Marcus Corp: Form 10-Q for the period ended Mar 31, 2026
Filed with the SEC on Apr 30, 2026 and accepted by EDGAR at Apr 30, 2026, 16:05 ET.
Management's discussion and analysis
As filed, 40,220 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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 first quarter of 2026 consisted of the three month period beginning on January 1, 2026 and ended on March 31, 2026 and included five fewer operating days compared to the prior year fiscal first quarter. The first quarter of fiscal 2025 consisted of the three month period beginning December 27, 2024 and ended on March 31, 2025 (comprised of five operating days between December 27-31, 2024, plus 90 operating days in the calendar first quarter 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 loss, other income (expense), net loss, and net loss per diluted common share for the first quarter of fiscal 2026 and fiscal 2025 (in millions, except for per share and variance percentage data):
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Revenues | $154.4 | $148.8 | $5.6 | 3.8% |
| Operating loss | (19.3) | (20.4) | 1.2 | 5.6% |
| Other income (expense) | (3.7) | (3.8) | — | 0.8% |
| Net loss | $(15.4) | $(16.8) | $1.5 | 8.7% |
| Net loss per common share - diluted | $(0.51) | $(0.54) | $0.03 | 5.6% |
Revenues increased during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 due to increased revenues from both our theatre division and hotels and resorts division. 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. Additionally, the first quarter of fiscal 2026 included five less operating days compared to the first quarter of fiscal 2025, negatively impacting revenue growth by approximately $15.3 million.
Operating loss during the first quarter of fiscal 2026 improved by $1.2 million compared to the first quarter of fiscal 2025 due to increased revenues from our theatre division, partially offset by a $5.3 million unfavorable impact as a result of five fewer operating days, a decrease in revenue before cost reimbursements from our hotels and resorts division, and an increase in corporate expenses. Operating loss during the first quarter of fiscal 2026 was negatively impacted by a $0.1 million loss on disposition of property, equipment and other assets, compared to a $1.4 million gain on disposition of property, equipment and other assets related to the sale of surplus land during the first quarter of fiscal 2025.
Corporate expenses during the first quarter of fiscal 2026 increased $0.4 million compared to the first quarter of fiscal 2025 due to increased non-cash stock compensation, incentive compensation expenses, personnel and benefits cost inflation, and director compensation, partially offset by decreased professional fees related to tax, audit, and legal services.
Our interest expense totaled $2.6 million for the first quarter of fiscal 2026, compared to $2.8 million for the first quarter of fiscal 2025. The decrease in interest expense during the first quarter 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 did not have any significant variations in investment income, other expenses, and equity losses from unconsolidated joint ventures during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025.
Net loss and net loss per diluted common share improved during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, resulting primarily from a decrease in operating loss as described above.
We reported income tax benefit of $7.6 million for the first quarter of fiscal 2026 compared to benefit of $7.4 million for the first quarter of fiscal 2025. Our fiscal 2026 first quarter effective income tax rate was 33.2% compared to our fiscal 2025 first quarter effective income tax rate of 30.4%. The effective income tax rate in both fiscal 2026 first quarter and fiscal 2025 first quarter were 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 loss and operating margin for our theatre division for the first quarter of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage and operating margin):
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Total revenues | $92.9 | $87.4 | $5.6 | 6.4% |
| Total revenues before cost reimbursements | 92.2 | 86.5 | 5.7 | 6.6% |
| Operating loss | (2.8) | (6.3) | 3.5 | 55.3% |
| Operating margin(1) | (3.0)% | (7.3)% | ||
| Adjusted EBITDA(2) | 8.0 | 3.7 | 4.3 | 117.1% |
| Adjusted EBITDA margin(2) | 8.7% | 4.3% |
(1) Operating margin is defined as operating income divided by total revenues before cost reimbursements.
(2) See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations. 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 loss for the Theatre division improved during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, due to increased attendance driven by stronger performances from films and a $0.4 million decrease in depreciation expense, partially offset by five fewer operating days in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. The five fewer operating days in the first quarter 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 loss by approximately $5.0 million. Additionally, operating loss in the prior year period was favorably impacted by a $1.4 million gain on disposition of property, equipment and other assets related to the sale of surplus land during the first quarter of fiscal 2025.
