Title

Presentation

The Marcus Corporation beats earnings expectations. Reported EPS is $0.73, expectations were $0.46.

Operator: Good morning, everyone, and welcome to The Marcus Corporation Third Quarter Earnings Conference Call. My name is Lydia, and I’ll be your operator today. [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.

Chad Paris: Thank you, operator, and good morning, everyone. Welcome to our fiscal 2024 third 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 2024 third quarter results and in the Risk Factors section of our fiscal 2023 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 this 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 at 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 of adjusted EBITDA to the nearest GAAP measure is provided in today’s release. All right. With that behind us, let’s begin. This morning, I’ll start by spending a few minutes sharing the results from our third quarter and discuss our balance sheet, liquidity and recent financing transactions. I’ll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we are seeing ahead for the remainder of the year.

We’ll then open up the call for questions. Our highlights this quarter include strong operating performance, the completion of the retirement of our convertible debt and the return of capital to shareholders through share repurchases. I’ll start with our operating results. This morning, we reported a record third quarter that exceeded our expectations. with both divisions contributing to our strong results. Last quarter, we noted that we believed we had turned a corner with improving theatrical content supply that began in June, and we entered the third quarter with strong momentum in July. Theatres’ strong start to the quarter continued deep into the summer with a string of great box office performances that played well in our markets and delivered year-over-year growth in August and September.

Our hotel division’s Milwaukee properties benefited from the Republican National Convention, which drove strong revenue growth and profitability for the quarter. Both of our businesses outperformed their industries to deliver record revenue, operating income and adjusted EBITDA for our fiscal third quarter, resulting in total company third quarter records for the same measures as well as record net earnings. This is the first quarter that our theatre division and the total company has exceeded pre-pandemic revenue and profitability, marking a major milestone in the extended industry recovery. I’ll start with a few highlights from our consolidated results for the third quarter fiscal 2024. We generated consolidated revenues of $233 million, an over 11% increase with revenue growth in both divisions.

We delivered $32.8 million of consolidated operating income and $52.3 million of adjusted EBITDA. Below operating income, we incurred $1.4 million of debt conversion expense associated with the repurchase of $13.5 million of our convertible senior notes that we announced at the end of the quarter. I’ll recap the economics of our convert repurchases and this quarter’s financing transactions in a moment. But in terms of the impact on our results, the repurchases and related noncash tax effect resulted in a combined negative impact to net earnings of $1.5 million or $0.05 per share in the third quarter and $16.5 million or $0.52 per share for the first 3 quarters of fiscal 2024. The unusual accounting for this transaction mirrors our prior repurchases last quarter and further details on the repurchases and related capped call unwinds are described in today’s earnings release.

Excluding the impacts of the convertible debt repurchases, net earnings for the third quarter of fiscal 2024 was $24.8 million or $0.78 per share. Turning to our segment results. I’ll start with the record results in Theatres. Our third quarter fiscal 2024 total revenue of $143.8 million increased 13.6% compared to the prior year third quarter. While we had planned for the second half of the year to be significantly stronger than the first half, we also expected the third quarter to be a challenging comparison given the box office success of Barbie and Oppenheimer during the third quarter last year. A strong slate of blockbuster films that featured a film mix that was favorable to our markets brought huge audiences out to our Theatres and drove our outperformance for the quarter.

Comparable theatre admission revenue increased 9.5% over the third quarter of 2023, with comparable theatre attendance increasing 7.1%. According to data received from Comscore and compiled by us to evaluate our third quarter results using our comparable fiscal weeks, United States box office receipts increased 3.8% during our fiscal 2024 third quarter compared to U.S. box office receipts during our fiscal 2023 third quarter, indicating that our theatres outperformed the industry by approximately 5.7 percentage points. We believe that our box office outperformance during the third quarter was primarily attributable to a favorable film mix compared with the third quarter of fiscal 2023. We achieved our — above our historical average market share for each of our top 6 movies in the quarter, which were Deadpool & Wolverine, Despicable Me 4, Twisters, Beetlejuice Beetlejuice, Inside Out 2, and It Ends With Us. In addition to the favorable film mix, we believe several changes that we made earlier in the year to Value Tuesday with the return of free popcorn and our new $7 Everyday Matinee promotion positively impacted our improvement in performance in the quarter.

