Good morning, everyone and welcome to The Marcus Corporation Fourth Quarter Earnings Conference Call. My name is Chach, and I'll 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 the conference. [Operator Instructions] As a reminder, this conference is being recorded. Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of the Marcus Corporation. At this time, I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead sir.

Thank you, and good morning, everyone. Welcome to our fiscal 2023 fourth quarter conference call. I need to begin by stating that we plan to make 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. Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected. Listeners are cautioned not to place undue reliance on our forward-looking statements. The 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 2023 fourth quarter results and in the Risk Factors section of our fiscal 2022 Annual Report on Form 10-K, which you can access on the SEC's website. We will also post all Regulation G disclosures when applicable on our website at marcuscorp.com. The forward-looking statements made during this conference call are only made as of the date of the conference call and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, we routinely post news releases and other information regarding developments at our company that impact our investors, customers, vendors and other stakeholders. You should look to our website marcuscorp.com as an important source of information regarding our company. We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP measure used in evaluating our performance and its limitations. A reconciliation…

Thanks, Chad and good morning everyone. I'd like to start today, by reflecting on fiscal 2023. We started the year with an expectation that both businesses will continue on their trend of growth with theaters continuing to recover with an increase in film supply and hotels continuing to grow occupancy. We had a plan for the year that focused on improving the guest experience, mitigating labor inflation through improving labor productivity and efficiency and controlling our costs across the company. Excuse me. As I look at our performance during fiscal 2023, the year came together pretty close to our expectations. And I'm pleased with our results, and how we managed our businesses. Not everything played out exactly as we expected. Some things didn't work as well as we expected, and some things surprised to the positive. Through it all our team adjusted to changing conditions, flexed when we needed to and remained focused on delivering great experiences to our guests. We ended the year with very good results. And we're in a position of strength the balance sheet that supports our focus on investing in our future growth. The fourth quarter and fiscal year that we're reporting today completes a year of significant progress. And we're pleased to be sharing these results with you. I'll start with our hotel division. Chad covered the highlights of another solid quarter, so I will focus my comments on the year overall looking ahead. After a record year for the division in 2022, we entered the year knowing, that the pace of growth was going to moderate as we transitioned, from the pandemic recovery to a normalized level of business. We also knew that following the divestiture of The Skirvin Hilton our reported division results will be negatively impacted. As we reflect on the…

Thank you. [Operator Instructions] Our first question today comes from Eric Wold from B. Riley Securities. Please go ahead.

Thank you and good morning, everybody. So a couple of questions. I guess one, you know you talked about the Milwaukee convention center expansion and kind of the group pace you're seeing this year kind of with and without the RNC then into next year. Can you maybe dive into the those kind of figures a little bit more in terms of kind of what rates you may be seeing versus last year and kind of how -- I guess more broadly how you expect the expansion you mentioned to kind of boost kind of occupancy and RevPAR maybe in the region overall in the coming years?

Well, Chad I think looking up for some specific data to try and help give you some color on that, Eric. But overall, it should be beneficial to the overall market. That's the whole point of the convention center. The convention center actually was designed -- just to give a little color on what they did is -- we have a very tight -- we have a limited season here at Milwaukee. It isn't beautiful 12 months a year. It's getting better though this winter. But -- so one of the challenges that we had with the convention center was its size and it basically could handle one convention at a time. Now -- and what would happen is, there's that setup and takedown period that happens when you bring in a new convention. And during that time, the convention center, you can't use the convention center, which – look, the reason we build a convention center is to provide an economic benefit to the entire community whether it's through selling hotel rooms and the room tax and all of that generates and the economic activity that generates or car rental or ride-sharing usage or retail or restaurants, all of the things that a convention center brings. It's the generator. It's not the entity itself. But the problem was it doesn't generate when it's in setup or take down. So when they built the center, when they made the decision to expand the center, the idea -- look, obviously, we can handle bigger conventions and the RNC is an example, of that. But what should be -- what we're aiming to have happen with it is that you can back to back conventions. And so -- and that -- and we certainly, have room in our hotel supply especially, on the west side of our town, to handle more customers. And that -- and that should be -- the benefit of having the convention center being able to handle back-to-back conventions, to just help the existing supply of hotels get better. And that should drive over time higher rates and better occupancy.

