Good morning, everyone and welcome to The Marcus Corporation First Quarter Earnings Conference Call. My name is Victor and I will be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this conference is being recorded. Joining us today are Greg Marcus, President and Chief Executive Officer; and Doug Neis, Chief Financial Officer of The Marcus Corporation. At this time, I'd like to turn the program over to Mr. Neis for his opening remarks. Please go ahead, sir.

Thank you very much and welcome to our fiscal 2018 first quarter conference call. As usual, I'm going to begin by stating that we plan on making a number of forward-looking statements on our call today. Our forward-looking statements conclude but not be limited to statements about our future revenues and earnings expectations, our future RevPAR, occupancy rates and room rate expectations for our Hotels & Resorts division; expectations about the quality, quantity and audience appeal of film products expected to be made available to us in the future; our expectations about the future trends in the business group and leisure travel industry, and in our markets; our expectations and plans regarding growth in the number and type of our properties and facilities; our expectations regarding various non-operating line items on our earnings statement; and our expectations regarding future capital expenditures. Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks, and uncertainties which could impact our ability to achieve our expectations are included in the Risk Factors section of our 10-K and 10-Q filings which can be obtained from the SEC or the Company. We'll also post our Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that behind us, let's talk about our fiscal 2018 first quarter. We once again reported record revenues with contributions from both divisions and record earnings as well, thanks to the lower income taxes. Our Theatre division did not quite match last year's record operating income but it again outperformed the industry, and in fact reported it's second highest quarterly operating income ever, even beating last year's Star Wars led fourth quarter. Our Hotels & Resorts division also reported small improvements in revenues and it's typical winter operating loss during the…

Thanks, Doug. I'll begin my remarks today with our theatre division. As you know, expectations for this first quarter in 2018 were pretty low as we were going up against the number two movie of 2017, Beauty and the Beast. As well as an all-time record for Marcus Theatres. And so, while our operating results did fall slightly short of last year, the surprising performance of 2017 holdover films that included Star Wars, Jumanji and The Greatest Showman, plus the breakout performance of Black Panther put us in a position to report our second best quarterly performance of all-time, regardless of time [ph]. Given what most prognosticators were suggesting about the first quarter compared to the strong first quarter last year, our industry has proven to be very difficult to predict once again. In the end, attendance was still down versus last year but our management team and operation staff led by Rolando Rodriguez, worked extraordinarily hard each and every day to maximize the results with a product that was available. As Doug shared with you, we once again outperformed the industry this quarter, albeit with a smaller differential than some of our previous quarters. I can say with some confidence, however the film mix this quarter compared to last year likely had a negative impact on our comparative performance versus the overall industry numbers. As I just mentioned, last year the tope film during the quarter was Beauty and the Beast. Our Midwestern circuit performed very well with this film, in fact overall we believe we outperformed our normal share of the total box office with this movie. This year the top film was Black Panther; although the movie did very, very strong business in our theatres, and an analysis of the Top 100 markets in the U.S. shows…

[Operator Instructions] Our first question comes from the line of Jim Goss from Barrington. You may begin.

Okay, good morning, guys. As I was wondering since you've come back from the CinemaCon, I wondered if you might talk about any takeaways you had, any issues and competitive responses that you might be thinking about? And it could be you hop-on [ph] issues, some slates to you or exhibitor relations, or any new services that struck you.

Well, let's go right to the bright side. I think the film slate, I try to never prognosticate, but it's hard to not get excited about what looks like to be a year that film was a really great product -- certainly this summer should be much better than last summer. We hope and again, you never know, that's why we play the game, but again, we're off to a great start tonight. I think everybody is pretty excited about what was going on. Just certainly no shortage of things to talk about, but I don't think that anything was particularly surprising.

Okay, so nothing in particular that sort of bubble to the surface that you think would cause you to make any movements or anything of that sort?

