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Operator: Good morning, everyone, and welcome to Marcus Corporation’s First Quarter Earnings Conference Call. My name is Lydia, and I will 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 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. Good morning, everyone, and welcome to our fiscal 2025 first 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 2025 first quarter results and in the Risk Factors section of our fiscal 2024 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 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 of adjusted EBITDA to the nearest GAAP measure is provided in today’s release. Alright. With that behind us, let’s begin. This morning, I’ll start by spending a few minutes sharing the results from our first quarter with you and discuss our balance sheet and liquidity.

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. We’ll then open up the call for questions. Our first quarter is always a seasonally challenging quarter in both of our businesses with typically a lighter movie slate coming out of Hollywood and slower leisure travel at our Midwestern hotels during the winter months. As we headed into the year, we expected several dynamics to influence our results, some positive and some negative, with a net result that would achieve growth in our first quarter. First, with our fiscal quarter transitioning to a traditional calendar quarter ending on March 31, we had 4 additional operating days in both of our businesses compared to the prior year quarter that favorably impacted our reported growth.

Two of these days were during the busy week in theaters between the Christmas and New Year’s holidays, and the other 2 days were during the slower period at the end of March. I’ll get to the numbers in a moment, but the favorable impact of the calendar change played out as expected, and the impact of the shift in future quarters will be significantly less meaningful. Further details on our fiscal calendar change can be found in today’s earnings release. Second, in theaters, we expected an improved movie slate would drive attendance growth compared to last year’s Hollywood strike-impacted slate. While the carryover of films from the holidays into the new year certainly was better than a year ago, it wasn’t enough to offset several films that underperformed expectations, particularly when comparing against last year’s strong performance of Dune 2.

As we will cover shortly, things turned around in a big way in April with several positive surprises, but the first quarter box office came up short of our expectations. Finally, in the hotel division, we are navigating a major renovation at the Hilton Milwaukee with a significant number of guest rooms out of service during the quarter. While this project is intentionally being done during our seasonally slower months and we have the unique ability to shift business to our 2 other hotels in the market, we knew this was going to be an operational challenge. Our team navigated this exceptionally well. And as you will hear today, our hotel division results were able to overcome this headwind and achieve revenue and RevPAR growth. I’ll start with a few highlights from our consolidated results for the first quarter of fiscal 2025.

Consolidated revenues of $148.8 million increased $10.2 million or 7.4% compared to the prior year quarter, with revenue growth in both divisions. The 4 additional operating days due to the change in our fiscal quarter favorably impacted consolidated revenue by $9.2 million. Operating loss for the quarter was $20.4 million, a decline of $3.7 million compared to the prior year quarter. I’ll cover the divisional operational results in a moment, but at a consolidated level, the operating loss was negatively impacted by a $1.8 million increase in depreciation expense, primarily related to last year’s hotel renovations placed in service and a $1 million increase in non-cash stock-based compensation expense and was favorably impacted by a $1.4 million gain on the disposition of property during the quarter.

Consolidated adjusted EBITDA for the first quarter was a loss of $300,000, a decrease of $2.6 million over the first quarter of fiscal 2024. While we don’t like to backtrack, we always stress that the road back is not a straight line. And if there was a quarter to face challenges, this was the one as the overall impact to cash flow was small in the big picture of our expectations for the year. Turning to our segment results. I’ll start this morning with our theater division. First quarter fiscal 2025 total revenue of $87.4 million increased 7.5% compared to the prior year first quarter. The 4 additional operating days, including 2 significant days between the December holidays, favorably impacted theaters revenue by $7.1 million or 8.7%.

For our fiscal first quarter 2025, comparable theater admission revenue increased 1.3% and comparable theater attendance increased 6.9% compared with our fiscal first quarter 2024. On a straight calendar quarter basis, first quarter 2025 comparable theater admission revenue decreased 14% and comparable theater attendance decreased 8% compared to the prior year first calendar quarter. When using our comparable fiscal days, according to data received from Comscore and compiled by us to evaluate our first quarter results, United States box office increased 3.1% during our fiscal 2025 first quarter compared to U.S. box office receipts during our fiscal 2024 first quarter, indicating our performance trailed the industry by approximately 1.8 percentage points.