Our theatre division Adjusted EBITDA increased during the first quarter of fiscal 2026 compared to the first quarter 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 benefits, insurance, and general administrative expenses.
The following table provides a further breakdown of the components of revenues for the theatre division for the first quarter of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Admission revenues | $44.8 | $40.9 | $3.9 | 9.5% |
| Concession revenues | 39.6 | 38.0 | 1.6 | 4.1% |
| Other revenues | 7.8 | 7.6 | 0.2 | 3.1% |
| Total revenues before cost reimbursements | 92.2 | 86.5 | 5.7 | 6.6% |
| Cost reimbursements | 0.7 | 0.8 | (0.1) | n/m |
| Total revenues | 92.9 | 87.4 | 5.6 | 6.4% |
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 first quarter results, U.S. box office receipts increased 5.0% during our fiscal 2026 first quarter compared to our fiscal 2025 first quarter, indicating that our increase in admission revenues for comparable theatres (excluding theatres closed during the past year) of 9.8% during the first quarter of fiscal 2026 outperformed the industry by 4.8 percentage points. On a calendar quarter basis (January 1st through March 31st), U.S. box office receipts increased 21.4%, indicating that our increase in admissions revenues for our comparable theatres of 29.0%, outperformed the industry by 7.6 percentage points. We believe our over-performance in the first quarter of fiscal 2026 was largely attributable to strategic pricing changes made late during the second quarter of fiscal 2025, resulting in higher average ticket price growth compared to other exhibitors. We believe our outperformance was also the result of a favorable film mix, that included family films such as Hoppers, Zootopia 2, GOAT, and Avatar: Fire and Ash, that were more appealing to audiences in our Midwestern markets than in other parts of the U.S.
Additional data received and compiled by us from Comscore indicates our admission revenues at comparable theatres during the first quarter of fiscal 2026 represented approximately 3.1% of the total admission revenues in the U.S. (commonly referred to as market share in our industry), compared to 3.0% during the first quarter 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 1.9% during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, which was attributable to increased box office performances from films and negatively impacted by five less operating days described above. During the first quarter of fiscal 2026, there were 30 wide-release films (films shown in over approximately 1,500 theatres in the U.S., excluding re-release films) compared to 27 wide-release films during the first quarter of fiscal 2025. On a calendar quarter basis (January 1 through March 31), total theatre attendance for our comparable theatres increased 19.1% during the first quarter of 2026 compared to the first quarter of 2025.
Our highest grossing films during the fiscal 2026 first quarter included Project Hail Mary, Hoppers, Avatar: Fire and Ash, Scream 7, and Zootopia 2. Our top five films during our fiscal 2026 first quarter accounted for 40% of our total box office results, compared to 45% for the top five films during the first 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. However, during the first quarter of 2026, the film slate was stronger, with a broader range of films performing well, resulting in fewer lower cost films to offset higher cost blockbuster films. Despite the more diverse film slate, our overall film cost as a percentage of admission revenues during the first quarter of fiscal 2026 was flat compared to the same period in the prior fiscal year.
Our average ticket price increased 7.8% during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025. Our average ticket price during the first quarter of fiscal 2026 was favorably impacted by an increased percentage of ticket sales coming from premium large format (PLF) screens, strategic pricing changes, and a favorable ticket mix. These increases were partially offset by an increase in the percentage of our attendance coming from Value Tuesday. The overall change in average ticket price favorably impacted our admission revenues of our comparable theatres by $3.2 million during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.
Our average concession revenues per person increased by 2.4% during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025, resulting from increases in movie-themed merchandise sales, concessions menu prices, and the number of concessions transactions per person or incidence rate. The overall increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $1.0 million during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025.
Other revenues during the first quarter of fiscal 2026 increased by $0.2 million compared to the first quarter 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 first quarter of fiscal 2026 and fiscal 2025 with a total of 971 company-owned screens in 77 theatres and 14 managed screens at one theatre, during both periods. We made the decision to close one underperforming leased Movie Tavern theatre during first quarter of fiscal 2025.