I don't think so, Jim. An overused term that we use all the time in terms of our long term focus, but look, we don't have our eye just on next week but over next years. You move the plan accordingly as you need to, but I don't think there's anything bubbled up in the last three days we know is out there and that we're dealing with and again, I think there were some very positive feeling that will come out of it overall. I'll tell you. There are certainly no shortage of the guy selling seats out there. Which actually for us is a great validation in a way of strategy. We really move quickly and talks to the benefit of owning our own real estate because we weren't the first one with the recliners, but we saw it early in the cycle, we were able -- because we own our real estate -- accelerate that deployment on a relative basis from the pack of the major operators for that. You see all these people selling seats, those are probably a pretty good idea. Well, actually one of them actually had a massage unit. I like that, I'm hoping we put that up.

We remain on-pace with the projects that we've got going on as we speak. Can we complete it in the next couple of quarters, we remain at pace to be probably in the 75% range in terms of the penetration in our screens with the DreamLounger recliner seats. And again, as of the piece of the whole puzzle was we've talked about in the past, it's not just the seats, it's the -- we think we're the best in the business in the food and beverage, I think that was validated as well at CinemaCon [ph] when you see all the focus on food and beverage that was -- that we heard about in the Sun on the tradeshow; we've identified that earlier and we think we're the best at it. So I think that our penetration is higher than anybody else and as you already know our large format screen penetration, I think we've got 80 of them today with 69 theatres and I don't think anyone has got that level of penetration as well.

Okay. And to the point about the seats, given that there are a variety of seats, does this enable you to potentially use something less extreme in some smaller markets and receipt more than 75% ultimately? By now it's spending quite as much money per seat than some of the new initiatives.

I don't think -- I'm sure that there are out -- that those exist and we're seeing -- I think you're going to bump into two dynamics. We're seeing in some of these markets that when we do the re-seating, when you do it right you really can -- you can drive some of that but you will extend your radius and your trade area because people will drive for good experience and I think about -- I go back to -- I think to pull out the -- pull the grandfather card out but I go back now three generations to reading about what my grandfather said about the first theatre which we still have to this day at Ripon, Wisconsin; the campus theatre in talking about how it was really important to really do it right and to spend the money and create something that was special, even in a small town in the middle of Wisconsin. And that strategy -- we worked through it and we'll continue to. So I think that thing you will see Jim as we move forward is that as we -- as we simply go through the natural cycle of refreshing theatres and we've always talked about how we're -- we're very disciplined about trying to make sure that we reinvest in our properties. Most likely we're going to be -- at some point you put new seats in and why wouldn't be putting the new recliners into the question, I'd be -- ask me because that's the theatre of tomorrow.

Okay, fair enough. And just one small -- or one thing on the hotel side; are any -- are the changes in mix with some of the new relationships you're developing, creating a potential impact to reduce any seasonality from the original Midwest focus?

So much of our cash flow comes from the owned hotels, I mean that after mammical [ph] proportion compared to what we get from our management contract, that really -- it does not…

Exactly. I mean the dollar range on these management contracts given the size that -- because we get a percentage of the revenues, [indiscernible] is not going to notice that so much; so as long as we have the current mix of our owned hotels, that seasonality we're going to have to live with.

But from a management perspective, the very good news from a supervisory perspective is if I need to go somewhere work -- it's actually more outlet [ph].

Exactly, there we go. Thanks very much. I appreciate it.

[Operator Instructions] Our next question comes from the line of Mike Hickey from The Benchmark Company. You may begin.

Obviously Q2 looks great on paper, huge franchise, I think it's pretty easily this sort of big number; I'm sort of curious -- I guess your view on spacing of films in the quarter and we sort of see that as an opportunity lost I guess when we think about the second half of the year and maybe just sort of the -- how you think about the pressure I guess on the consumer and [indiscernible] film sort of crawl over each other? I have a follow-up.