On a straight calendar quarter basis, we were also 1.8 percentage points below the performance of the U.S. box office. We attribute our lower box office performance primarily to the differences in our pricing strategies during the quarter compared to those of other major exhibitors. And we believe our 8% attendance decrease for the calendar quarter performed better than our peers in the industry. As you know, that attendance outperformance benefits us at the concession stand and anywhere else that attendance drives ancillary revenue such as pre-show advertising. We also believe that it drives more habitual movie-going, which at this point on the road back is very important. Average admission price decreased 5.1% during the first quarter of fiscal 2025 compared to last year, which was primarily due to an unfavorable ticket mix with an increase in child attendance, resulting from an increased number of family films compared to the first quarter last year, as well as the impact of our strategies to drive attendance through various value-oriented promotions and programs that are designed to encourage repeat movie-going that I just discussed.

Our average concession food and beverage revenues per person at our comparable theaters increased by 0.8% during the first quarter of fiscal 2025 compared to last year’s first quarter, which was primarily due to inflationary pricing changes. During the first quarter of 2025, we faced two cost challenges compared to the first quarter last year. First, our top 10 films in the quarter represented approximately 66% of the box office in the first quarter of fiscal 2025 compared to 62% for the top 10 films in the first quarter last year. Six of the top 10 films in our first quarter this year were fourth quarter releases that carried over into the first quarter, including the holiday blockbuster films. Our first quarter of 2025 also included 5 days during the week between the December holidays, which drove a higher proportion of our Q1 box office towards the holiday films.

The higher film cost on these holiday blockbusters and a more concentrated film slate resulted in an approximately 2.4 percentage point increase in overall film cost as a percentage of admission revenues. In addition, our labor costs in the first quarter of 2025 were higher compared with the first quarter of ‘24. As we shared on our first quarter call last year, operating hours and staffing levels were significantly reduced during the first quarter of 2024, particularly during January and February due to a weaker film slate following the Hollywood strikes and a shorter carryover of holiday films. With an anticipated improvement in the film slate in the first quarter of fiscal 2025, we returned to more traditional operating hours and staffing levels, resulting in higher labor costs.

In addition, the lower-than-expected opening weekend performance from certain films during the first quarter of 2025 resulted in reduced labor efficiency on the lower-than-expected attendance. While we believe that we can tighten up that performance in the future, once again, we also see the normalized operating hours as an investment in repeat moviegoing. Being reliably open for customers when they can come is important. And as attendance rebuilds, it will allow us to build from a bigger attendance base. As a result of these 2 cost pressures, theater division adjusted EBITDA during the first quarter of fiscal 2025 was $3.7 million compared to $6.2 million in the prior year quarter. Turning to our hotels and resorts division. Revenues were $61.3 million for the first quarter of fiscal 2025, an increase of 7.2% compared to the prior year.

Total revenue before cost reimbursements at our 7 owned hotels increased over $4.3 million or 8.9% over the first quarter of fiscal 2024. The 4 additional operating days due to the change in our fiscal quarter favorably impacted hotels revenue by $2.1 million. RevPAR for our comparable owned hotels grew 1.1% during the first quarter compared to the prior year, which resulted from an overall occupancy rate decrease of 3.4 percentage points, offset by an 8% increase in our average daily rate or ADR. Our average fiscal 2025 first quarter occupancy rate for our owned hotels was 50.3%. Our occupancy rate decrease was negatively impacted by the Hilton Milwaukee renovation, while guest rooms were out of service. While we were able to shift business to our 2 other hotels, the Pfister and Saint Kate, to mitigate the impact of the renovation on the overall portfolio, on peak weekend nights, there was some occupancy displacement from business turned away due to the reduced available rooms.

We estimate that the renovation negatively impacted our RevPAR growth by nearly 4 percentage points during the first quarter. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced RevPAR growth of 6.7% for the first quarter of 2025 compared to the first quarter of fiscal ‘24, indicating that our hotels underperformed the competitive set by 5.6 percentage points. Our lower performance relative to the competitive sets results primarily from group displacement at the Hilton Milwaukee while under renovation, which we believe unfavorably impacted RevPAR by nearly 4 percentage points, while favorably impacting competing hotels’ RevPAR growth by 1 percentage point. After adjusting for the impact of the Hilton Milwaukee renovation, we believe our hotels’ RevPAR growth was within less than 1 percentage point of the competitive set and attribute this slightly lower performance to new hotel room supply within one of our markets.

