The Marcus Corporation (MCS) Q3 2018 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to the Marcus Corporation Third Quarter Earnings Conference Call. My name is Mark, 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, Executive Vice President, Chief Financial Officer and Treasurer 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.

Well, thanks very much. And welcome everybody to our fiscal 2018 third quarter conference call. As usual, you know, I need to begin by stating that we planning making a number of forward-looking statements on our call today. Our forward-looking statements could include, 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 and resorts division, our 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. Expectations and plans regarding growth and numbers 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 could be obtained from the SEC or the company. We'll also post all Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that, let's talk about our record fiscal 2018 third quarter and first three quarters. It's great to lead with our hotels and resorts division this quarter as the third quarter is typically one of our strongest periods and they not only didn't disappoint, they posted some great record results this quarter. Our theater division reported record revenues once again, and had yet another very profitable quarter. Thus operating income was impacted by several one-time costs and a film mix that contributed to higher film costs this quarter. I'm going to take you through some of the details behind the numbers both on a consolidated basis for each division, and then turn the call over to Greg for his comments. Now, before I dig in these divisions, I'll spend just a couple minutes on a couple of the line items below operating income. You'll note that our investment income was up slightly this quarter, and our interest expense was slightly lower than last year due to reduced overall borrowings, despite a higher average interest rate during the quarter. But other than that, the rest of the line items below operating income really were virtually unchanged from last year. Of course the most significant change in our line items below operating income was income taxes due to the new tax law. Our first three quarters effective income tax rate adjusted for losses from non-controlling interest was 21.5%, significantly lower than last year's 37.8% for the first three quarters of the year. As you know, we've indicated that we generally expect our effective income tax rate to be in the 25% to 26% range, and that's still remains our expected rate over the long-term. Having said that, during our fiscal 2018 third quarter, in addition to our new lower base rate, we also benefited from several onetime items related to various deductions that also favorably impacted our report results. Now, shifting gears away from the earnings statement for a moment, our total capital expenditures during the first three quarters of fiscal 2018 totaled approximately $45 million compared to approximately $87 million last year. Approximately $37 million of our total spend during the first three quarter was incurred in our theater division, the majority of which related to our continuing DreamLounger seating projects, premium large format conversions and new food and beverage outlets that we've been discussing for some time now. The $8 million of capital expenditures on our hotels and resorts division were primarily related to various normal maintenance projects. Clearly, our capital spending is declining from our very high numbers from last year, as the number of theater projects have lessened. Depending upon the timing of payments on several projects at year end, we would currently estimate that our total capital expenditures for fiscal 2018 will likely end up in the $55 million to $65 million range. The actual timing of various projects currently underway of proposal will certainly impact our final capital expenditure number as well any currently identified projects or acquisitions that could develop during the final couple months of our fiscal year. Now, I would like to provide some financial comments on our operations for the third quarter and first three quarters. And as part of these comments, I'm going to remind you of some of the accounting changes in our fiscal 2018 financial statements that are important to note as you compare some of the line items for last year. It’s important to point out, however, that while some of the changes resulted in noticeable variation in specific line items, none of these changes had a material impact on overall operating income or net earnings. Let’s begin with theaters. Our reported box office revenues increased 4.3%, and our concession revenues increased 6.6% during the third quarter and have increased 11% and 13%, respectively year-to-date. The fiscal '18 year-to-date numbers did include the two new theaters that we opened during the second and third quarters last year as well as an accounting change that negatively impacted box office revenues and favorably impacted concession revenues. Now just as a quick reminder, as a result of the adopting the new accounting standard related to revenue recognition during the first quarter, our accounting for our loyalty programs and our Internet fee revenues has changed. In accordance to the new guidance, the portion of the theaters admissions and concession revenues attributable to loyalty points earned by customers is now deferred as a reduction of these revenues until rewarded redemption. Prior to adopting this new standard, we reported independent -- or we reported estimated incremental cost of redeeming loyalty points at the time they were earned in advertising and marketing expense. As a result, during the third quarter and first three quarters of fiscal 2018, while the net effect to these changes in accounting, it was very close to net zero on our operating income. As I mentioned, it did result in a decrease in theater admission revenues, an increase in theater concession revenues and a decrease in advertising and marketing expense. Now what does become important is when we attempted to compare our theater results for the rest of the industry. The data we received from Rentrak, a national box office reporting service for the theater industry, represents gross box office receipts reported to it. And so by definition, it would be before any such deferral of revenues for accounting purposes that we or any other exhibitors to that matter might record. Thus, we need to add back the impact