The Marcus (MCS) Q4 2020 earnings summary

Executive summary

• FY2020 was a 53-week year in which COVID-19 closures and reduced capacity drove steep losses across theatres and hotels; all eight owned hotels and ~52% of theatres were open at year-end.

• Liquidity remained supported by ~$7M cash and $220M of availability under a $225M revolving facility at Dec. 31, 2020; management expected resources to sustain operations through FY2021 and into FY2022 under significantly reduced revenue conditions.

• Recovery was expected to be uneven: nearly 70% of theatres were open by the report date, while hotel demand was led by drive-to leisure and pre-COVID occupancy was not expected in FY2021.

Financial highlights

• Revenue was $237.7M vs. $820.9M in FY2019; operating loss was $178.4M vs. income of $68.2M, and net loss was $124.8M vs. net income of $42.0M.

• Diluted EPS was a loss of $4.13 vs. earnings of $1.35 per common share in FY2019.

• Operating results included $24.7M of impairment charges and ~$11.5M of nonrecurring closure and reopening costs; state grants of ~$7.0M and net insurance proceeds of ~$1.8M partly offset the loss.

• Income tax benefit was $70.9M, including favorable CARES Act and accounting-method impacts; the reported effective tax rate was 36.2%, or 26.0% excluding those favorable adjustments.

Outlook and guidance

• FY2021 cash capital expenditures were estimated at $15M-$25M; planned division spending was ~$10M-$15M for theatres and ~$5M-$10M for hotels and resorts.

• Theatre performance was expected to remain materially below prior-year levels in H1 FY2021, then progressively approach closer-to-normal levels in H2; the film slate was expected to be stronger in H2.

• Hotel results were expected to improve quarter by quarter, but occupancy was not expected to return to pre-COVID levels in FY2021; group room bookings remained significantly behind prior-year pace.

• FY2021 effective tax rate was estimated at 24%-26%, excluding further tax-rate changes or other one-time tax benefits.

• Potential real estate sales over the next 12-18 months were estimated at $10M-$40M, depending on demand; FY2021 debt and debt-to-capitalization could modestly increase.