When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, the upper upscale segment experienced an increase in RevPAR of 2.8% during our first quarter compared to the first quarter of ‘24, indicating that our hotels underperformed the industry by 1.7 percentage points, but outperformed the industry by 2 percentage points when adjusting for the estimated impact of the renovation. With the continued growth in group business and events, our banquet and catering operations continue to grow with food and beverage revenues up 10% in the first quarter of fiscal 2025 compared to the prior year. Hotels other revenues grew 11.4%, primarily due to an improved ski season at Grand Geneva Resort & Spa and from fees generated from an all hotel group buyout at one of our condo hotel properties.

Finally, hotels adjusted EBITDA increased $1 million in the first quarter of fiscal 2025 compared to the prior year quarter. Shifting to cash flow and the balance sheet. Our cash flow from operations was a use of cash of $35.3 million in the first quarter of fiscal 2025 compared to cash used by operations of $15.1 million in the prior year quarter, with the increase in cash used primarily due to the timing of payments of accounts payable following a stronger holiday period and the lower EBITDA. As a reminder, our cash flow from operations in the first fiscal quarter is historically impacted by seasonal changes in working capital resulting from the slowdown in our businesses following the peak holiday season and by the timing of various year-end accounts payable and compensation payments.

Total capital expenditures during the first quarter of fiscal 2025 were $23 million compared to $15.4 million in the first quarter of 2024. A large portion of our capital expenditures during the first quarter were invested in the Hilton Milwaukee renovation, with the balance going to maintenance projects in both businesses. Our capital investments and renovations projects have progressed as planned, and we continue to expect capital expenditures for fiscal 2025 of $70 million to $85 million, recognizing that the timing of several of our planned expenditures are still just estimates at this time. We are finalizing the scope and timing of various projects in the second half of the year, and the actual timing of these projects will impact our final capital expenditure number for the year.

We will update our capital expenditure estimates as the year progresses. Our balance sheet remains strong, and we ended the first quarter with $12 million in cash and over $192 million in total liquidity with a debt-to-capitalization ratio of 31% and net leverage of 2x. Finally, as we announced in today’s release, during the quarter, we repurchased approximately 424,000 shares of our common stock for $7.1 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 long-term returns to shareholders.

With that, I’ll now turn the call over to Greg.

Greg Marcus: Thanks, Chad. Good morning, everyone. As we entered 2025, our plan for the year projected growth in both of our businesses. In theaters, we expected a stronger movie slate to drive significant growth, while in hotels, we expected a stable macroeconomic environment supporting slow but steady growth. While our outlook for the full year remains positive and optimistic, our path for the year looks a little different today than it did as we began the first quarter. In theaters, while the first quarter didn’t play out as expected, in April, we made up the lost ground versus last year and then some. And the summer ahead looks strong. In hotels, the first quarter exceeded our expectations. And while bookings remain strong, economic uncertainty has elevated.

It’s periods like these when I’m glad that we have a diversified business model that can provide a counterbalance when conditions may change in one of our businesses. I’m excited for the seasonal ramp-up coming in the months ahead, and our teams are ready to execute. We’re maintaining our focus on long-term value creation while managing the short-term dynamics. I’ll start with our theaters division. While the first quarter box office got off to a better start than last year with improved carryover of the holiday films, including family content that played well in our markets, the first quarter lacked big contributions from major tent pole films, and some films didn’t attract the audiences that the industry had hoped. As I’ve said many times before, it’s difficult to predict which individual films are going to work, and there are always going to be surprises, both positive and negative.

With that said, one quarter does not make a year. And over time, we continue to expect growth. To illustrate this point, through the first 2 months of 2025, the domestic box office was up 19% over last year. One month later, at the end of the first quarter, the domestic box office was down 12%. Now, after a very strong April, the industry is up nearly 16% through this last weekend, and we’re building momentum heading into this busy summer moviegoing season. We remain focused on driving attendance through our programs that promote and incentivize repeat moviegoing and continue to believe our strategy is showing early signs of positive results. For the second quarter in a row, our comparable theater attendance growth was better than most of our national peers and this will continue to be an area of focus.