of this revenue recognition accounting change to our reported admission revenues in order to get numbers that we can then compare to the rest of the industry. So according to data received from Rentrak, and compiled by us to evaluate our fiscal 2018 third and first three quarters, United States' box office receipts increased 6.9% during the fiscal 2018 third quarter. After adjusting for the deferred revenue from our loyalty program, our third quarter box office receipts increased 5.5% compared to last year. As a result, we believe our box office receipts during the third quarter of fiscal 2018 slightly underperformed the industry in this quarter. Greg is going to dissect the third quarter performance versus the industry in even greater detail during his prepared remarks as we do believe that there were some unusual circumstances that contributed to this rare overall underperformance for the quarter. Performing at same calculation for our fiscal 2018 first three quarters, however, shows that our fiscal 2018 continues to be another strong year of outperformance for us. As we find that the U.S. box office receipts have increased 10% during our comparable 39 weeks, meaning that our increase in box office receipts of 12.5%, after we adjust for that accounting change outperformed the industry by 2.5 percentage points, year-to-date. We still outperform the industry average overall during 16 of the last 19 quarters. Now the second quarter theater increase in our box office revenues was attributable to an approximately 3% increase in attendance at our theaters, and an increase in our average admission price of 1.3%. For the first three quarters of fiscal 2018, theater attendance at comparable theaters has increased approximately 6%, and our average ticket price has increased 4.6% compared to last year. A modest price increase taken in October last year and an increased number of premium large format or PLF screens with the corresponding price premium contributed to our increased average price during the fiscal 2018 period. Conversely, we do believe that a change in film product mix had an unfavorable impact on our average ticket price during the third quarter of fiscal 2018 compared to that third quarter last year. Our top films during the third quarter of fiscal 2018 was the PG-rated family movie Incredibles 2, which results in a higher percentage of lower price children tickets sold. Compared to our top film during the third quarter of fiscal 2017, which was the R-rated film It, which resulted in a higher percentage of higher price adult tickets sold. So we had a clear mix change that impacted that average ticket price this quarter. We're pleased to report an increase in our average concession in food and beverage revenues per person of 3.5% for the third quarter and 6.3% year-to-date. Our investments in nontraditional food and beverage outlets continue to contribute to higher per capita spending. But having said that, we believe that the same change and film product mix that I just discussed during the third quarter likely reduce the growth of our overall average concession sales per person during the fiscal 2018 period. As those family oriented films such as the top film during third quarter described 10s and not contributed the sales of nontraditional food and beverage items as much as adult oriented films. I'd also point out that theater other revenues increased by approximately $600,000 during the third quarter, an increase by approximately $4.3 million during the first three quarters of the year. And while a portion of these increases are due to increased pre-show ancillary revenues, a larger portion of the increase was related to the accounting change for internet ticket fees that I referenced earlier. Prior to the new revenue recognition standard, we recorded these fees net of third-party commissions or service fees, and then, under the new guidance that we adopted in the first quarter, we're recognizing ticket fee revenues based on the gross transaction price. This change had the effect of increasing other revenues and increasing other operating expenses by an equal amount. They had no impact and operating income or net earnings. That's enough for the numbers for now. I'll let Greg talk to some of the items that impacted operating income this quarter for the theaters. Shifting over to our hotels and resorts division, excluding cost reimbursements, our overall hotel revenues were up 4.3% from the third quarter, and are now up 2.7% for the first three quarters of fiscal 2018. Thanks to increases across the board, in room revenues, food and beverage revenues, and other revenues. The largest portion of the increase in food and beverage revenues related, particularly on the year-to-date numbers, is due to the opening of the new SafeHouse in Chicago, in March last year, and the largest portion of the increase in other revenues is due to an increase in management fees. Room revenues were up due to an increase in our revenue per available room, or RevPAR, of 5.2% during the third quarter, and now we're up 1.3% year-to-date compared to last year's periods. As we've noted in the past our RevPAR performance did vary by market and type of property. Breaking out on our numbers more specifically, our fiscal 2018 third quarter RevPAR increase was due to an overall occupancy rate increase of 2.1 percentage points, and a 2.5% increase in our average daily rate for ADR. Our fiscal 2018 first three quarters, RevPAR increase was entirely due to a 1.2% increase in ADR, as our overall occupancy rate is even with last year. All eight of our company-owned properties reported increased RevPAR during the fiscal 2018 third quarter compared to the third quarter of 2017. And four of our eight company-owned properties reported increased RevPAR for the first three quarters of the year compared to last year. Our quarterly data received from Smith Travel Research and compiled by us in order to compare our third quarter and first three quarter results, comparable upper upscale hotels throughout the United States experienced an increase in RevPAR of 2.1% during our fiscal 2018 third quarter. Meaning that we outperformed the industry during the fiscal 2018 third quarter. Finally, I'm pleased to tell you that as a result of the increase in management fees and improved performance at our own hotels, hotel division operating income and operating margin increased significantly during the third quarter and first three quarters of fiscal 2018 compared to the same period last year. With that, I'll turn the call over to Greg.

