The Marcus Corporation (MCS) Q2 2021 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to the Marcus Corporation's Second Quarter Earnings Conference Call. My name is Cree, and I will be your operator for today at this time. [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.

Thank you. Good morning, everybody. Again, welcome to our Fiscal 2021 Second Quarter Conference Call. As usual, you know I need to begin by stating that we plan on making a number of forward-looking statements on our call today, all of which we intend to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act. Our forward-looking statements may generally be identified by our use of words such as we believe, anticipate, expect or words of similar import. Forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected, including, but not limited, to the adverse effects of the COVID-19 pandemic on our theater in 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 and the duration of the COVID-19 pandemic and related government restrictions and social distancing and level of customer demand following the relaxation of such requirements. Our forward-looking statements are based upon our assumptions, which are based only upon currently available information, including assumptions about our ability to manage difficulties associated with or related to the COVID-19 pandemic. The assumption that our theater closures, hotel closures and restaurant closures are not expected to be permanent or to reoccur. And our assumptions about the release of new movies and the temporary and long-term effects of the COVID-19 pandemic on our business. Listeners are cautioned not to place undue reliance on our forward-looking statements. And additional factors, risks and uncertainties, which could impact our ability to achieve our expectations identified in our forward-looking statements are included under the heading Forward-Looking Statements in the press release we issued this morning, announcing our fiscal 2021 second quarter results and in the Risk Factors section of our fiscal 2020 annual report on Form 10-K, which you can access on the SEC's website. And we'll also post our Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that behind us, let's begin this call. As usual, our format will be that I'll start with by spending a few minutes briefly sharing a few numbers from our quarter with you, and I'll also discuss our balance sheet and liquidity. I'll also then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we're seeing for the near-term and longer future. We'll then open the call up for questions. So you've seen the numbers, the recovery continues and maybe even at a little faster pace than projected. We're obviously comparing our results this quarter to a quarter where most of our properties were closed for the majority of the quarter last year. So as I go through some of these numbers, I will sometimes reference comparisons to prepandemic numbers in fiscal 2019 in order to help gain some added perspective. We did have a few nonrecurring items this quarter and last year, and all of which were detailed in a non-GAAP reconciliation that we included at the end of the press release. The small impairment charge we took this quarter is related entirely to certain surplus theater real estate that we are actively marketing for sale. As you probably know, in GAAP accounting you never write an asset up if you believe you may sell it for a gain. And we certainly have assets that fall into that category. But you're required to write an asset down if you believe you may sell it for a loss. The impairment charge we took this quarter comes from over a half dozen individual assets with none of the individual charges being particularly large. I think the lead story of the quarter comes from the non-GAAP adjusted EBITDA measure that we shared with you in the release, which adjusts for items like the impairment charge that is discussed and gives one look at how our businesses performed from a cash flow perspective. As I discuss adjusted EBITDA, I do want to refer you to the disclosures we provided in the press release regarding the use of this non-GAAP measure in evaluating our performance and its limitations. As you know, our negative EBITDA has been gradually improving each quarter since bottoming out during the second quarter last year at negative $30 million. We took a really big step forward during the second quarter this year, improving our negative adjusted EBITDA of over $17 million during the fiscal 2021 first quarter, improving from that number and coming in at just over $1 million of breaking even on this very important metric during the second quarter. Now breaking that number down even further, as our press release notes, I'm happy to tell you that our hotels and resorts division had positive adjusted EBITDA for the entire second quarter. And for the first time since the onset of the pandemic, both divisions and the company as a whole delivered positive adjusted EBITDA for the month of June, a huge milestone in our continued recovery from this terrible pandemic. Greg will go into a little more detail about these improvements in his remarks. Now getting back to the financial statements for just a second, there shouldn't have been anything particularly surprising about our numbers below operating income. As you'd expect, our interest expense increased during the second quarter and first half of the year due to increased borrowings and a higher average interest rate. It's very important to note, however, that our fiscal 2021 second quarter and first half interest expense included approximately $600,000 during the second quarter and $1.2 million during the first half of noncash amortization of debt issuance costs compared to only about $100,00 million to $150,000 of such costs during last year's comparable periods. Shifting gears away from the earnings statement for a moment. Our total cash capital expenditures during the first half of fiscal 2021 totaled approximately $6 million. Most of these dollars were spent on 2 projects, a theater renovation and a lobby renovation at our Grand Geneva Resort & Spa. We'll continue to keep capital expenditures relatively low in the near term, but we will be prepared to increase expenditures in subsequent quarters and certainly into 2022, assuming conditions continue to improve. So let me provide some brief financial comments on our operations for the second quarter and first half, beginning with theaters. We continue to experience increased per capita spending in our theaters. Our average admission price at our comparable theaters has now increased 7% during the first half of fiscal 2021 compared to last year. Our premium large-format screens continue to outperform compared to our regular screens, contributing to this overall increase in our average admission price. Meanwhile, our average concession in food and beverage revenues per person at our comparable theaters increased by 17.2% for the first half of the year. Shorter lines at the concession stands are emphasis that we're placing on encouraging guests to purchase concessions and food and beverage items ahead of time, either online or using our mobile app and possibly pent-up demand for just a general return to normal likely has contributed to our increased per capita revenues. Since most theaters in both our circuit and the industry as a whole were closed during the second quarter last year, we believe a comparison of our results to prepandemic results in fiscal 2019 may be the best way to compare our performance to the industry this quarter. When you compare our second quarter and first half admission revenues to fiscal 2019, we calculate that our admission revenues were down 70% during the second quarter and nearly 75% for the first half of fiscal 2021, both compared to 2019. Now according to data received from Comscore and compiled by us to evaluate our fiscal 2021 second quarter and first half results, United States box office results decreased 73.9% during the fiscal 2021 second quarter and 80% during our fiscal 2021 first half, both compared to U.S. box office receipts during fiscal 2019. As a result, we believe our admission revenues decline outperformed the industry average by approximately 4 percentage points during the quarter and approximately 5 percentage points during the first half of the year. Shifting to the hotels and resorts division, the same logic applies. Comparing our total revenue per available room or RevPAR to last year, when most of our hotels were closed for the majority of the second quarter, does not provide particularly meaningful numbers. We believe comparing the same metric to prepandemic levels in fiscal 2019 however does help provide perspective on the pace of the current recovery. Our RevPAR for our 7 comparable owned hotels decreased approximately 42% during the second quarter and 47% during the first half compared to the same period during fiscal 2019. Now these numbers exclude the Saint Kate which was closed for most of the first half of fiscal 2019. According to data received from Smith Travel Research for the fiscal 2021 and fiscal 2019 periods and compiled by us in order to compare our results, our hotels outperformed comparable upper upscale hotels throughout the United States during the second quarter and first half by approximately 4 and 8 percentage points respectively. The data also indicates that our hotels outperformed competitive hotels in our markets by approximately 7 and 8 points during the second quarter and first half, again compared to fiscal 2019 results. Breaking out those second quarter numbers for the 7 comparable hotels more specifically, our overall RevPAR decreased during the fiscal 2021 second quarter compared to fiscal 2019, again prepandemic, was due to an overall occupancy rate decrease of approximately 27 percentage points and an 11.8% decrease in our average daily rate, or ADR. Our average second quarter occupancy rate for our owned hotels was approximately 49%, with lighter midweek business partially offsetting quite strong weekend occupancies at most of our hotels. Finally, before I turn the call over to Greg, let me also briefly comment on our balance sheet and liquidity position. You may recall that we reported cash and revolving credit availability of approximately $213 million at the end of the first quarter, while thanks to continued strong cost controls at every level of our organization and improved operations, our cash and revolving credit availability was still an extremely strong $210 million at the end of our fiscal 2021 second quarter. We anticipate an income tax refund of approximately $24 million in the second half of the year, along with tax loss carryforwards that may be used in future periods. We also successfully monetized 2 life insurance assets early in our fiscal 2021 third quarter totaling over $18 million and anticipated sales proceeds from real estate sales in the upcoming quarters as well, further increasing our liquidity and strengthening our balance sheet. We have over $10 million of carrying value in assets currently under contract or letter of intent to sell later in 2021. Early in our third quarter we amended our revolving credit agreement and made an early payment on our term loan facility, reducing the balance of our short-term borrowings from approximately $84 million to $50 million and extending the maturity date of this remaining term loan facility to September of 2022. We also favorably tweaked our existing debt covenants all the way through fiscal 2022. Our confidence in our strong balance sheet and our significant liquidity allowed us to make this early payment on our term loan. Once again, our conservative long-term approach to our balance sheet continues to pay off. And we're confident that we're well-positioned to weather any remaining impacts of the pandemic and be in a position to come out the other side of this in really good shape. With that, I'll turn the call over to Greg.