While box office growth relative to the nation is one of several measures we look at to evaluate our performance, we’re also focused on optimizing total revenue growth, including ancillary revenue and the ultimate contribution that each incremental customer brings to the bottom line. As I discussed last quarter, while these pricing strategies create a short-term headwind to our admission per caps, which were down in the first quarter as we expected, we believe that they are important drivers of long-term future attendance. In addition, we believe it is important to be thoughtful on pricing in a potentially slowing economy, and we will approach future pricing changes with this in mind. We continue to optimize our regular ticket prices in our markets to ensure we remain competitive and offer an attractive value to all types of customers, while capturing a premium during our peak demand periods.

In addition to our focus on attendance, our team has also been executing several investment projects focused on increasing per capita revenues. First, we recently completed the conversion of 3 new ScreenX auditoriums at theaters in Illinois, Minnesota and Ohio, adding to our initial test location in Wisconsin. Customers have enjoyed the immersive experience of the 270-degree panoramic screen that extends the projection to the side walls for select scenes, and we’re excited to expand this premium large format offering to additional locations. The new ScreenX auditoriums premiered on May 1 in time for the weekend opening of the Thunderbolts and enjoyed large crowds and strong customer demand. Second, we are currently under construction to add concession stands to 3 of our dine-in Movie Tavern locations in New York, Pennsylvania and Kentucky.

These locations previously only offered customers concessions, food and beverage ordering through our mobile app or at the bar for delivery to your seat. By adding walk-up concession stands where customers can order all food and concession items, as well as pickup for mobile concession orders and self-serve soda, we expect to capture higher per capita concession sales, while streamlining labor from our service delivery model at these locations. We piloted concession stands at 3 other Movie Tavern locations, and we expect these 3 additional locations to operate with the new model by the middle of this summer. In April, we were with our theater team at CinemaCon, and once again, our studio partners, film directors and talent all continued to reaffirm the importance of theatrical exhibition and our role in elevating their content.

Not only do we continue to see an increasing supply in the pipeline from the major studios, but it was truly exciting to see the serious commitment to theatrical exhibition from Amazon MGM with a film slate that will continue to grow over the next few years. While there is an important ongoing industry discussion regarding the appropriate length of the exclusive theatrical window, there is wide acknowledgment that theatrical exhibition plays a critical role to the overall movie and media ecosystem. Second, we got a closer look at the film slate for the rest of the year and into 2026, and we remain very optimistic about the coming attractions. As I alluded to earlier, April was a great positive surprise in several ways. Of course, everyone is thrilled with the record-breaking Minecraft Movie, but the month was much more than that with The Amateur, The King of Kings and Sinners, all exceeding pre-opening industry projections and holding very strong in the following weeks.

In addition, the 20th anniversary re-release of Star Wars: Episode III – Revenge of the Sith, with a $25 million weekend contribution to the box office, is a great example of just how much audiences prefer to see movies on the big screen. The summer movie season kicked off last weekend with the opening of the Thunderbolts, which continued the string of strong openings that began in April and will be followed by a number of big titles, including Mission: Impossible – The Final Reckoning, F1, Jurassic World Rebirth, Superman and The Fantastic Four. The summer will also be full of widely appealing family features such as Lilo & Stitch, How to Train Your Dragon, Elio, Smurfs and The Bad Guys 2. The fall and holiday film slate is also exciting with Tron: Ares, Wicked: For Good, Zootopia 2 and Avatar: Fire and Ash, just to name a few.

There are many more great films coming noted in today’s earnings release. Looking even further ahead, the 2026 film slate also looks strong with major franchises, including Avengers: Doomsday, Spider-Man 4, Super Mario Bros. Movie 2, Moana, Jumanji 3, Toy Story 5, Mega Minions and The Mandalorian & Grogu, just to name a few. In summary, we remain positive and optimistic about the road ahead and the long-term future for the industry and our theater business. Moving to our Hotels and Resorts division, you have seen the segment numbers and Chad shared some additional detail on the performance metrics, including our continued RevPAR growth and strong average daily rate growth. As we have discussed in past years, there is significant seasonality in our hotel business, given that most of our company-owned hotels are located in the Midwest.

We often lose money in this division during the winter months. And in the first quarter of fiscal 2025, we achieved $1 million of positive adjusted EBITDA, which benefited from the four extra days in the quarter and improved winter weather that helped the ski season at Grand Geneva. There were a few notable items in the quarter I would like to highlight. We were able to drive higher rates this quarter due to our continued focus on optimizing revenue management. With stronger weekend demand due to the improved ski season at Grand Geneva, we were able to drive significantly higher transient rates. In addition, we were able to create some rate compression in the Milwaukee market with the reduced available room count due to the Hilton renovation.

