Marcus (MCS) Q2 FY26 earnings call: guidance and Q&A

Are you seeing a broader return of younger moviegoers, and how did 'Obsession' and 'Backrooms' perform in your markets compared to nationally?

Management confirmed a positive trend of younger demographics returning to theaters, noting it's not new but highlighted by recent successes. They expect Hollywood to produce more films targeting this demographic. 'Obsession' performed in line with normal share, while 'Backrooms' significantly outperformed normal market share in Marcus's circuits.

“We're seeing really positive signs out of the younger demographic. They really, Obsessions in Backrooms has highlighted it, but it's not new. We, for the last year or so, been noting that that customer has been coming back at levels that we haven't that are really you know like back to back to old times in a way.”

asked by Michael Hickey · answered by Gregory S. Marcus

Is 52% incremental EBITDA flow-through for theaters a good framework for future box office growth?

CFO Chad Paris stated that historically, incremental dollars fall through to EBITDA at about 50% in the theater business. The current quarter was slightly above that due to additional operating leverage from higher attendance. He noted that this can fluctuate by a few points quarter-to-quarter.

“I always think of it as the incremental dollar falls through in that business to EBITDA at about 50 percent in a quarter.”

asked by Michael Hickey · answered by Chad Paris

What are you seeing in terms of advance demand for the upcoming 'Spider-Man' film?

Management reported very positive pre-sales and a high review score for 'Spider-Man Brand New Day'. They also highlighted the operational advantage of their multiple PLF screens, allowing them to optimize showtimes for both 'Spider-Man' and 'The Odyssey' to maximize demand.

“I heard about, yes, it's very positive, and even better. Again, the thing that I like the most is I was looking at the review score, and it's very high.”

asked by Michael Hickey · answered by Gregory S. Marcus

Can you provide an update on your overall market share in the theater segment, especially since the pandemic?

Management stated their market share in their specific markets has been good, normalizing somewhat from immediate post-pandemic highs but remaining strong. They've optimized their store footprint, exiting some locations that didn't contribute to the bottom line. They expect low single-digit inflationary growth in admission revenue per cap, but no meaningful changes in market share from additional pricing actions.

“Yes, I mean, our market share in our markets, has been good. We were immediately coming out of the pandemic. We were quite a bit ahead. And we've seen some normalization of that over time, but still quite strong.”

asked by Patrick Scholl · answered by Chad Paris

Has the long recovery from the pandemic rationalized lease structures, making a broader pool of M&A targets available?

Management noted that onerous lease structures can be challenging for acquisitions, as the high operating leverage business requires critical mass of attendance. It's a location-by-location analysis. They focus on quality markets, growth profiles, and locations for M&A in both businesses, and are disciplined in their investments, noting that growth is desired but not imperative.

“It's a high operating leverage business, and so you need a critical mass of attendance to make buildings work. And with attendance where it is today relative to pre-pandemic, in some locations that's certainly more challenging.”

asked by Patrick Scholl · answered by Chad Paris

Given the strong Q2 RevPAR, has your annual outlook changed from the more modest expectations at the start of the year?

Management's view for the full year remains unchanged, expecting industry growth in the low single digits, with Marcus's assets having an opportunity to outperform. They noted that visibility is short, and performance can be lumpy week-to-week. While 80% of group business is booked, the last dollars are very profitable and dependent on economic conditions.

“I don't think we see really a change in the view for the full year. Our guide was industry growth, low single digits. And I think that's still where our view is with some opportunity for our assets to outperform their markets because of the investments that we've made in the quality of the assets.”

asked by Drew Crum · answered by Chad Paris

Has the industry seen any lift from efforts to extend theatrical windows, and specifically your circuit in Q2/early Q3?

Management believes extending windows benefits both exhibitors and distributors by allowing for multiple sales and maximizing content revenue. They noted it's too early to see the full impact of recent window extensions, as it takes time to retrain customer expectations. They highlighted that older, more patient audiences would particularly benefit from longer windows.

“It's tough to tell or see this early on, you know, they see that coming through the results. Just like when, as the windows shorten, it it didn't all hit overnight. I think it is going to take some time and a year or longer to retrain customers on how long it will be before product is in the home and recondition customers.”

asked by Drew Crum · answered by Chad Paris