Thanks, Doug. As you saw in the release and heard more about in Doug's remarks, our second quarter marks a continued emergence from the depth of the pandemic for the Marcus Corporation. We reached a milestone in our hotel division with positive adjusted EBITDA for the quarter. And while we don't normally highlight the results of any specific month, in June we reached another milestone with both our theater division and our company as a whole turning positive cash flow over the month. Contrast that with what we were a year ago at this time. We reported negative adjusted EBITDA of $30 million in the second quarter. We've come a long way. Now look, we're still reporting a loss for the quarter, and it will definitely still take some time to return to prepandemic levels. But what we're all looking for is progress. And there was a lot of progress to hang our hats on during our fiscal 2021 second quarter. As I said from the beginning, while the path to a full recovery might not be a straight line, and the pace of that recovery might be there faster or slower-than-expected at times, we believe in the long-term viability and strength of our businesses. This quarter was another step on that journey, and we're pleased to be sharing these results with you today. So let me start my remarks with our hotel division. Doug shared some of the numbers with you, including comparisons to our prepandemic fiscal 2019 numbers and the fact that the data indicates we once again significantly outperformed both the industry and our competitive sets this quarter. As you know, our hotels have consistently outperformed their markets in prior years as well. But the amount of outperformance in recent quarters has widened significantly. And while an overall occupancy rate of approximately 50% during the second quarter is certainly below where we were in 2019, I can honestly say that our performance in this division has surprised us to the positive each and every month so far this year. The leisure customer is out in force, and our team has done an outstanding job adapting to the temporary reduction in business and group travel, successfully filling our hotels on weekends. And with the advent of summer, our weekdays are doing much better as well. The outperformance is also a direct reflection on the quality of our hotels and resorts. Stated simply, we have always had some of the best properties in our respective markets, and it doesn't surprise us that they've outperformed during this period of recovery. We've highlighted the strong performance of the Grand Geneva Resort & Spa in prior calls, but that's not the only property currently exceeding expectations. As we noted in our release, not only did we report positive adjusted EBITDA in this division during the second quarter, but several of our properties also reported positive operating income. We certainly still have a ways to go with transient business and group business. But even there, we are encouraged by noticeable improvements in these 2 business segments as well. We continue to have a very strong wedding season. And we are experiencing increases in smaller group business as well. We also continue to have success booking major league baseball teams, and not surprisingly, the Milwaukee Bucks' playoff run to the NBA Championship was not only great for the city but also a nice boost for our Milwaukee hotel business in June and July. The next step is the gradual reopening of offices in our downtown markets, which would likely be accompanied by an easing and ultimately lifting of travel bans that so many businesses put in place during the pandemic. While this might be delayed slightly with the recent uptick in cases, that next step is coming. Our significantly improved second quarter numbers are also a direct result of the continued hard work of our entire hotel team. They continue to do a fantastic job of managing cost and providing the same superior service we are all -- we are known for, all in the midst of what most would agree is a very challenging labor market. Looking to future periods, our group room revenue bookings for the remainder of fiscal 2021 and into fiscal 2022, commonly referred to in the hotels and resorts industry as group pace, is currently running approximately 20% behind where we would historically be at this time in prior years. But that's quite an improvement from where we were earlier in the year as our booking activity continues to improve each week. Banquet and catering revenue pace for the remainder of fiscal 2021 and into fiscal 2022 is also running behind where it would typically be at this time in prior years, but not as much as group room revenues due in part to the strength of wedding bookings. It is our hope that as we get to the fall and mid-week leisure travel subsides as kids go back-to-school, we'll also be experiencing continued improvement in the various business segments. Overall, we generally expect our revenue trends to track or hopefully continue to exceed the overall industry trends for our segment of the industry, particularly in our respective markets. As I said in my opening comments, we know it will take a while for business travel to return to normal, but the speed with which overall travel has ramped up bodes well for the long-term future of our hotel business. Many of our assets don't depend solely on business travel. These are special assets that make our portfolio unique. Finally, let me end my remarks by congratulating our hotel team on the recently announced addition of a new management contract, the Coralville Hotel and Conference Center, soon to be a Hyatt Regency and located near the University of Iowa. It's a great addition to our portfolio. With 2 other hotels in the big 10 cities of Madison, Wisconsin and Lincoln, Nebraska, we think we're a great fit for this property. And we look forward to a long, prosperous relationship with the city of Coralville. So let's shift to our theater division. Doug went over the numbers with you. We started the quarter off with 74% of our theaters open as we waited for