Our average admission price increased by 2.6% during the third quarter of fiscal 2024 compared to last year. The increase in our admission per caps was positively impacted by an increase in the percentage of PLF and evening ticket sales during the third quarter of 2024 compared to the third quarter last year, which offset the impact of various pricing promotions during the quarter that were used to drive attendance. Concession, food and beverage revenues were up nearly 14% with per capita concession, food and beverage revenues increasing by 7.9% during the third quarter of fiscal ’24 compared to last year’s third quarter. The increase was primarily due to pricing changes implemented during 2023 and by an increase in the number of concession, food and beverage transactions per ticket sold or our hit rate.

Our top 10 films in the quarter represented approximately 83% of the box office in the third quarter of ’24 compared to 73% for the top 10 films in the third quarter last year. The more concentrated film slate resulted in an over 2 percentage point increase in overall film cost as a percentage of admission revenues. On the higher revenues, theatre division adjusted EBITDA was a third quarter record $33.2 million, an increase of 24.3% compared to the prior year quarter. Adjusted EBITDA margin during the third quarter of fiscal 2024 was 23.1%, which was not only 200 basis points higher than our third quarter margins last year, it was also higher than our 22.3% adjusted EBITDA margin in the third quarter of 2019. This quarter demonstrates that despite cost inflation over the last several years, we can get back to our old margins and profitability when the film product is consistently there driving box office, even with 22% less attendance than the third quarter of 2019.

Turning to our Hotels & Resorts division. Revenues were $88.7 million for the third quarter of fiscal 2024, an increase of 8.1% compared to the prior year. Total revenue before cost reimbursements increased over $6.9 million or 9.6% over the third quarter of fiscal ’23. RevPAR for our comparable owned hotels grew 9.8% during the third quarter compared to the prior year, growing at 4 of our 7 owned hotels. RevPAR increase resulted from an average daily rate or ADR that was up 9.6% over the prior year with an overall occupancy rate that was essentially flat. Our average occupancy rate for our owned hotels was 76.7% during the third quarter of fiscal 2024. The Republican National Convention held in July significantly impacted the results at our 3 Milwaukee hotels, resulting in an approximately $3 million increase in revenue during the 5 days of the convention.

The RNC primarily had the effect of increasing average daily rates with limited impact on occupancy during our normally peak summer period. Excluding the impact of the RNC for the 3 Milwaukee hotels, the average daily rate during the third quarter of 2024 was effectively flat compared to the prior year quarter and RevPAR grew approximately 1%. Our properties continue to perform well against the industry as a whole. When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, the upper-upscale segment experienced an increase in RevPAR of 1.4% during our third quarter compared to the third quarter of fiscal 2023, indicating that our hotels outperformed the industry by 8.4 percentage points, including the benefit of the RNC.

According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced RevPAR growth of 12.4% for the fiscal third quarter of 2024 compared to the third quarter of fiscal 2023, indicating that our hotels underperformed their competitive set by 2.6 percentage points. We believe our lower performance compared to the comp set was primarily due to our higher mix of contractual airline crew business at lower rates, which we believe did not impact competitive hotels during the RNC. Group demand continued to grow during the third quarter of 2024, particularly during midweek with group rooms increasing to 47.3% of our total room mix and 43.1%, excluding the RNC groups during the third quarter of fiscal 2024 compared to 40.7% in the prior year quarter.

An increase in our group rooms as a percentage of our overall room revenue generally increases occupancy at lower rates. We also continued to benefit from improvements to our revenue management strategy at certain properties to drive higher midweek occupancy at lower daily rate offerings to optimize overall room revenue and RevPAR. With the continued growth in group business and events, including the RNC, our banquet and catering operations grew with food and beverage revenues up 10.2% in the third quarter of 2024 compared to the prior year. Finally, on the higher revenues, hotels adjusted EBITDA grew to a third quarter record, $23.1 million, increasing 18.7% during the third quarter compared to the prior year quarter. Shifting to cash flow and the balance sheet.

