
Net cash used in investing activities during the first three quarters of fiscal 2026 totaled $23.3 million, compared to net cash used in investing activities of $46.6 million during the first three quarters of fiscal 2025. The decrease in net cash used in investing activities of $23.3 million was the result of a decrease of $34.2 million in capital expenditures, receipt of $3.5 million in key money related to the renovation of one hotel property, partially offset by a $8.2 million decrease in proceeds from the sale of trading securities and a $4.5 million decrease in proceeds from insurance recovery in the prior year that did not recur. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $26.7 million during the first three quarters of fiscal 2026 compared to $60.8 million during the first three quarters of fiscal 2025.
Fiscal 2026 first three quarters cash capital expenditures included approximately $15.9 million incurred in our theatre division, including construction related to insured property damage at one theatre location, addition of D-BOX seating at two theatre locations, and normal maintenance capital projects. We incurred capital expenditures in our hotels and resorts division during the first three quarters of fiscal 2026 of approximately $10.4 million, including several smaller capital improvement projects and normal maintenance capital projects. We incurred corporate capital expenditures during the first three quarters of fiscal 2026 of approximately $0.4 million related to technology implementation.
Net cash used in financing activities during the first three quarters of fiscal 2026 totaled $15.4 million compared to net cash used in financing activities of $22.9 million during the first three quarters of fiscal 2025. During the first three quarters of fiscal 2026, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added
$82.0 million of new short-term revolving credit facility borrowings, and we made $92.0 million of repayments on short-term revolving credit facility borrowings during the first three quarters of fiscal 2026 (net $10.0 million decrease in borrowings on our credit facility). We ended the third quarter of fiscal 2026 with no outstanding borrowings under our revolving credit facility. During the first three quarters of fiscal 2025, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $156.0 million of new short-term revolving credit facility borrowings, and we made $143.0 million of repayments on short-term revolving credit facility borrowings during the first three quarters of fiscal 2025 (net $13.0 million increase in borrowings on our credit facility).
We made no principal payments on long-term debt during the first three quarters of fiscal 2026 compared to approximately $10.4 million during the first three quarters of fiscal 2025.
Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.24 at September 30, 2026, compared to 0.26 at December 31, 2025.
During the first three quarters of fiscal 2026, we repurchased 0.1 million shares of our common stock for $1.3 million in the open market, compared to 0.4 million shares of our common stock for $7.1 million in the open market during the first three quarters of fiscal 2025. As of September 30, 2026, approximately 4.4 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.
During the first three quarters of fiscal 2026, we received $7.5 million from exercises of stock options, compared with no proceeds from exercises of stock options during the first three quarters of fiscal 2025.
Dividends paid during the first three quarters of fiscal 2026 were $7.6 million. Dividends paid during the first three quarters of fiscal 2025 were $6.8 million. We have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.
Critical Accounting Policies and Estimates
We have included a summary of our Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the summary provided in that report.
The Marcus Corporation published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 12:49 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]