more new films to be released. By the time we got to Memorial Day weekend and the release of Quiet Place Part II and Cruella, we had reopened most of our remaining theaters. As we noted in our release, we currently have 97% of our theaters open again, almost all of which are operating 7 days a week with normal operating hours. Like our hotel division, one of the highlights of the quarter was our continued outperformance versus the industry. As Doug shared with you, based on industry data available to us, we believe we've outperformed the industry throughout fiscal 2021. And week in and week out we believe we've been one of the top-performing theater circuits in the U.S. compared to the top 10 circuits that we track on a regular basis. Additional data received and compiled by us from Comscore indicates our admission revenues during the second quarter and first half of fiscal 2021 represented approximately 3.4% and 3.7%, respectively of the total admission revenues in the U.S. during the same 2 periods. This is commonly referred to as market share in our industry. This represents a material increase over our reported market share of approximately 3.2% during the comparable periods of fiscal 2019 prior to the pandemic. A great job all around by the team. I mentioned earlier that we were looking for continued progress in both of our businesses. So here are another couple of numbers for you. In January of this year, our total theater division revenues were only 16% of our theater division revenues in January of 2019, prior to the pandemic. While clearly we still have a ways to go in June of this year, thanks to increased attendance and increases in our average admission price and average concession revenues per person, our total theater division revenues have increased to 48% of our theater revenues of June 2019. That's progress. And we've seen that percentage continue to gradually increase in the early weeks of July as well. That doesn't mean we aren't still facing some challenges in the near term. Recent surveys by the National Association of Theater Owners have indicated that the percentage of those surveyed saying they're very or somewhat comfortable going to the movies right now has been hovering in the 70-plus percent range in recent weeks, with likely concerns over the Delta variant and new masking recommendations in some markets dropping that percentage down several points in recent weeks. But the same percentage was about 47% at the beginning of the year. So again, taking a step back in the big picture, progress. The fact that we're not completely out of this yet as a country has also contributed to continued experimentation on the part of the studios and different distribution strategies. The studios have clearly chosen to use this unique time to develop their streaming services, which frankly is likely more of a challenge for their linear TV in the long run than exhibition. We recognize that it's hard to interpret the various box office numbers being reported. While we're still not back to normal. It's hard for you and it's hard for us. But let's step back and take stock of a few of the things that we do know. There has never ever been a permanent pandemic. It won't always be like this. We as human beings are social creatures. We have an inherent desire to interact with others, be together, get out of the house. You've heard me quote my grandfather numerous times. "There's a kitchen in every house, but people still go out to eat." Going to the movies remains one of the cheapest forms of out-of-home entertainment. Linear TV and streaming are relatively substitutable. Going to a movie theater is not. There's a completely different experience from your home. And the people who make these films, the producers, directors, actors have continued to express their agreement with that basic principle. Just yesterday, David Zaslav, soon to be CEO of Discovery, said the following, and I quote, "The motion picture business is not going away. It is the top of the patina. It is why the greatest writers, producers and creative talent came. When you look up at that big screen, that is where stars are made and where the magic happens." And finally, theatrical exhibition still represents an extremely important component of the financial model of a film and its distribution. Theatrical exhibition gives a film gravitas that can't be achieved with a tile on a TV screen. Theatrical exhibition spurs millions of people to collectively seek a shared experience in any given weekend, creating that water cooler moment on Monday that every content provider seeks. Theatrical exhibition creates franchises like nothing else can, and most importantly, theatrical exhibition takes money for the studios. My point is that our focus on our theater division continues to be on managing to the short-term challenges, all while keeping our eye on the long term. And we believe in the long-term prospects of this business. This remarkably resilient business has navigated and adapted to change for the entire 85 years we've been in it. And I'm confident that we will continue to adapt and thrive in the months and years ahead. And speaking of the months ahead, there are a lot of potentially very good movies scheduled to be released during the remaining months of fiscal 2021. We listed a number of them in our press release. And the list of films scheduled for 2022 reads like a who's who of successful film franchises. So I'll wrap this up exactly where I started. We're pleased with the significant improvements we reported today in our theater business. And we're looking forward to continued progress in the periods ahead. And I can't end my prepared remarks without saying once again that I continue to be thankful for our experienced and dedicated associates throughout our organization. Thinking back to where we were a year ago at this time, it's incredible what this amazing team has accomplished. I couldn't be more proud. With that, at this time, Doug and I would be happy to open the call up for any questions you may have.