Thanks, Doug. I'll begin my remarks today with our theater division. It was an interesting, and I would even say unusual quarter for this division. On the one hand, we reported another record quarter for revenues, and we saw a nice recovery in July and August box office performance versus last year. Of course, we also knew we will be going up against the very unusual September last year, thanks to the breakout blockbuster again. And, as expected, this year's box office in September couldn't match that. Doug shared with you that we slightly underperformed this quarter, which is the U.S. box office. So that was certainly unusual as well. There were a number of factors that we believe contributed to our small overall industry under performance this quarter, despite the fact that, once again, our markets [indiscernible] figures outperformed the industry at times by a pretty wide margin. To begin with, we believe that the film mix during the third quarter of fiscal 2018 compared to the third quarter of fiscal 2017 likely had a negative impact on our comparative performance versus the overall industry numbers, particularly during August and September. One of the top films during those two months, Crazy Rich Asians, performed extremely well on the East and West Coast, but generally underperformed in our Midwestern markets. Conversely, our theaters do very well with the horror genre, and we definitely outperformed last year on it, making the September comparison even more difficult for us. And then, finally, the fact that the Major League Baseball Season three of our key markets Milwaukee, Chicago and St. Louis, were competing for the play offs during the final months of their season, September 2018, likely had a negative impact on our attendance compared to industry as a whole. All those sound like excuses but they're not meant to be. They're just a reality of the circumstances we dealt with this quarter. Last quarter the film mix was perfect for us so as the weather. This quarter we had a couple of headwinds to deal with, let's so be it. Those things can even out overtime and our outstanding year-to-date results reflect that. The same thing holds through as we shift to our operating income performance this quarter with some unusual things happened there as well. For example, we had two onetime items. The larger than normal insurance claim this year and a large film cost adjustment last year that accounted for nearly $900,000 of our operating income differential this quarter versus last year. In addition to the onetime film costs adjustment last year, film costs also increased this year during the third quarter due to unusual [indiscernible] again mix of films compared to last year. The top films of our fiscal 2018 third quarter, Incredibles 2 and Jurassic World: Fallen Kingdom, were summer blockbuster films. And film costs expressed as a percentage of admission revenue to generally greater for summer blockbuster films. As we just talked about, our top film during the third quarter of fiscal 2017, was less expensive September film, resulted in an unusual almost apples and oranges comparison this year. Again, that meant to be excuses just a way it was this quarter. When you consider that we have increased fixed costs such as depreciation, and to a lesser extent, labor, due to the investments we've made in new food and beverage amenities we've added, it makes it more difficult to overcome when unusual things happened like they did this quarter. Last quarter I talked about the fact that there is a lot of leveraging on our operating margin due to relatively large fixed cost component to our operating structure. Well, leverage we spoke weighs in this quarter worked against us just as a little bit. I share all this because this is our third quarter earnings call and you want to know what went on this quarter. But as you know, our perspective is much greater than any one quarter. You may even recall that I shared that same perspective three months ago after our incredible second quarter. And we step back and look at our fiscal 2018 year-to-date results with one quarter to go, we’re extremely happy with Rolando Rodriguez and his outstanding team have taken us so far. Record revenues are up over 12% from last year, and we are once again outperformed in the industry. Record operating income is up over 13%, and we’ve increased our overall operating margin even with all the significant investments we’ve made in the business. As we look ahead, we’re excited to continue to invest in both new and existing theaters during fiscal 2018 as we further expand the successful concepts and amenities that have contributed to our industry outperformance. We also continued to