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 2026 and fiscal 2025 (in millions, except for variance percentage and operating margin):
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Total revenues | $61.4 | $61.3 | $0.1 | 0.1% |
| Total revenues before cost reimbursements | 51.7 | 52.3 | (0.6) | (1.1)% |
| Operating loss | (7.9) | (6.0) | (1.9) | (31.2)% |
| Operating margin(1) | (12.9)% | (9.9)% | ||
| Adjusted EBITDA(2) | (0.3) | 1.0 | (1.3) | (128.0)% |
| Adjusted EBITDA margin(2) | (0.5)% | 1.9% |
(1) Operating margin is defined as operating income divided by total revenues before cost reimbursements
(2) See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations. 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 0.1% during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, and revenues before cost reimbursements decreased 1.1% during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. Results were negatively impacted by five fewer operating days during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. The five fewer operating days during the first quarter of fiscal 2026 negatively impacted revenue growth by approximately $3.1 million and the increase in operating loss by approximately $0.4 million. Operating loss increased $1.9 million during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025, due to lower revenues, a $0.5 million increase in depreciation expense, as well as increases in personnel, benefits, and other costs.
Our hotels and resorts division Adjusted EBITDA decreased during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 and was negatively impacted by approximately $0.4 million due to five fewer operating days, a decrease in other revenue related to certain group business at one of our condo hotel properties, and increases in personnel, benefits, and other costs.
The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the first quarter of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Room revenues | $20.5 | $19.3 | $1.2 | 6.2% |
| Food/beverage revenues | 17.5 | 17.8 | (0.4) | (2.1)% |
| Other revenues | 13.8 | 15.2 | (1.4) | (9.2)% |
| Total revenues before cost reimbursements | 51.7 | 52.3 | (0.6) | (1.1)% |
| Cost reimbursements | 9.7 | 9.0 | 0.7 | 7.3% |
| Total revenues | $61.4 | $61.3 | $0.1 | 0.1% |
Division total revenues before cost reimbursements decreased 1.1% during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025, resulting primarily from five fewer operating days due to the change in fiscal year described above and decreases in other revenues driven primarily by a group buyout of one condo hotel property during a portion of the first quarter of 2025 that did not reoccur in the current year quarter and a weaker ski season at Grand Geneva Resort & Spa resulting from unfavorable weather compared to last year. These revenue decreases were partially offset by the favorable impact of Hilton Milwaukee being fully operational compared to the prior year when the hotel had rooms out of service while undergoing significant renovations.
The following table sets forth certain operating statistics for the first quarter 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:
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Occupancy pct. | 59.2% | 50.3% | 8.9 pts | 17.7% |
| ADR | $156.56 | $162.09 | $(5.53) | (3.4)% |
| RevPAR | $92.60 | $81.45 | $11.15 | 13.7% |
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 2026 compared to the first quarter of fiscal 2025, driven mainly by increased occupancy rates. Group business as a percentage of our mix of business represented approximately 35.6% of our total rooms revenue in the first quarter of fiscal 2026, compared to approximately 34.6% during the first quarter of fiscal 2025. Non-group transient pricing decreased in some of our major markets during the first quarter of fiscal 2026, primarily due to less rate compression with the Hilton Milwaukee fully operational compared to the prior year when rooms were out of service due to the renovation, as well as increased competition in one market.
According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2026 first quarter results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increase in RevPAR of 3.9% during our fiscal 2026 first quarter compared to our fiscal 2025 first quarter, leading us to believe we outperformed the industry during the fiscal 2026 first quarter by approximately 9.8 percentage points. We believe our outperformance during the first quarter of fiscal 2026 was partially driven by the favorable impact of the Hilton Milwaukee hotel being fully operational, compared to the first quarter of fiscal 2025 when the hotel was undergoing significant renovations.