[Operator Instructions] Your first question comes from Mike Hickey with Benchmark Company.

Congrats on the quarter guys. Awesome. Yes. Just a couple of questions from me. On the hotel side, great to see the positive EBITDA in looks like June of the company. That's really a remarkable moment. Any opportunity for us to sort of give us some color on July or maybe 3Q in terms of what we should expect on the EBITDA level, Doug?

Well, I certainly would expect it to be positive again, Mike. I mean we don't provide guidance. We don't provide numbers. But given that we are positive in the second quarter, Mike, and given how strong July is, and here I'm not telling anything out of school here. I mean, the fact is that, as Greg referenced, with the Milwaukee Bucks doing as well as they did, it was a huge boost to the city. It was great for our hotels. The -- I'm not going to share numbers, but the percentage of our -- we shared with you that we -- where we were kind of compared to 2019. Well, that number certainly has improved more in July. I mean, we've had a good July. We really have. Again, we're not back to 2019 levels yet because we don't have the business travel, but it's been quite strong. So look, I certainly think that the wildcard is going to be when we get to the fall, right, because the leisure travel is so strong right now. We have going for us. So we do have -- knock on wood here, if everything goes well with the Ryder Cup and that proceeds as planned right now. We do have that in September. But as the kids go back to school, like we mentioned in our prepared remarks, we're going to see certainly that midweek travel back off again. And we're going to be looking for and hoping that we're going to continue to see momentum in some of the just general business travel. So that will be the wildcard as we get into the later -- the second half or the final quarter of the year, if you will.

The -- obviously a lot of discussion on Disney's approach to windowing, starting, I guess, with Black Widow when they gave some visibility to the data on the VOD side of Disney+. Just sort of curious what you're seeing in theater, if you think it's sort of impacting attendance, whether it's first or second week and sort of your view on, I guess, the longevity of their approach, if you think they'll sustain as we sort of think about '22.

Yes, there's so much noise. Look, first of all, I'll start off with -- we're pleased that they're releasing these good movies and that they're driving the tenants and driving people back to the theaters and getting -- building habit again and getting people to see trailers and the like. I'd tell you the most heartening thing in a way is that the -- I think the numbers that I find really the heartening is that we're almost doing what we're doing with an arm tied behind our back. And when I say that, when we talk about confidence and people being confident, it's not spread equally across the spectrum. We're seeing really more confidence with the younger mail cohort. And so if you think about the fact that the -- that there's less confidence in other cohorts, the numbers we're doing, you could say, okay, well, look at, let's start with where we said pandemic isn't going to last forever. And then the -- and the -- and then the -- and eventually the confidence will return to be more broad-based and we will then -- then you're going to have even sort of a, let's say, a bigger pool to swim in, in which case then the issue for Disney and for any exhibitor really, not specifically Disney, I'm sorry, distributor is going to be, okay, do I want to run the risk of diluting my theatrical performance. I think it's important to remember that people always -- they talk about content as sort of like it's generic, like it's a screwdriver. So if I don't sell the screw driver to the guy who shows up on Thursday to buy the screw driver than my competitor is going to. If you want to see -- let's not pick something current, you want to see Star Wars when it's in a theater. If it's not directly released the same day, the consumer can still choose to see it a few months later on PVOD, ultimately on streaming. This idea of compressing the revenue streams into one, I -- and you've seen it with a lot of the studios where they're saying we're going to have a window. We talked about -- most everybody has already declared, it's a shorter window, but it's still a 45-day window. And I'll tell you, I do agree with -- Bob Chapek made a comment actually. He's like in the way the times have changed and 45 days to the younger people today is like an eon. They can't wait 45 days for anything. And boy, can I tell you that's true just sort of seeing what I see amongst the young people I'm around. The world is an on-demand world now in a lot of ways, right? You want a car, you pick up Uber. You want your food, you go to DoorDash. And so they don't have to -- patience is much shorter. But then also, again, it's still a unique product, and you choose to release that product. Nobody else can release Star Wars, only Disney can release Star Wars. So when they choose to make it available to the customer, is when is -- will be when the customer can see it. And they don't want to obviously take it too long, but I think that, again, at the end of the day, they want to maximize their revenue streams at the end of the day. Right now I think that everybody is looking at this short term, let's get as many subscribers as we can, we'll be valued on a subscriber basis. You'll be valued in a per subscriber basis for a window. Let's quote Warren Buffett. "In the short run, the stock market is a voting machine. In the long run, it's a weighing machine." And they're going to vote for subscribers. But in the long run those subscribers need to be profitable. And the guy with the most profits or the team of the most profits will win. And the way you're going to drive the most profits is driving the most revenues. Consolidating revenue streams into nothing or just to one doesn't really seem to make a lot of sense. And I think at the end of the day most of the groups realize that. And that's what gives us a long-run perspective that this is ultimately going to make sense and work out. But we're going to have to live through these times right now. That's sort of a long-winded answer. But I think at the end of the day we're looking at things very short-term day-to-day, and we need to try and take a longer-term perspective on what makes most sense for the whole system.