That is always a concern but you know, we've got a great picture in the first quarter in Black Panther; I mean it is a mix but again, we've got to see how these all turn out. I mean we're all -- I hope we're all right but let's see how everything plays out.

Okay, fair enough. I guess just thinking about maybe your medium term type growth opportunity; you know, your hotel business does sort to like steady state here, obviously low incremental upside with management contracts. Your theatre business has certainly been exceptionable but now it seems like you're kind of achieving a scale in terms of your amenity rollout. So just sort of wondering how you see your -- where you see I guess your medium opportunity for growth?

The first thing that would come to mind for me in the near-term is going to just be what we expect -- what we hope to see from our Marcus Wehrenberg theatres, Mike. When you think about those theatres, in 2017 job #1 was to absorb them operationally; we put our $5 Tuesday program in running [ph] way, few months later we put the loyalty program in, we introduced a lot of our operational policies and procedures but the capital really didn't go into the near the end of the year rather than latter half of the year and so I think that there is still -- I mean, if you're talking near-term, I think that's -- I think that 2018 is going to be the year -- not kind of what here that we really see some of the real benefits and what we try to do and how we try to add value to that existing change. So I certainly think that we still have some nice runway with those properties that we have a number of efforts on throughout the rest of the circuit as well in terms of things such as -- we've got a major focus, we've talked a lot about it in some of our meetings at Cinema [ph] this week. A very major focus on our sales effort, Rolando likes to use the word that we're hunters, that we don't just sit back and wait for the customers to come to us that we go out there and we're hunting customers rather seeking customers and taking some ownership of our business and one of the -- there is a lot of examples of that, lot of different things we do, I'll just touch on one of them which is our group sales effort; we have people who every morning -- wake up in the morning looking for groups, looking for opportunities to be able to bring people into our theaters and so -- I mean there is a -- so there is a number of efforts like that; those are things where we still think we have the ability to move the needle in the short-term, just on the existing stuff, never mind the capital.

If there is -- we always have other levers to pull. If there is -- we'll consistently -- as my remarks said, we're looking for opportunities, if anybody has anything ought to find me, I was joking with [indiscernible]. I was just talking, I never know that you've got something for sale, we don't know, but we're open to that. But it's not -- you know, we have other ways of -- we will look for other opportunities and if there are not opportunities then we'll return the capital to shareholders. It's a nice product to have as we talked about them.

Fair enough. I guess last one on opportunities to grow attendance. How you see the solid e-sports market potentially taking shape or form within the theatrical space by offering the space, I guess. It seems like at CinemaCon this year there were some pretty clever examples of how sort of combined e-Sports and theatre market together and drive attendance and excitement; maybe even the demographic perhaps that is not as strong and the theatre is -- maybe the degeneration [ph] -- I'm just sort of curious, you guys have always been pretty innovative and forward, you've experimented with the idea and if you do see it as a potential way to grow in the interim?

You know, I don't even know enough to answer the question, Mike. We have been looking at it because yes, you are right, we keep an eye on that stuff, we do keep an eye on it. My hope is that there is enough throughput or at off times that we can -- to make it make sense. It is interesting, anything -- anytime you could take something to throw it up on the big screen like that, it really does have -- it really has some great impact. And I checked outside -- few years ago I checked out the legal logins [ph] and -- so there is something there but we don't what it is yet.

Okay, thanks. Best of luck for the second quarter.

Thanks, Mike.

Thank you. And at this time, it appears there are no other questions. I'd like to turn the call back to Mr. Neis for any additional or closing comments.

We'd like to thank all of you once again for joining us today. Maybe we'll see some of you in less than two weeks at our upcoming annual meeting on Tuesday, May 8 at our new Bistroplex Cinema in Greendale, Wisconsin; and for those of you who can't attend we certainly will be webcasting the meeting once again, as well. Rest, we look forward to talking to you once again in July when we've released our fiscal 2018 second quarter results. And till then, thank you and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.