The Marcus (MCS) Q4 2018 earnings summary

Executive summary

• FY2018 delivered record revenue and operating income; theatre strength and hotel growth were partly offset in net earnings by higher taxes, interest and asset-disposition losses.

• Strategic expansion began with the February 2019 Movie Tavern acquisition and conversion of the Milwaukee InterContinental into Saint Kate - The Arts Hotel.

Financial highlights

• Revenue was $707.1M, up 8.2% YoY; operating income was $83.2M, up 7.6%.

• Net earnings attributable to shareholders were $53.4M, down 17.9%; diluted EPS was $1.86 vs. $2.29, including a $0.75/share one-time tax benefit in FY2017.

• Operating cash flow rose 26.0% to $137.4M; cash capex fell 48.9% to $58.7M.

Outlook and guidance

• FY2019 cash capex, including approximately $30M cash for Movie Tavern and excluding unidentified acquisitions, was forecast at $105M-$125M.

• FY2019 division capex was projected at $50M-$60M for theatres and $25M-$35M for hotels and resorts, excluding acquisition opportunities.

• Movie Tavern was expected to add to earnings, EPS and cash flow within 12 months of closing; theatre operating margin was expected to decline, while operating income was expected to rise.

• Comparable theatre admission revenue was down early in FY2019 amid a weaker film slate and severe Midwest weather; the second-half film slate was expected to be strong.

• FY2019 hotel group-room and banquet/catering revenue bookings were ahead of the prior-year pace; U.S. lodging RevPAR growth was expected to remain limited.