Your next question is from Eric Wold with B. Riley Securities.

I guess, I can't remember which one of you mentioned, I mean, you noted that the box office market share gains you saw, I think it you, Greg, versus prior levels. I'm just sure you've looked around your existing theaters that have reopened. Can you give us a sense of what you're seeing in terms of the competitive set in terms of if there's been any market changes in theaters that have closed? Clearly if they've not opened by now, they're probably not going to open. Has that been -- has there been a reasonable number of those in your areas?

Not -- there's not a lot of that in our markets, Eric. I mean, that's why I think the numbers are kind of real and pretty clean because -- first of all, as you know, I mean, it's -- in some ways it's difficult for us to gain market share because we are so strong in our markets, right, I mean -- so it's -- but yet we still have done it overall just because of the nature of our markets, the nature of just, I think, people coming back to the theaters quicker in our markets. We have the best theaters. And I think we provided some of the best value and some of the best -- as you know, we have the highest percentage of everything in terms of recliner seats and large-format screens and food and beverage. So I don't think it's -- as we look at it, I don't think it's a function of theaters for the most part not opening. It's just that we're performing well. Yes. I think it goes back to -- I'll build on that too and say, first of all, yes, you want to invest in a theater business, there's probably no better -- most improved circuit, the nicest car you can buy is ours because we just made such investments in the business over the last number of years, we're very disciplined about doing that. The team was really strong in making sure we did that. So as people get exposed to that, who might have gone somewhere else, we get some of that. In the markets we do have some competition. I'll tell you, the one thing that's helpful, this was our decision, as we've talked about historically, we made the decision when things were really, really rough. We want them to be open where we could be open. We're -- where the decision was, can we at least perform a little better than being closed, if we're open. That doesn't mean we hit a home run performance. But doing so allowed people who -- this was the only place they could go in some instances. And then also good for your teams, and we wanted to keep people employed. And I've seen this in other businesses that were involved and not necessarily in this public company, but the -- if you let your teams go, it's hard to bring them back. And so I think that was -- that's an advantage for us. Again, we'll always -- will we always have this advantage, maybe not totally, but I think that we get to keep some of it.

Perfect. And then maybe talk about what you're seeing around labor availability, cost headwinds, both at the theater and the hotel division. Are the issues comparable between your two? Or kind of where are you seeing the most pressures? And what are you doing to kind of offset that?

We are -- we're seeing the challenges that everybody is seeing. Again, I think you can -- staying open for us was an advantage because it helped us with our teams. But we're reacting where appropriate. The -- whether we -- just making -- doing our best to keep the teams staffed where we can. And I also -- I want to be careful to make long-term judgments on this because I sort of have this theory, and we'll see it play out whether it's right or not. I mean, look, we know there's going to be pressures in the labor markets. I think that nobody is expecting it to be -- go away permanently. But I think there's a couple of short-term dynamics that we want to wait to see how they play out. And that is -- one is going to be what happens as the supplemental unemployment goes away, especially for -- at some of the -- some of our jobs where they're at the lower end of the pay scales, those become very comparable numbers. Also, I do think there's this -- this is a complete guess. I have no idea if I'm right about this. But I think there's this sort of, hey, you know what, the last year has really been tough. I'm on summer vacation. And I'm really going to wait until the end of the summer to really get back to it if I can do that. And so once that gets past us let's see what things look like.

Okay. That makes sense. And then last question, Doug, I know you're not showing your guidance around '22, typically, and I know it's early. But if we assume everything kind of gets back to normal for the most part into early next year, how much of the lack of CapEx this year would need to be made up next year, I guess, is -- if I think about both maintenance -- normal maintenance CapEx and things have been deferred as well as growth CapEx projects?