Our cash flow from operations was $30 million in the third quarter of fiscal 2024 compared to $21 million in the prior year quarter, with the increase in cash flow from operations primarily due to the higher EBITDA. Total capital expenditures during the third quarter of fiscal 2024 were $18.5 million compared to $10 million in the third quarter of fiscal 2023. A large portion of our capital expenditures continue to be invested in the hotel business during the quarter, including our renovations at The Pfister Hotel and meeting space renovations and associate housing construction at Grand Geneva Resort & Spa. The remaining balance of capital expenditures during the quarter were for maintenance projects in both businesses and construction related to the relocation of our corporate and divisional headquarters offices.

Our capital investments and renovations projects have progressed as planned, and we now expect total capital expenditures for fiscal 2024 to end up at approximately $70 million to $75 million. As I mentioned earlier in the call, during the third quarter, we entered into an agreement to repurchase $13.5 million aggregate principal amount of our remaining convertible senior notes for $15.5 million of cash consideration, net of the cash received from the unwind of the capped calls in a transaction that closed in October. This marks the retirement of substantially all of the $100 million [Technical Difficulty] convertible in 2025, with the overall program resulting in the repurchase of $99.9 million of convertible notes for net cash of $103.3 million.

We believe the repurchase transactions eliminated potential future dilution at an attractive price to retire the debt and significantly simplified our capital structure. In addition, as we mentioned on our last call, early in the third quarter, we also completed a private placement offering of $100 million of senior notes, which were used to refinance the convertible notes repurchased and extend maturities. The notes were issued in 2 tranches, $60 million of 6.89% notes with final maturity in 2031 and $40 million of 7.02% notes with final maturity in 2034. With the completion of these financing transactions, our balance sheet is well positioned as we head into 2025. We ended the third quarter with $28 million in cash and over $248 million in total liquidity with a debt-to-capitalization ratio of 27% and net leverage of 1.7x net debt to adjusted EBITDA.

Finally, as we announced in today’s press release, during the quarter, we once again began repurchasing shares, buying approximately 693,000 shares of our common stock for $9.7 million in cash. Our strong balance sheet and confidence in our businesses gives us the ability to continue investing in our businesses and pursuing growth while returning capital to shareholders through our quarterly dividend and opportunistic share repurchases. We will continue to allocate capital with a balanced approach that supports our strategic priorities while pursuing investments that provide the most attractive returns to — long-term returns to shareholders. With that, I will now turn the call over to Greg.

Greg Marcus: Thanks, Chad. Good morning, everyone. When we were together last quarter, we discussed the improving trends that we were seeing, including an improving film slate with stronger quality film product and what felt like an inflection point in June. The third quarter got off to a strong start in July, and we know that the ingredients were there setting up for a good quarter in both of our businesses. I’m incredibly pleased to report the rest of the quarter continued the early trends, and our teams were able to deliver record results in both divisions and a record third quarter for the company overall. That played very well in our markets helped drive us to record revenue, operating income and adjusted EBITDA in theatres, beating our prior pre-pandemic records in the third quarter of 2019.

While we said the long-term recovery for the theatre industry has been a winding road with several short-term disruptions, this quarter marked significant progress, and we’re clearly building momentum heading into 2025. The hotel division broke our third quarter records with the Republican National Convention in Milwaukee, driving significant growth in average daily rates and illustrating the long-term potential for future events in this market to drive room demand. While the growth and recovery in our industry is not a straight line and not every quarter is going to break records, this one feels very good, and I’m very pleased to share our third quarter results with you today. I’ll start today with our theatre division, as Chad mentioned, we outperformed the industry by nearly 6 percentage points for the quarter and there are a few factors that we believe drove this.