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 a decrease in RevPAR of 2.9% during our fiscal 2026 first quarter, again compared to our fiscal 2025 first quarter. Therefore, we significantly outperformed our competitive sets during the first quarter of fiscal 2026 by approximately 16.6 percentage points. We believe our outperformance to our competitive sets during the first quarter of fiscal 2026 resulted primarily from strong performance in our group customer segment, in particular at our renovated hotel properties. We believe the outperformance to our competitive sets during the first quarter of fiscal 2026 was also partially attributable to the renovation of Hilton Milwaukee in the prior year period which we believe unfavorably impacted our RevPAR in the first quarter 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 quarter of fiscal 2026 by approximately 11.5 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 to soften, and we expect our group business to remain stable. Leisure travel demand has softened in the midscale and economy segments 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 in-line with where we were at the same time in fiscal 2025 for fiscal 2026. Banquet and catering revenue pace for fiscal 2026 is running in-line with where we were at the same time last year. Banquet and catering revenue pace for fiscal 2027 is running approximately 12% 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 first quarter of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):
| First Quarter F2026 | F2025 | Variance Amt. | Pct. | |
|---|---|---|---|---|
| Theatres | $8.0 | $3.7 | $4.3 | 117.1% |
| Hotels and resorts | (0.3) | 1.0 | (1.3) | (128.0)% |
| Corporate items | (5.1) | (5.0) | (0.2) | (3.5)% |
| Total Adjusted EBITDA | $2.6 | $(0.3) | $2.9 | 1102.3% |
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The following table sets forth our reconciliation of Adjusted EBITDA (in millions):
| First Quarter F2026 | F2025 | |
|---|---|---|
| Net earnings (loss) | $(15.4) | $(16.8) |
| Add (deduct): | ||
| Investment (income) | — | (0.1) |
| Interest expense | 2.6 | 2.8 |
| Other (income) expense | 0.4 | 0.4 |
| Loss (gain) on disposition of property, equipment and other assets | 0.1 | (1.4) |
| Equity (earnings) losses from unconsolidated joint ventures | 0.7 | 0.6 |
| Income tax expense | (7.6) | (7.4) |
| Depreciation and amortization | 17.8 | 17.8 |
| Share-based compensation expenses (1) | 3.8 | 3.5 |
| Theatre exit costs (2) | — | 0.1 |
| Other non-recurring (3) | 0.1 | — |
| Total Adjusted EBITDA | $2.6 | $(0.3) |
The following tables set forth our reconciliation of Adjusted EBITDA by reportable operating segment (in millions):
| First Quarter, F2026 Theatres | Hotels & Resorts | Corp. Items | Total | |
|---|---|---|---|---|
| Operating loss | $(2.8) | $(7.9) | $(8.5) | $(19.3) |
| Depreciation and amortization | 10.3 | 7.2 | 0.4 | 17.8 |
| Loss (gain) on disposition of property, equipment and other assets | 0.1 | — | — | 0.1 |
| Share-based compensation (1) | 0.5 | 0.3 | 3.0 | 3.8 |
| Other non-recurring (3) | — | 0.1 | — | 0.1 |
| Total Adjusted EBITDA | $8.0 | $(0.3) | $(5.1) | $2.6 |
| First Quarter, F2025 Theatres | Hotels & Resorts | Corp. Items | Total | |
|---|---|---|---|---|
| Operating loss | $(6.3) | $(6.0) | $(8.1) | $(20.4) |
| Depreciation and amortization | 10.7 | 6.7 | 0.4 | 17.8 |
| Loss (gain) on disposition of property, equipment and other assets | (1.4) | — | — | (1.4) |
| Share-based compensation (1) | 0.5 | 0.3 | 2.7 | 3.5 |
| Theatre exit costs (2) | 0.1 | — | — | 0.1 |
| Total Adjusted EBITDA | $3.7 | $1.0 | $(5.0) | $(0.3) |
(1) Non-cash expense related to share-based compensation programs.
(2) Reflects non-recurring costs related to the closure and exit of one theatre location in the first quarter of fiscal 2025.