be very interested in expanding our circuit with selective acquisitions if appropriate opportunities arise. We’ll always take disciplined in our approach. But we also believe that we are demonstrating currently how we can add value to theaters and would welcome the right chance to bring our secret sauce to more theaters in the future. Even though baseball impacted attendants at our Milwaukee theaters in the early weeks of October, I think, it was pretty well known that the fourth quarter box office has started very strong. Thanks for some of the films noted in our release. Our press release highlighted some of the films scheduled for release during the remaining two months of the fourth quarter. We are hoping to build these and cushion heading into December as we fully expect comparisons in December to be more difficult without a Star Wars picture this year. One of the great things about the movie business, however, is that there’s always the possibility of one or more surprises. So we’re always optimistic. In fact, we’re starting to see some of the films scheduled for release in November and December. And so far, they look very good. And of course, you’ve probably heard about the early buzz in the 2019 films slate is very positive. Regardless, you can count on one thing for sure, we will be prepared for whatever happens unusual or not. With that, let’s move on to other division, hotels and resorts. You’ve seen the segment numbers, and Doug gave you some additional detail. It was a great quarter for this division with the record revenues and operating income. I’m very proud of our entire hotel management team from our sales team that help drive those record revenues to our operating team that did an absolutely outstanding job of converting those increased revenues to the bottom-line. You can do the math. Excluding class reimbursements, we were able to convert nearly 90% of our increased revenues into increased operating income. As a tremendous low fee percentage, that is the result of a lot of hard work by many, many associates. Dough shared some of the numbers with you. RevPAR was up over 5%. It is often the case with our hotels. We rise and fall with group business. And this was a very good quarter for that segment of our customer base. Harley Davidson’s 115th Anniversary Celebration in Milwaukee certainly helped. And as we noted in our press release, the very thing that likely has some negative impact in our theater business baseball appears to have some positive impact on our hotel business. Look into future periods, our group room revenue bookings for the remaining period in fiscal 2018, something commonly referred to in the hotels and resorts industry as group pace, is currently running slightly ahead of our group room revenue bookings for the remaining period last year at this time. The same holds true for our 2019 group pace, which is also currently running ahead of where we were last year at this time for 2018. And since playoff baseball came to Milwaukee this year, our total business at our hotels have certainly benefited as well. The benefits of having complimentary businesses I guess. From a growth perspective, as you know, 2018 has been a good year so far with the addition of three new management contracts, and we saw some of the benefit of those new contracts, and the new properties added in late 2017 show up in our increased other revenues this quarter. We continue to actively review opportunities to add to our portfolio of managed hotels in the coming year. We also continue to seek opportunities where we might invest equity and new hotel opportunities as well. And finally, reinvesting in our existing hotels will always be an important part of our success as well. We're about to begin a significantly reinvestment in our management hotel as we head into the slower season, and we're actively preparing for our 2019 conversion of InterContinental Milwaukee Hotel into an exciting new independent, immersive arts-focused hotel. The big reveal of the new name will be in November, and we're very excited about what lies ahead for this hotel. Before we open the call for questions, I want to, once again, thank all our hardworking associates both in the field in our corporate office that works so hard every single day, making ordinary days extraordinary for our guests. It's very easy to spend all of our time talking about movies, group business, investments, et cetera and forget about the people who make it all happen. Without whom we would not be reporting the record results we have so far this year. Thank you to each and every one of you. With that, at this time, Doug and I will be happy to open the call up for any questions you may have.