First, the film slate was very good and played extremely well to our markets, particularly in July when we had a heavy dose of family content with Inside Out 2 continuing its strong run, lifting it to become the #1 movie of the year with over $650 million in domestic box office gross and Despicable Me 4 bringing families out to the movies. As you might expect, Twisters played very well with audiences in the Midwest and Beetlejuice Beetlejuice also played well in our markets. We also performed above our normal market share in the biggest blockbuster of the quarter, Deadpool & Wolverine, which opened strong to huge audiences and held on to break records and become the highest grossing R-rated film of all time. Deadpool & Wolverine broke several records for Marcus Theatres as well, becoming our highest ever grossing weekend summer film opening between May and August and our highest ever PLF grossing opening weekend summer film.

While the stronger box office in the third quarter this year compared to last year’s third quarter was primarily driven by stronger performances from the top 5 films, we also had more wide release films to play with 30 wide release films this year compared to 24 wide releases last year. We also believe our outperformance was — we also believe — we’ll try that again. We also believe our outperformance was the result of our continued focus on driving attendance to keep customers coming to the movies and making sure that we have compelling offerings for everyone, particularly our value-oriented customers. We believe the changes we made earlier this year to our Value Tuesday promotion continuing to bring — continue to bring customers back to theatres with the reintroduction of free complimentary size popcorn for all MMR members.

In addition, our Everyday Matinee promotion, which offers a $7 ticket for children and seniors for any shows starting before 4:00 p.m. on a standard screen 7 days a week continues to contribute to our improving attendance. Our marketing and film teams continue to work together to roll out creative promotions and programs that are designed to stimulate moviegoing and bring out customers who might not otherwise go to the movies. This summer, we debuted Marcus Mystery Movie, a promotion that on 2 Mondays each month gives customers the opportunity to catch a 7:00 p.m. screening of an upcoming movie before its official release date for a $5 ticket. There is one catch. The title isn’t revealed until showtime. Not even our theatre staff know what movies will be playing.

The only thing we will tell you is the film — is if the film is rated R or PG13 and if it’s a horror film, since many of our customers don’t care for a surprise quite that big. While we are only a few months into the Mystery Movie program, it has become a growing piece of our Monday business during the weeks the Mystery Movie is offered. Customer feedback has been overwhelmingly positive, and Marcus Mystery Movie has developed a social media following that speculates on the upcoming film title. More importantly, it brings customers out to see films they might not have otherwise gone to see, yet find themselves enjoying while building awareness of coming attractions during the preshow trailers. These promotions and programs are designed to drive attendance and appeal to value-oriented customers by making sure that moviegoing remains the most affordable out-of-home entertainment option.

As Chad shared, we saw meaningful per cap growth for both admissions and concessions, food and beverage, which we believe benefited from the stronger movie slate and several changes to promotions and pricing for concessions, food and beverage. As we look ahead to the end of the year, we continue to see a strong fourth quarter slate for the holidays. While October got off to a slower start than we hoped and reminded us that not every big budget movie works, we are excited and looking forward to films such as Gladiator II, Moana 2, Wicked, The Lord of The Rings: The War of the Rohirrim, Kraven the Hunter, Mufasa from The Lion King and Sonic the Hedgehog 3. As we look further ahead to next year, we see a slate for 2025 that is stacked with several very strong titles, including Superman: Legacy, Captain America, Minecraft, Thunderbolts, Mission: Impossible, Jurassic World, Karate Kid, Elio, M3GAN 2.0, F1, The Fantastic Four, The Bad Guys 2, The Naked Gun, Snow White, Wicked Two, Five Nights at Freddy’s and Avatar 3 and many more.

The 2025 slate includes both quality and quantity, and we remain very positive and optimistic about the long-term future for the industry and our theatre business. Moving to our Hotel & Resorts division. You’ve seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance to upper upscale hotels nationally. It was a record quarter for the division, and our team executed extremely well during our busiest months of the year. The Republican National Convention was the big story of the quarter for the division. And given the timing of the event in July, we provided a number of the operational highlights on our last call. As for the event’s impact in our third quarter, the sell-out of our 1,250 rooms at our 3 hotels in downtown Milwaukee at high rates resulted in an approximately 9 percentage point increase in average daily rate for the quarter and added $3.3 million of incremental revenue for the division over our volumes during the same week last year.