While this helped us with ADR, the renovation negatively impacted occupancy and RevPAR during the quarter, as Chad described. RevPAR grew at four of our seven owned hotels with average daily rate growth at five hotels and occupancy growth at two out of seven hotels, resulting in overall RevPAR growth of 1.1%. Milwaukee hosted the opening weekend, first and second rounds of the men’s NCAA basketball tournament, and our properties hosted four of the eight teams playing at Fiserv Forum. While we don’t get this event every year, it’s a great event for the market to host in March during one of our seasonally slower months, and the proximity of our hotels to the arena make them an attractive option for the teams and fans. Group business during the quarter was generally stable, and our team is doing a great job capturing our share of the group business.

The bookings continue to look solid with our group room revenue bookings for fiscal 2025 or group pace in the year, for the year running just slightly ahead of where we were at this time last year, even when including the RNC group business in the prior year that was the Republican National Convention. Even more encouraging, group room pace for 2026 is up 20% ahead of where we were at this time last year for the next year out. Banquet and catering pace for the remainder of fiscal 2025 is similarly ahead of where we were at this time last year. Finally, a quick project update on the Hilton Milwaukee renovation. The project continues to progress as planned. And as of today, we have completed and returned to service approximately 65% of the 554 guest rooms we will be renovating.

We are on track to have the remaining rooms back in service by June 30th, with the meeting space and ballroom renovations continuing later into the summer. The newly renovated rooms look fantastic. And when we are done with the project, our historic hotel will feel like new and will be a great complement to the city’s newly expanded convention center. As our Hotel division heads into the busier spring and summer travel months, we believe the investments we are making in our properties puts us in a great position to win in our markets. While we have not yet seen any meaningful change in demand or significant cancellations of group business at our portfolio of hotels, it’s important to acknowledge the increased level of economic uncertainty compared to just a few short months ago.

Our portfolio of upper upscale Midwest hotels in primarily drive-to destinations has historically experienced less volatility than coastal fly-to markets. With that said, if we begin to see softness, we are prepared to react and adjust quickly. Finally, we have discussed several of the investments we have made in both – we are making in both businesses. And as planned, this is going to be a significant year for capital expenditures as we reinvest in our assets for future growth and long-term returns. In addition, as Chad discussed, we also allocated capital this quarter to return to shareholders through opportunistic share repurchases. We have confidence in our businesses and a strong balance sheet that allows us to move quickly when we see good opportunities, and this is one example of us executing when we see great value in our stock.

Over the last four quarters, we have now returned over $25 million or approximately $0.78 per share to shareholders between our quarterly dividend and share repurchases. We will continue to balance investing in our businesses for future growth and returning capital to you, our shareholders. Before we open the call up for questions, I want to once again thank all the people that worked so hard every single day making our ordinary days extraordinary for our guests. We talk a lot about the investments that we make in our businesses, 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. With that, at this time, Chad and I would be happy to open up the call for any questions you may have.

Operator: [Operator Instructions] Our first question comes from Patrick Sholl – from Eric Wold with Texas Capital Securities. Please go ahead. Your line is open.

Eric Would: Thank you. Good morning guys. A couple of questions, I guess first off, Chad, you mentioned that concessions per patron were up less than 1%, 0.8% on inflationary pricing changes. I guess would that indicate that either incidence and/or basket size declined? And if so, do you read that as more slate-driven or a shift in kind of consumer spending levels over here?

Chad Paris: Yes, Eric, the change in F&B per caps really was almost entirely pricing, and we just did less of it this year than we have the last few years with higher levels of inflation. On an incidence and on a basket size, not a lot of change for this quarter, really nothing worth mentioning, so it’s pretty similar to what we saw a year ago.

Eric Would: Okay. And just in general, what are your views on your ability to take price if you need to, if certain inputs start getting pressured on the cost side?

Chad Paris: Yes. I mean we have done a lot of price in the last 3 years. And candidly, our customers have been willing to do it on an experience out of the home and have spent, and we haven’t seen negative impacts from it. That being said, in a softening environment and macroeconomic environment, we are going to be thoughtful about it. But our experience in the last couple of years has been we have been able to manage through it and pass it through as needed.