Thank you. [Operator Instructions] And we'll go first to Jim Goss of Barrington Research. Your line is now open.

I was wondering in the absence of M&A deals that you might be able to close, is there any new build potential in any of your existing markets where you might extend your franchise? Or is it conceivable to start a new market from the scratch maybe one that somewhat contiguous that might offer some opportunity? Is that even an option? Is this?

Jim, look, it's Doug. Yes. The answer to your question is yes. But it's not a huge number. I mean, the world is -- does not need a ton of new movie screens, I think, we know that. The -- but that even brought me to say that it doesn't have necessarily be in a contiguous market. That's a great thing. But frankly we look at opportunities throughout the country. We believe this -- we've operated businesses for many years throughout the country. And at one time, when we had, they not -- we were in 28 states. So we're comfortable with operating at a distance. And we -- I know this, we look at other opportunities. But I think it's not a -- it's an opportunity, but it maybe with a small or giant at all.

Okay. And to the extent that the, now, Marcus Wehrenberg properties are pretty much up to speed. I'm wondering if you are detecting any differences. And between those properties in St. Louis, somewhat bigger market versus some of the other markets that aside from maybe Milwaukee and Chicago, don't quite match those characteristics in terms of reception to films or any other of those areas you've talked about is differentiating factors?

No. Actually, we think this is actually performed pretty much sort of -- it's performing like a Midwestern market. It performs -- the film we tend to see tend to perform relatively similarly. I suspect if there was a Cardinals documentary might perform better there if it does here. But …

Perhaps.

But beyond that, no, it's -- again, similar decisions, same impact, baseball impacted similarly. One advantage that we have in St. Louis is -- unfortunately for St. Louis, there is no football there anymore. And so that's something we always thought appear with [indiscernible] But the St. Louis doesn't have that. So we saw that as one of the benefits actually we went to the deal.

Okay. And is -- to the extent that you are in some of the markets that might be competitive with, say AMC, perhaps in Chicago or wherever else, that are introducing these loyalty programs. Are you seeing any competitive impact against those loyalty programs, or the subscription programs, I should say?

We have not seen that yet. But -- and our feeling on this just to -- for anyone that has that question to submit that, is that subscription is an interesting phenomenon. It is a phenomenon in the country. And we as it true as always we're always looking forward. And the question is really what will subscription look like? I don't know necessarily if AMC knows what it's ultimately going to look like. This is where they came out of the box, but they even admittedly said, well, we don’t -- this is our initial -- our opening AMC. But we watch those markets very closely. We're not really seeing much impact. But I would tell you that it probably also -- as it relates to that, it's probably more impactful on the coasts; because the price of the ticket is so much higher, and that was the same thing that seems to happen that movie pass. On the coasts, we think that there was a much larger impact than in our markets. But all that being said, we are looking forward and saying what is subscription going to look like. And we're talking to our studio partners and saying, we need to experiment and trying to figure what that model does look like. And I could sit here for an hour and give you 19 different variations of what a subscription model might look like, maybe not as across the board broad is all you can need any movie you want to see anytime, but you could imagine lots of different flavors of that. And we want to be upfront of that and be thinking about what will be the successful model. I'm not sure that is yet. I don't think anybody is proven it out yet.

Okay. One last one on net. Does the internet intercontinental relationship lapse or do you terminate that relationship in order to move on to the next variation?

We would end of the contract.

Thank you. [Operator Instructions] Our next question comes from the line of Brian Rafn with Morgan Dempsey Capital Management. Your line is now open.

Hey, when you coming up -- you talked a little bit about the movie slate for the holidays. When you have Dr. Seuss' The Grinch; and The Nutcracker and the Four Realms, and I'm thinking in the past that L for The Polar Express, do those China movies in the holiday season -- are they maybe not blockbusters like a Star Wars, but does that help the movie slate?

Oh, absolutely. And look, those are typical November pictures. If you get go back over the years and look at the slate that seems to be the time period that they like to release kind of pictures you're describing. And I think, their thought process, I mean I can’t give their answers that they’re getting people ready for the season. And I think they’re hoping that they have some good legs as well that takes them beyond Thanksgiving and into the holiday season. And so those typically perform well. I mean they still got deliver the goods, right, when we still have the good. But those types of films typically do well.

Okay. Now if you guys -- you’re kind of developing your second BistroPlex at Brookfield Square. Is that a concept guys be it geography demographic, psychographic or whatever, that can be rollout across your circuit? Or their unique characteristics in your whole market Milwaukee that might prevent that?