While an event of this magnitude isn’t going to happen in our key markets every year, we are optimistic that the success of the RNC demonstrated the city’s ability to host large-scale events and will have a long-term positive impact on event bookings and hospitality demand in the market for years to come. When we look at our performance, excluding the impact of the RNC, and I will say, although backing out the RNC is somewhat of a tough egg to unscramble, we believe we executed well during our busiest quarter. As was the case last quarter, our average daily rates were effectively flat in the third quarter compared to the third quarter last year, and RevPAR was up modestly, both excluding the impact of the R&C. Group business continues to increase as a piece of our total mix, representing 43% of our business mix, excluding RNC groups compared to 40% last year.

Leisure customer demand continues to be softer compared to last year, which continues the trend we’ve seen throughout the year at some of our properties. We’ve been able to offset the softness in this customer segment with increased group business and a modest improvement in business travel. As we’ve done in theatres, our marketing team in the hotel division is adjusting strategy and getting creative promotions and weekend packages to attract leisure customers in a softer demand environment to drive occupancy. As we look ahead, group bookings remain strong with our group room revenue bookings for the remainder of fiscal 2024 or group pace in the year for the year running approximately 11% of where we were at this time last year. Looking further ahead, our group pace for fiscal 2025 is running over 30% ahead of where we were at this time last year for non-RNC-related business.

Banquet and catering pace for the remainder of fiscal 2024 and ’25 is similarly ahead of where we were at this time last year. Lastly, I’d be remiss if I didn’t conclude my remarks about our Hotels & Resorts division by highlighting the Conde Nast Traveler several of our hotels recently received and noted in our press release. Our hotels continue to be widely recognized by AAA, TripAdvisor and a host of other outlets as well. These awards are a direct tribute to our people from our executive leadership team and home office personnel to the outstanding management teams and staff at each and every one of the hotels we own and/or manage. And I want to publicly thank our entire hotel team for another strong quarter and for all their efforts each and every day to take what might be an ordinary day for us and turn it into an extraordinary day for our guests.

Finally, I’d like to briefly comment on the financing transactions and capital allocation. We were pleased to be able to repurchase substantially all of our remaining convertible notes to finish cleaning up our capital structure. We were deliberate in our approach and retiring the $100 million of convertible debt for $103 million in cash was a win, and that win was led by Chad, who I have to personally thank for stewarding that transaction. Now that the convert repurchase are behind us, I want to reiterate that we made this a priority because we have confidence in the long-term future of our businesses, and we want future value creation to flow to our shareholders. Secondly, with the convertible notes retired, we moved to repurchase just over 2% of our outstanding shares.

We take a balanced and disciplined approach to deploying capital with each investment decision, whether for growth, maintaining our assets or returning capital to shareholders through dividends or share repurchases. As we discussed today, we are reinvesting in our assets and our management team is focused on opportunities for growth. With our strong balance sheet, we repurchased shares this quarter because we believe it provided attractive returns to our shareholders. We will continue to evaluate our investment opportunities through this lens and deploy capital where we see the best returns. I would like to once again express my appreciation for all of our dedicated associates at The Marcus Corporation. We talk a lot about the investments that we make in our business, but we can never lose sight of the fact that our people are our most important asset, and they proved that once again this quarter.

So on behalf of our Board of Directors and our entire executive team, thank you to all of our associates. And with that, at this time, Chad and I’d be happy to open up the call for any questions you may have.

Operator: [Operator Instructions] We’ll go first to Mike Hickey with Benchmark Company.