Well, look, yes, look, I mean, us spending only $6 million in the first half of the year is pretty unusual. And I certainly see that number going up in 2022. We've got a couple of -- as we've shared previously, we have a couple of big hotel projects that we really want to get at. And we -- the Grand Geneva, we did the immediate guest-facing lobby and got that done in time for the summer here, but we've got more work to do there. And we've got -- we did some things in the room, so we have a bigger project ahead of us there. And so I definitely -- we're not ready to put a number out there yet for that -- for 2022. But it's -- but I mean, I think we're going to get back up into the tens of millions in terms of -- and certainly, my -- our credit agreement allows us to spend much more than that. But I don't see us bumping up against that number, but I do see it going up. The advantage, and Greg just alluded to it, that we have is on the theater side. We spent all that money in the prior 6 years. And so do we have some projects that we want to get at on the theater side? Sure. We've got some maintenance capital, and we have some things that we want to get at. But we have state-of-the-art theaters. And so it -- and every time we went and did the recliner seats and the food and beverage, et cetera, we didn't just do that. We also then renovated the theater itself, proper. And so our theaters look great. And so we have that really going for us in terms of our overall dollar planning for next year.

Your next question is from Jim Goss from Barrington Research.

I've got a few also. First, in hotels, similar to Carville, is -- are you finding any greater receptivity to your interest in management deals? And how many such deals do you feel you need to sign in order to create a meaningful contribution to your results?

I know the team is out working on looking at different deals. And I think we thought there'd be more -- typically, the deals start to come up when there's transactions, but the transaction market is still sort of slow. So until there's more transactions I think that's not going to be -- not have a huge amount of activity, but there'll be continued progress in it. And I think that it's meaningful -- it's meaningful. Look, adding capital is meaningful. It's also meaningful from the standpoint of just growth in the team and feeling that, again, going back to that word progress, that we're making progress and that new stuff is coming our way and that people value our intellectual capital. I don't know if you can put a price on that, but it's really good for our people because it reflects well on -- it's one thing for me to say you're doing great because I think they all -- I think they've done fantastic, and it's a great team. It's another for someone to come out and validate that and send us some money at the same time. So I think there's a value there.

Okay. And Doug, I might ask, you mentioned the early payment on your term loan. I was wondering about the potential to improve your capital structure further in your interest expense levels. I'm wondering what would be needed to position yourselves for argument for better positioning? For example, what are you -- what are the agencies pointing to in terms of factors you can control?

I'm not sure if I completely understand the question, Jim. So the agencies, are you talking about like credit agencies?

The credit rating agencies, I think.

So we don't have a…

They usually have some requirements that they like.

Yes. So here is the thing, is that we don't have public debt, Jim. So we don't have any official ratings on our debt. We do have some private senior notes. And so those are kind of separately rated in a different format just for those senior note holders. And the only thing I'll tell you about that is that the basis of that has always been the underlying assets of the company. I mean, again, so we talk about -- and it's just kind of -- we kind of take it for granted, but it's not -- we shouldn't take it for granted. We have such a substantial balance sheet with real assets with our hotels and our theater real estate. And so the private agency that does take a look at our senior notes, they hang their hat on that. And that's -- sometimes we don't bring that up enough in terms of the substantial assets that we have underlying our balance sheet. So I don't have a -- there isn't something specific beyond that in terms of any ratings agencies in terms of what they're looking for that would improve our position. We -- for us, we've got this great -- we've got a really good credit agreement that we signed. We re-upped for 5 years in January of 2020. So we're solid there. We've built in provisions that when we -- when the pandemic hit, and we bought -- and we took on the term loan facility, and we had to waive some covenants, but we built in provisions in the agreement that gets us back to where we were. So that when -- so ultimately, when the term loan is repaid, and we're back fully repaid. We've already repaid some of it. But when it's fully repaid and we get back to our old covenants, then the collateral goes away and our investment-grade pricing comes back and we move on right back where we were before. So we've already kind of built-in the provisions to deal with that.

Okay. One other thing on the theatrical side. You're talking about the -- some of the key variables like slate windows and all of that sort of thing that there's a push and pull in where the numbers count. And I wonder about the dollars lost from the piracy that might be a very important variable. And as you look down the road, do you think that might have a potential to pull things back from the studio side? But are we sort of doomed to look at levels below $11 billion on a total domestic box office that we've become used to as a fait accompli. And what -- if that were the case, do you feel comfortable that cost cuts can get your profitability back to the levels you've been able to achieve at the higher box office levels?