Eric Would: Got it. And then just a follow-up question, kind of similar on the hotels and resorts side, I guess as you get towards the end of the Hilton Milwaukee renovation later this year, do you view that as providing an opportunity to take price at that location or view it more as ability to hold price and some kind of a renovation that needed to happen to be more competitive? I guess and then just a kind of larger picture, how competitive do you view that market becoming once the kind of convention center demand continues to ramp?

Greg Marcus: I think it’s – I think you actually – your last point is what really highlights it, Eric. I think it’s a little bit of both. I think that we had to do the renovation. I mean it just – it was time. So, a piece of the work is just keeping you in place. But part of it was an investment knowing what was coming with the convention center. And we are seeing – and the initial results out of what’s going on in the convention center look good. We are seeing good – we are seeing bookings happen, and we should be a beneficiary of that. We will have the – we will be the first choice hotel. I mean we just – we will have the newest, nicest hotel convention – connected to the convention center. So, that should benefit us.

Chad Paris: The other thing I would add, Eric, is as you know, we have done several major renovations at our properties over the last 3 years now between Grand Geneva and Pfister and now Hilton Milwaukee. And what we tend to see once we complete them is that you win the group business when you are redoing the meeting spaces and the banquet and ballroom spaces, and so – because you are the newest venue in the market. And so, I would expect that we should be able to win on group business at Hilton Milwaukee, certainly more than we have in the last several years just because the product is going to be fresh, and there is a premium related to that.

Eric Would: Perfect. Thank you both.

Operator: Next in queue, we have Patrick Sholl with Barrington Research. Please go ahead.

Patrick Sholl: Hi. Good morning. Just a question on ticket pricing, I was curious if you could also provide any detail on the impact of the Marcus Movie Club subscription product and the impact that that’s had as consumers have taken that up.

Greg Marcus: We are pleased with the initial results. It is still just such early days, as we have talked about before, Pat. And the impact right now is – perhaps, is very minimal. But we are pleased with the uptake, and it’s moving in a direction and it’s heading towards where we think it should get to. Again, we won’t see – if you want to drive comparisons because our program is like one of our peers, it is, we may not see the level of penetration that they have seen because our Tuesday program is so strong. And so we are able to cover a chunk of the discount customer on Tuesday. But people like the program, and we like the value it’s providing and we like the direction we are going.

Patrick Sholl: Okay. And on the hotel side, with the group pace coming in, it sounds like so far up year-over-year just on a reported basis from what you are talking, could you maybe talk about like if that’s like driven by specific markets, if that’s like – as you have talked about the convention center in Milwaukee, if that’s the main driver or if it’s more broad-based in terms of your Midwest markets?

Chad Paris: Pat, I would say it really gets to one of my earlier comments is, in the properties that we have recently renovated and refreshed, in the years that follow, you tend to win on group business. And so we are doing really well at Grand Geneva. Pfister has done well. And then, even at some of our assets that aren’t most recently renovated, Saint Kate has done a nice job of capturing business. So, it’s a number of our key properties. I wouldn’t say it’s across all markets. Each market sort of has its own dynamics, and some of that is driven by events that are happening in the market more than specific assets. But we are seeing it in several different places across the portfolio.

Patrick Sholl: Okay. Thank you.

Operator: [Operator Instructions] Our next question comes from Mike Hickey with Benchmark Company. Please go ahead.

Mike Hickey: Hey Greg. Hey Chad. Nice quarter, guys. Obviously, tough conditions. Thanks for taking our questions. I guess on Q2, it looks like the whole slate here is sort of rocking. Minecraft, Sinners, obviously very strong in April. Thunderbolts kicked off the summer slate grade, also I think, exceeded most people’s expectations. Just curious, in your view, what’s driving the strength here and how durable do you think it is? And why should we sort of expect the momentum to continue? I think Greg, you called out ‘26 is also looking good, so just curious all the pieces to that outlook.

Greg Marcus: Look, I think it’s a couple of things. First of all, although subjective quality has been very good and not just tent pole films. I really enjoyed with The Amateur. I thought it was really good. You had a weekend, was it two weekends ago, you had four films all above $20 million. That we haven’t seen in a long time. And that shows something broad-based. That’s healthy for the market because that means you are attracting different demos, getting more people back to the movies. That’s really good. And then, you had my favorite thing. Everyone always says to me at some point, what are you most looking forward to, and I always say, I don’t know. I am looking forward to the surprise. Sinners was the surprise this quarter so far, and I am looking forward to more of it.