Michael Hickey: Greg, Chad, congratulations, guys. What a great quarter. Well done. Just 2 questions. First one, Greg, on the consumer. I know you’re pretty close to your consumers. Do you think you’re benefiting from sort of a trade down here? Obviously, we’ve seen the inflation impact, broadly speaking, on the consumer and the economy. And when you sort of reflect on your pricing. You don’t give attendance, but pricing, I’m guessing per ticket sort of sub-10, concessions sub-8. So you’re sort of getting a few hours outside the home plus food for under $20. So the value proposition, I guess, in this market seems remarkable, especially when you consider, as you alluded to, the ’25 slate that has got a lot of exciting movies, and I think sentiment overall for moviegoing has increased.

So I’m just curious if you think you’re sort of benefiting in that broad scenario I just outlined. And then the second question would be on capital allocation. You seem way ahead of your peers here, and you did mention a buyback, which is exceptional to see. I’m curious how you’re thinking about M&A. I mean, obviously, you’ve not looked away from it. Are you seeing activity? Do you feel like you’re in a position now to be opportunistic? I know you did one theatre deal, I think, last quarter, but how you’re sort of thinking about the opportunity to sort of grow your asset base given where you are in your capital allocation recovery?

Greg Marcus: Look, great point on what could be happening in the broader economy and its impact. And we’ve talked — look, I can’t tell you that I know the answer, Mike. I wish I knew for sure. But we’ve always talked about 6 out of the — we always use that stat, 6 out of the last 8 recessions, the theatre business got better because you’re right, it becomes apparent that it’s the cheapest form of outside the home entertainment. And so if someone wants to go out and then they have — and they don’t want to spend the money that some of the more expensive things can do, that’s going to benefit us. But look, I think it’s a combination of so many things, and it could be that — it’s probably some of that. It’s some of — it’s the product mix.

I can’t — I would love to take credit for that, but that’s just to some extent, we got lucky, but they say what is luck is the intersection of opportunity and preparation. So — and we were prepared because we did do some things that operationally were important in this idea of sort of relooking at what we — the changes we’ve made to Tuesday 1.5 years ago to what we — to bringing back the free popcorn and then focusing on the family and making sure that we were priced so that a family could come to the movies affordably. Those were important changes along with all the other marketing things we’re doing and more to come. But the — and then a little bit of a reversion to the mean because a year ago, we were — some of the things we had done and we’re always going to try new things, and we probably had some catch-up to do.

So I think there’s a bunch of things. But I certainly support your point on that the economy slowing down will be beneficial on a macro level to theatre exhibition. On your question on M&A, the — we, of course, are open to it. We will be — we’ll always take our thoughtful approach to whatever we do. I can’t say that there’s a whole bunch of stuff that’s been going on that we’re hearing. I hear some rumbles here and there. And I think it’s going to be one of those things where I think a lot of people are waiting to see where they stabilize out and then start to make decisions about their lives because that’s what it comes down to. And a lot of the stuff we would be looking at is families, things that they’ve owned and they’ve had for a long time.

And we had a seismic event. They were — the government helped a lot of those groups out. So they got through the rough patch so that they don’t have any — they didn’t have to make any decisions that were pressured decisions. But so — but now they’re looking and saying, okay, what do we do? And when they feel that they’re at a point of stability, maybe they’ll make some changes. But I can’t tell you there’s much right this second.

Michael Hickey: By the way, that Mystery Movie, genius idea. Congrats, man. So good luck, guys.

Greg Marcus: But I’m going to tell you right now, thank you. The only thing that was genius about it was copying everybody else doing it. My grandfather had a saying the only originals were Adam and Eve, everything else is a copy. There’s other guys in the industry doing it, and we saw it and said, oh, we should do that. So I will only take credit for being smart enough to see a good idea and go with it.

Operator: Our next question comes from Eric Wold with B. Riley.

Eric Wold: Two questions. I guess, one, obviously, you talked about some of the share gains and outperformance in the quarter with some of it was driven by the changes you made to Value Tuesday and the $7 Matinee. Anyway, Chad, to estimate what that might have benefited in the quarter? I know it’s tough to figure out if someone shifted for another day to that or whatnot, but maybe just kind of some guesstimate of what it may have been. And then remind us when you lap those changes in the coming quarters? And I have a follow-up as well.