Well, Jim, it's really -- I'm glad you brought up that point because the piracy is an issue. They all know it's an issue. When a movie opened in the theaters, it -- the best they could get was a grainy copy. Somebody was sitting there with a camera in a theater. And it's a pristine copy when it's -- it's coming out on digital right away. And so that -- I know the studios are concerned about that issue. And so going to add to the list of things. Again, as I was saying, this world that you want to control your IP. The IP is unique. We got to remember that. I was making that comment about time -- people not being patient. Because if Uber said I'm not going to show up for a while, you're going to call Lyft. But again if Star Wars said I'm not going to show up for a while, if you want to see Star Wars, there's really nowhere else to go. So it's a -- it is a -- the piracy issue is really, really important because if you want to watch Star Wars that's been pirated, well, you can do that. So you have to be very -- I think that's something that they want to be sensitive to. Where will we get back to? I don't know because, as you know, we talked about, one of the dynamics that's happening is as windows decline, there's other people who've said I'm interested in being in theatrical. We've tested a Netflix. We played Army of the Dead. And then it showed up as #1 on Netflix right after it opened. Talk about -- I mean I go back to what is the theatrical advantage, one that we don't talk about is this -- and I mean every day it gets worse. It's so confusing to figure out how to watch stuff. Almost anything you -- anyone you talk to it's like, it's hard to understand what is playing, how to see it, where to see it. When it's in a theater, it's very -- there just aren't a lot. Aren't a lot of choices because you highlight something with that level of importance, and people are going to want to take advantage of that, I think. And so where do we -- it's hard to predict where we're going to come back. Could it be more? Could it be -- going to be less? Will we work to them be more profitable? Will we play other kinds of content? We will. And we have these buildings that are built to accommodate groups of people who want to be together to watch content, whatever that might be. And there are great ways. Just watching a movie is not the only thing you can do on a movie screen that looks fantastic and is enveloping. Where you don't have your cell phone out the whole time, and you're really paying attention to it. So it's -- I don't know how to predict where we're going to end up. But I'm confident that we'll get there.

Your next question is from Ryan Hamilton with Morgan Dempsey Capital.

I know I'm kind of at the back of the line, so most of my questions have already been answered. You guys used to touch quite a bit on $5 Tuesdays being such a driver for attendance. Can you touch on that and maybe see how that's being impacted by this turnaround?

It continues to be an important part of our business, Ryan, it really does. I mean we -- today's Wednesday, yesterday was Tuesday, and we had a very strong Tuesday yesterday. I mean, the Jungle Cruise was the top film that was playing. And it continues to be an important component of our outperformance and market share gains.

Sounds good. Kind of along those lines, you've always been kind of creative in finding new ways, original ways to get people to come to the theater. You've been doing single screen rentals. Can you kind of touch on that and maybe how that's impacting business and if that's something you may continue going forward, long term?

I think what you're probably referring to, Ryan, is the Marcus Private Cinema. And we talked quite a bit about that in our last call. And so thank you for bringing that up. Actually, it was really critical to our success and our relative success compared to others in the first quarter. Obviously not as significant in our overall mix in the second quarter. As we started getting new films and as vaccines were rolled out and people -- the comfort level of people going to theaters increased we intentionally dedicated less auditoriums or screens to that program because we could put more people into them often by just selling them the traditional way. Having said that, we are still doing Marcus Private Cinema. There's still a place for that. It's -- we've talked about in the past, and Greg just kind of alluded to it, too. I mean, we've got this fixed building, and we have 7 days a week and quite a few hours per day to fill. And so there are -- we believe there will continue to be opportunities to this program and doing other things in order to potentially kind of fill in times that maybe wouldn't be as busy otherwise. And so we don't have a formal -- I mean, it's too early to say what the long-term plan is in terms of are there certain days? Are we going to have it every 7 days a week or certain days or certain times when we might do the Marcus Private Cinema? We're going to have to kind of just play that out as time goes on. We do think there's going to be a continued place for it.

Yes. I know you guys have always been creative with the [Elektra] series and whatnot. So I mean, I think that’s great. That’s all I have for now, but congrats on the turnaround and good luck going forward.

[Operator Instructions] And there are no questions.

Sounds like – yes, sounds like we’re all set here. So thank you, operator. Thank you, everybody, for joining us again today. We look forward to talking to you once again in about 3 months when we release our fiscal 2021 third quarter results. Until then, thank you, and have a great day.

That concludes today's call. You may disconnect your line at this time.