And so Eric, let me take the part on [indiscernible] sorry Eric, let me just take a part on the -- on your question on the impact of the RNC. When you look at the third quarter, I'm not going to get into the specific impact of what the sell-out for the week means in terms of, the rate that that's going to be at. But in terms of the uplift to the quarter for the portfolio overall, you should think about this as like an 8% to 10% RevPAR uplift for the division in the quarter. And there's a lot of other things that happened in that quarter. It's our peak season. It's our biggest quarter of the year. So, there could be other puts and takes. But when we just look at what the RNC could mean that's sort of how we think about it. Q – Eric Wold: That helps. Maybe to just rephrase my broader question, a little bit differently. Obviously, the -- they can handle now 2 times the number of the conventions. I'm not going to make the assumption that the number of conventions in town doubled. But let's say, take a number, let's say the number of conventions that the Milwaukee hosts goes up by 50% annually, because of this. If you were to get what you normally get as your share of bookings and room rates and food and beverage from the convention business and that goes up by 50% as you maintain your share of that increased convention business annually going forward, what could that be into kind of annual revenues and EBITDA because of that? A – Greg Marcus: I don't know, that we have that number. I don't think, it's that robust though. Even if that were to happen, because remember it is our busiest season and we still have -- it will displace some business. It will drive some occupancy, but it will also displace some business at higher rates, but that's not a straight 50% add-on. So I don't know off -- top of my head, what we're projecting at the convention center for -- what it will mean. We can’t find that data.

Yes. And I'd just say Eric, in terms of how they're booking events into the center, the building is going to open in May. And some of the event planners are going to want to see it done. And so, the impact is probably more of a late 2025 into 2026 type of -- hitting the new run rate. And so we'll have -- I think have a better sense of what the feedback is from event planners, as they get through the first summer here, with the center opened and then we can start to quantify what that impact could mean to us. A – Greg Marcus: And even on top of that like for example, there's a -- right after the RNC, there's a conference of event planners coming here, to see the new convention center. They have their annual conference and they go check out whatever that I guess the shiniest, newest thing is. And they're coming here. And so, that's when they're going to be able to evaluate, our convention center, our hotel product, the whole market. But remember, these things are planned out years in advance. So, this is -- you got to have sort of a really long-term perspective on this. It's great for the long term, but its good to build on. Q – Eric Wold: Okay. And -- just two more quick questions. I guess one on -- just quick on the theater side. I know you closed a number of theaters last year. Is there anything -- I know if you can only come for valuation, but is there anything you can think of that's -- this year that's likely to be closed or exited?

Yes, I don't know -- we did quite a bit of pruning last year, as we look at underperforming theaters. And as we look at lease maturities this year, nothing significant Eric, if its one or two maybe but right now nothing currently planned Q – Eric Wold: Okay. And then – lastly -- with the Loews Minneapolis agreement, I guess one, how robust is the pipeline right now for additional deals maybe relative to how it was a year or two ago? And then, would you put that $2 million to $5 million investment kind of towards the lower end or the higher end of, what you would consider for future deals? A – Greg Marcus: The pipeline is better than it was a year ago. It's not like -- we're not -- it's not going crazy because the market is still -- it's still been somewhat -- with the financing markets, it's still somewhat tough to get transactions done and get buyers and sellers to come together. I read today that the housing market, that now the homeowners are starting to understand what the value is and so the transactions are happening there, so maybe that will happen in the hotel market. But there are transactions happening and so we have, and we've got more we've and we're seeing better flow. As for the dollar amount it's probably, I was thinking about, it's probably in the range, remember we have two partners on this deal, so we're only really picking up a third of the equity overall and we'll take some limited partners even on our end as well. And so it's probably somewhere, it's probably somewhere in that range even going forward.

Yeah, I'd say it's pretty average. You could see us do deals in this structure in that $5 million to $10 million range, depending upon how big the asset is and how many other folks we have in the deal. But this is, we'd like to do more of these with this structure. Q – Eric Wold: Got it. Thank you both. Appreciate it.

Thanks, Eric.

[Operator Instructions] The next question on the line is from Jim Goss from Barrington Research.

All right. Thank you. I'd like to pursue a little more on what Eric was just raising. I know you always are rethinking for business mix and in recent years, you've taken this light approach to hotels, but it does reduce the relative impact of the hotel space on your business mix. Now, this might be a little bit more than some of the other equity stakes you've taken in some of the hotels, but I wonder if you could just talk more broadly about what you think the mix should be given how hotels have acted recently for you relative to some of the issues you've had in the theatrical side.