Chad Paris: Yes, Eric, thanks for the question. Very difficult to pull apart and see on an A and B test once we’ve rolled it out on putting some of these Tuesday changes in place. We know, though, that it’s — the customer feedback and our NPS scores and the anecdotal feedback has been overwhelmingly positive, and it’s brought back some of the deeply value-oriented customers to drive attendance who then are in the building buying other things. And so it has been a net positive. Certainly, I’d say the film slate was the other big one this quarter, genres that played really well to our audiences. And then to your final question, we lap — we will lap the most recent Tuesday changes in May next year. So we think there is still a fair amount of year-over-year incremental benefit that we’ll see for a while here.

Eric Wold: Got it. And then a follow-up on the last question around M&A, just more so on the hotel side. I know you’ve talked in the past about potential to do more on-balance sheet transaction, hotels, where it makes sense. I guess what would you need to see — obviously, if you see an attractive target and attractive opportunity. But I guess, broadly speaking, what would you need to see there? I mean how much more would you need to see rates come down? Or how much of a factor that in the decision versus really maybe just not seeing anything out there that even remotely seems attractive at this point?

Greg Marcus: I think it’s more toward the end of your last point. It’s a slow market in terms of transactions being done. I think that just you have so many assets that with — when interest rates went up, you have a bunch of people who bought them with interest rates lower and probably wrote lower cap rates into their models. And so they really they didn’t want to sell if they didn’t have to. And since there hasn’t — the economy has been okay, and they’ve been able to continue. So as rates come down, the impact might be that, that’s going to actually loosen up the markets and people will start to transact again.

Operator: [Operator Instructions] Our next question comes from Patrick Sholl with Barrington Research.

Patrick Sholl: Just sort of following up on the improving kind of attendance trends within the theatre side. I was just wondering if you’ve got a sense that you had recovered all of the share that you had lost? And I guess, if not, how — if that’s something you think you would build up to? And then I’m just wondering if that’s sort of bringing people that had sort of maybe thought that just cinema in general was too high price and coming back into theatres or if they were coming from the more competitive markets?

Chad Paris: Pat, I assume you’re referring to the Tuesday changes specifically.

Patrick Sholl: Yes. Yes.

Chad Paris: Yes. I mean I think it’s really more of the latter, tough to tell, but it’s more about the customer that either comes or doesn’t come. But in many of our markets, I don’t think it’s really so much as they’re going to one theatre operator versus another. The Tuesday changes are directed at deeply value-driven customers. And we’re trying to make sure that there’s a price point on a day of the week or a certain showtimes, whether it’s our Everyday Matinee program that appeals to them. And it’s not just day of the week, it’s also making sure that there’s non-PLF options available at good showtimes alongside the PLF options. So for somebody who maybe doesn’t want the PLF upcharge, those options are available to them. And when they look at the total ticket, the total cost of going out to the movies, inclusive of food and beverage and the experience for the family that we’ve driven or we’ve provided an offering that is attractive for them and gets them to come out.

So I think it’s more about coming versus not coming.

Patrick Sholl: Okay. And then like the stronger concession per cap, have you started to introduce like more merchandise or collectible — in addition to collectible items into the concession offering? Or is it more just people finding the, I guess, combined value of the movie plus concession being an attractive opportunity?

Chad Paris: Not a ton of merchandise on a stand-alone basis, Pat, but we have had an increase in things like souvenir cups and souvenir popcorn tubs that do create a must-have item associated with some of these films, and we do think that, that’s helped driving concession purchases, but not a ton of stand-alone merchandise.

Operator: At this time, it appears there are no other questions. So I’d like to turn the call back to Mr. Paris for any additional or closing comments.

Chad Paris: We’d like to thank you once again for joining us today, and we look forward to talking with you again in February when we release our 2024 fourth quarter results. Until then, thank you, and have a good day.

Operator: This concludes our call. Thank you for joining. You may now disconnect your lines.