(3) 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 90-year history and our financial position remains strong. As of March 31, 2026, we had a cash balance of approximately $11.2 million, $194.3 million of availability under our $225 million revolving credit facility, our debt-to-capitalization ratio was 0.28, and our net leverage ratio was 1.70x 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):
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Long-term debt (GAAP measure) (1) | $174.1 | $159.0 |
| Finance lease obligations (GAAP measure) (2) | 10.6 | 11.3 |
| Less: Cash and cash equivalents | (11.2) | (23.4) |
| Net Debt | $173.5 | $146.8 |
| Net Debt | $173.5 | $146.8 |
| LTM Adjusted EBITDA (3) | 102.1 | 99.3 |
| Net Leverage (Net Debt to Adjusted EBITDA) | 1.70x | 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 used in operating activities totaled $15.2 million during the first quarter of fiscal 2026, compared to net cash used in operating activities of $35.3 million during the first quarter of fiscal 2025. The $20.1 million decrease in net cash used by operating activities was primarily due to an $8.9 million favorable impact from the timing of payments of accounts payable, a $1.9 million decrease in prepaid and other assets, a $4.1 million increase in accrued compensation, $3.0 million in proceeds from the sale of historic tax credits, and a $1.5 million decrease in net loss.
Net cash used in investing activities during the first quarter of fiscal 2026 totaled $6.6 million, compared to net cash used in investing activities of $22.8 million during the first quarter of fiscal 2025. The decrease in net cash used in investing activities of $16.2 million was the result of a decrease of $16.4 million in capital expenditures. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $6.6 million during the first quarter of fiscal 2026 compared to $23.0 million during the first quarter of fiscal 2025.
Fiscal 2026 first quarter cash capital expenditures included approximately $3.8 million incurred in our theatre division, including construction related to insured property damage at one theatre location, and normal maintenance capital projects. We incurred capital expenditures in our hotels and resorts division during the first quarter of fiscal 2026 of approximately $2.7 million, including several smaller capital improvement projects and normal maintenance capital projects. We incurred corporate capital expenditures during the first quarter of fiscal 2026 of approximately $0.1 million, related to technology implementation.
Net cash provided by financing activities during the first quarter of fiscal 2026 totaled $9.6 million compared to net cash provided by financing activities of $29.3 million during the first quarter of fiscal 2025. During the first quarter 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 $51.0 million of new short-term revolving credit facility borrowings, and we made $36.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2026 (net $15.0 million increase in borrowings on our credit facility). We ended the first quarter of fiscal 2026 with $25.0 million of outstanding borrowings under our revolving credit facility. During the first quarter 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 $69.0 million of new short-term revolving credit facility borrowings, and we made $29.0 million of repayments on short-term revolving credit facility borrowings during the first quarter of fiscal 2025 (net $40.0 million increase in borrowings on our credit facility).
Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.28 at March 31, 2026, compared to 0.26 at December 31, 2025.
During the first quarter 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 quarter of fiscal 2025. As of March 31, 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.
Dividends paid during the first quarter of fiscal 2026 were $2.4 million. Dividends paid during the first quarter of fiscal 2025 were $2.2 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.
Controls and procedures
As filed, 1,113 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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.
Risk factors
As filed, 149 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
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 31, 2025.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2026-03-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2026-01-01 to 2026-03-31 | $154.4m | us-gaap:Revenues |
| Operating income | 3 months2026-01-01 to 2026-03-31 | −$19.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months2026-01-01 to 2026-03-31 | $2.6m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months2026-01-01 to 2026-03-31 | −$7.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2026-01-01 to 2026-03-31 | −$15.4m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months2026-01-01 to 2026-03-31 | 30,681,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months2026-01-01 to 2026-03-31 | −$15.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months2026-01-01 to 2026-03-31 | $6.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months2026-01-01 to 2026-03-31 | $2.4m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | At period end2026-03-31 | $11.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2026-03-31 | $50.4m | us-gaap:AssetsCurrent |
| Total assets | At period end2026-03-31 | $992.1m | us-gaap:Assets |
| Current liabilities | At period end2026-03-31 | $145.2m | us-gaap:LiabilitiesCurrent |
| Long-term debt | At period end2026-03-31 | $174.1m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | At period end2026-03-31 | $441.2m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0000062234-26-000028. Last ingested by Listed: Oct 29, 2026, 08:49 ET. Listed shows no prices and gives no investment advice.