Marcus Corp: Form 10-Q for the period ended Mar 28, 2024

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.

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):

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.

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):

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):

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.

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.

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):

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):

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:

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 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 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):

The following table sets forth our reconciliation of Adjusted EBITDA (in millions):

The following tables sets forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):

21

(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):

(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.

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.

We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material and to the extent equity is used, dilutive.

Financial Condition

Net cash used in operating activities totaled $15.1 million during the first quarter of fiscal 2024, compared to net cash used in operating activities of $7.7 million during the first quarter of fiscal 2023. The $7.4 million increase in net cash used in operating activities was primarily due to a $2.4 million decrease in net earnings, a $4.5 million increase in deferred tax benefits, a $1.3 million increase in cash matching contributions to the company’s retirement savings and profit-sharing plan, partially reduced by an increase in non-cash share-based compensation expense.

Net cash used in investing activities during the first quarter of fiscal 2024 totaled $20.8 million, compared to net cash used in investing activities of $9.5 million during the first quarter of fiscal 2023. The increase in net cash used in investing activities of $11.2 million was the result of an increase of $6.5 million in capital expenditures, a $5.6 million purchase of joint venture interests in The Lofton Hotel, and an increase in cash used in the purchase of trading securities and other investing activities, partially offset by a $1.5 million sale of joint venture interests in The Lofton Hotel to other minority investors. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $15.4 million during the first quarter of fiscal 2024 compared to $8.9 million during the first quarter of fiscal 2023.

Fiscal 2024 first quarter cash capital expenditures included approximately $2.8 million incurred in our theatre division, primarily related to normal maintenance capital projects. We also incurred capital expenditures in our hotels and resorts division during the first quarter of fiscal 2024 of approximately $12.3 million, including costs related to guest room renovations at The Pfister Hotel, meeting space renovations at the Grand Geneva Resort and Spa and normal maintenance capital projects.

Net cash used in financing activities during the first quarter of fiscal 2024 totaled $3.4 million compared to net cash provided by financing activities of $5.6 million during the first quarter of fiscal 2023. During the first quarter of fiscal 2024, 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 $5.0 million of new short-term revolving credit facility borrowings, and we made $5.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2024 (net zero borrowings on our credit facility). We ended the first quarter of fiscal 2024 with no outstanding borrowings under our revolving credit facility. During the first quarter of fiscal 2023, 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 $29.0 million of new short-term revolving credit facility borrowings, and we made $20.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2023 (net $9.0 million of borrowings on our credit facility).

Principal payments on long-term debt were approximately $0.3 million during the first quarter of fiscal 2024 compared to payments of $0.4 million during the first quarter of fiscal 2023. Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.27 at March 28, 2024, compared to 0.26 at December 28, 2023.

During the first quarter of fiscal 2024 and the first quarter of fiscal 2023, we did not repurchase any shares of our common stock in the open market. As of March 28, 2024, approximately 2.4 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.

Dividends paid during the first quarter of fiscal 2024 were $2.2 million. Dividends paid during the first quarter of fiscal 2023 were $1.5 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 28, 2023. There have been no material changes to the summary provided in that report.

a. Evaluation of disclosure controls and procedures

Based on their evaluations and the evaluation of management, as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

b. Changes in internal control over financial reporting

There were no significant changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15 of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 28, 2023.