Jim, I don't think that we have a set mix at this point. It's going to be sort of what, where do we see the best opportunities for our capital? And right now we're seeing opportunities on the hotel side. To the extent that theater opportunities pop up, we're looking at them as well, and it's just sort of, I can't sit here and say, well, we've got X percent figured for each one right now, the best opportunity looks to be on the hotel side, but we'll see what happens with theaters and I don't know what's going to happen with that mix. Neither of our, for us, we want to grow our businesses always, but neither of them really has at our, has big scale benefit. We don't see huge scale impacts, because whether theaters, the scale really comes from marketing big national movies, which the studios are doing, and from hotels, it's the big, generally the national marketing elements of the big hotel companies, and so it's not that, that doesn't mean we have to say, okay, we've got to get to a certain scale size. We just want to keep growing them, creating opportunities for our associates, creating opportunities for investment.

Okay. And the, I don't know if I recall you saying it was a, basically a third each for three partners, so this does seem like a little step up in the equity that you've taken relative to some other recent transactions, so that's of interest. Also, IMAX on its call was talking about a greater number of domestic opportunities for IMAX locations, and I know your, your focus is on your own PLF brands, but I wonder if you have any appetite in any of your areas for additional IMAX involvement, and also, is there a likelihood you would try to continue to pursue the multiple PLF brand option that you have in a number of your locations?

Look, it all comes down to what the deal looks like. Right, as of now the deal hasn't, you can imagine, IMAX has our phone number. They know how to find us, and we've talked, of course, we've talked to them for years, but when we sit down and do the math, it makes more sense to continue with our Ultra Screens and Super Screens, which have performed beautifully, and I would tell you, I think I've talked before, but historically, probably the first PLF in the history of the business came from us many, many years ago. And with the first UltraScreen which that theater doesn't even exist anymore. I think how long ago that is. And but -- it's a numbers question, Jim and we just -- right now we like ours.

The only thing I'd add to that Jim is -- and we've talked about it a little bit during the year is the operational flexibility that we get from our UltraScreens in terms of scheduling and content and flexibility to what we're showing. It allows us to be really nimble, particularly in locations where we have multiple PLFs. And we are looking at for 2024 a few opportunities to add some PLFs to the existing circuit and conversion. So, not huge numbers, but we did some of that in 2023 and we're looking at a few more.

But I would also tell you Jim, our PLF percentage I think is amongst the highest in the industry. In terms of attendance, PLF -- relative attendance, PLF is very high in ours.

All right. And one final one. You and others have talked about some additional alternative content popping up here and there. And I know you've been very creative in say creating a discount day. I think you were one of the early ones in doing that sort of thing, maybe the first. Do you have any similar thoughts to create some habit toward alternative content, maybe target? I'm not even sure what I have in mind exactly, whether it be a certain genre movie or something like that on another weekday, day or something like that to maybe take advantage of the opportunity and the data you're able to exploit with your loyalty program to create an event that might make more out of the day than it would have been otherwise as you did with the discount day in movies?

Well, I don't -- Jim that's -- I would tell you that, I like your thinking. And I don't have anything to tell you right this minute specifically, but trust -- but you hit on all the exact points, right? And we talk about how we're going to -- how we will continue to build with alternative content. And it is -- you're absolutely right. Our loyalty program is hugely important so that we can -- because as I just talked about a minute ago, at a national level, the scale is really important from the studio side, right, because they really need to be able to -- look no matter, how good an alternative content get that's still going to be the huge piece of our business. But our last customers are our most profitable. To the extent that we can build up our alternative content business, the ability to reach and talk and know who our customers are is of paramount importance and we are stressing that inside the business. And then, the idea of, could you create a day's, I'm not sure if it's a date, but the underlying importance is this idea of our business is one of momentum and no matter what it is, the more you come the more you want to see. And so figuring out how to develop more frequency in an alternative content environment is extremely important as well. So you are on to the important stuff. It's still R&D. We are working on things like that. A perfect example is Passport. Our Passport program is how do we sort of eventize and create something special around a bundle of alternative content? Harry Potter was unbelievably successful. And that really in a way was alternative content, because it's repertory content at this point. And we've got our Oscar Passport that an alternative content right this minute, some of it could almost be. But it's how do we do things like that and know our customers better. And that's where it does become important to have -- to leverage our loyalty program. So you're right on.

All right. Well, thank you very much. Appreciate it.

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

Thank you, operator. We'd like to thank everyone for joining us today for our business update. We look forward to talking with you again in early May, when we release our first quarter results. Until then, thank you and have a great day.

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