Brian, the concept of the enhanced food and beverage is really one that's proliferating throughout the industry. Now I will tell you that we are among the leaders in that, and it’s been really interesting to see that. But so the idea of dine-in theater, those exists around the country. That is not just unique to our markets. So the answer to your question is yes, that’s got application throughout the country. But I will tell you that if you think about what’s been going on in our theaters, just what we call a traditional theater. With our enhanced food and beverage, the line between a dine-in theater and a traditional theater is blowing at least in our circuit. And we’re testing lots of new ways to deliver the food, blowing that line even further. Because we believe that in order to have that competitive advantage over, we believe our true complication, which is somebody's couch. We have to give people a reason to get off the couch. And our team has been great at that. Rondo and that team has done a phenomenal job of getting people to move off the couch, but that’s from making investments in recliners and PLS, and enhanced food and beverage. So BistroPlex is an extension of that, but it’s not midterm market.

Yes. I don’t know, I think your food is still the best in the country. But I debate this front that. Let me ask you from the standpoint, with the Brookfield Square One, I think, it was deal serious property, I think, General Woods, at the end of the second world, he ended up buying all the real estate under a lot of his serious thought. Were you guys able to acquire that real estate? Or is that part of the larger Brookfield Square ownership?

In this particular transaction, we will be leasing the real estate.

Got you. Okay. You mentioned two, a lot of times with movies like having more children’s pictures or more adult pictures of better food and beverage. With Incredibles 3 the Transylvania picture, do you see any little pickup in candy and consensus and that type of thing for, especially the summer part more younger children’s pictures then versus the loss on the food and beverage?

So you’re right. I mean that, and historically, if we go in our time machine and go back five years, that’s what we’ve been talking about. We’ve been talking about the fact that pictures like Incredibles 2 and these family pictures, was helpful for our concession business. And then that still is the case. But now that the enhanced food and beverages sites a large, obviously, higher prices in general, and higher average ticket for some of the enhanced food and beverage. So that’s a larger part of our mix. That’s why we’re now highlighting that. It’s an interesting dynamic where we kind of -- they’re actually kind of competitive competition with each other where when the film mix goes more towards adult's type stuff. We see probably a quicker or higher increase on our average concessions per person; I use the word concessions broadly. Because of that enhanced food and beverage, and just the opposite when we now have the kids and family pictures, we see a nice increase, we do well at the concession stand, but we just don't do as well at the -- having not a lot of kids are at the bar.

They actually define ways for anybody -- because a win-win for that right. Now it's historically, it's great to get into the higher -- to get the higher margin concession that aims the kids, historically, it was. But now, we're actually -- but when it's not a kid movie to sell higher margin beverages. And so we see a little bit of trade off, obviously, with depending on the movie mix.

Yes, I got you. Another, one more kind of a strategic more of a macro questions, with Jim talked about maybe new builds contiguous. If you looked at all of the technology in a new multiplex that you have today, the ultra screens, the dream loungers, the stadium seating, all of your vast array of real sizzle and pay five lounges, what kind of - if you went backstage 15 years, 20 years ago versus say today, how much is the incremental construction cost up? And I know you don't have a hard figure but. Might it be 30% more expensive today to build a 12 auditorium multiplex than maybe it was 20 years ago, and you take out, certainly inflation for materials in that, but just with the tremendous technology that you have today?

I look at, obviously, construction costs are higher today than they were then, but there's -- and there is certainly been tradeoffs that we've made. We don't build as many screens as we used to build. So the complexes are as large as they were 20 years ago, we are building much larger complexes. But we also, and we don't need to build as high as stadiums that actually advantageous to have a lower stadium build in a -- with recliners just because of the screen angle -- because of the angle. So I don't have those numbers up.

Yes, I know, I just kind of kick. And now just ask one more. With the St. Louis market Wehrenberg, is there a possibility of doing a flagship down there like majestic or do they have something similar that? Or is that flagship construction that you have that would be another one on Sun Prairie? Is that kind of episodic theater mix?

We actually -- we have one Ronnies, which is in St. Louis.

Okay.

Is a -- is what we consider in this flagship there.

Okay. Thanks guys.

[Indiscernible]

Okay. Thank you.

Thanks, Brian.

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.

Well, thanks everybody for joining us. I really appreciate it. We look forward to talking to you once again in February when we release our fiscal 2018 fourth quarter and year-end results. Until then, thank you and have a great day.

That concludes today's call. You may now disconnect at any time.