I mean people – look, it’s Ryan Coogler. You know it’s going to be a good – you feel like it should be a good movie with Michael B. Jordan. But it was great, and I went and saw it and thoroughly enjoyed it, and it was a surprise. And so, we never know what’s coming our way. The surprises work both directions sometimes, as we saw in the first quarter, but overall, seeing that breadth of product was very heartening.

Mike Hickey: You are obviously being very opportunistic on your pricing, and you see that in the headwinds on the – on your ATP here. Greg, is that sort of your normal playbook when you sort of – you and your family have managed the business over the many decades. Is this sort of normal for you to be sort of opportunistic on price reductions led by promotions to sort of offset the recessionary impact on your consumers?

Greg Marcus: I think really what it is, it was something that we picked up probably, over probably the last 10 years was a real focus on the importance of attendance and how that really – box office, obviously, you don’t take people to the bank, you take the money to the bank. And so, we ultimately look at what the box office is, but not just the box office because I could charge the most in the whole business and drive four people in the door, but then only those four are buying concessions and being subjected to advertising and all the different ancillary ways we make money, so – and then, just the health of more people going to the movies, building up that habit. So, we just have had a big focus on attendance and trying to make sure that we are striking the right balance, having that hotel side in this makes us think a lot about revenue management, so we maximize revenue, but that also – attendance matters.

And we saw it. The results are showing that. We led the league in attendance growth for sure, or, let’s say, in attendance and change in attendance. And we believe that’s a long-term investment. We will continue to tweak, and we constantly are looking at pricing, and it’s getting more and more complex and more and more thoughtful. And I am going to say this half jokingly, but I really hope AI just tells us what the charge is in one of these days. But we think it should help.

Mike Hickey: Nice. On the attendance, I guess one of the push-backs as a moviegoer, when you go into the theater, Greg, and there is big lines at the concession stand, it kind of makes you maybe want to skip it. So, I guess attendance is great, but sort of how do you manage that incremental boost in attendance at the concession stand, whether it’s maybe through digital purchases or maybe unique ways to sort of manage the congestion of all the people going into concessions?

Greg Marcus: Yes. Actually, you hit the nail on the head. We believe, and the time is coming, and we are working on it right now to – that digital will be the solution to that, getting more people. We know that our basket size increases when people order digitally and our per cap should go up. That increase in per cap should allow us to make an investment in technology to help sort of – to help that. What we believe will be a virtuous cycle. You invest in the technology, you make it easier, more people use it, and we drive more – a higher per cap. And we think that’s where it’s going to go. I can’t tell you for sure. We are still in early days, but that will help reduce those lines. And as the labor markets are challenged and they have been for a long time, that will help us deal with that problem that you bring up, Mike.

Mike Hickey: Cool. Last question. Thanks guys for taking all of these. Just on the labor expense impact, you noted higher labor costs from increased operating hours relative to last year, which is obviously being influenced by the strike-impacted quarter. Can you provide more details on staffing levels, how they are trending and whether that labor pressure will continue in Q2 or later in the year? Thanks guys.

Chad Paris: Yes. Mike, I mean I think a lot of this really gets to the comp in the quarter, in particular, how much we have reined in operating hours and tightened labor management and staffing levels last year when we knew that we were going to have this extended period between, call it, mid-January and really late February going into the launch of Dune, where we really battened down the hatches and managed labor tightly. The operating hour increase was 7% year-over-year in the quarter on comparable days. So, that gives you a sense of how much we tightened it last year. I would characterize our staff – our operating hours this year in the first quarter as more of a return to normal than that we extended them. That being said, we do have some opportunity to improve labor efficiency.

That’s probably we are reacting very quickly when things don’t pan out as you expect in attendance, reaction time there, there is some room for improvement. But I think that what we see in Q1 is not something that I would model going forward. It was more an idiosyncrasy of the comp in the quarter.

Greg Marcus: Yes. I mean it’s a tough balance, right. It’s – because you want to give people work because you want to be able to have a staff when you need it, so that the concession lines aren’t so long when the people show up. And yet the other side of it is you want to control your expenses when there is nobody showing up. And it’s like it happened in the first quarter, I shouldn’t say nobody, but less people. But could we do better, yes, we could do better. I know we could, and the team is focused on that. But it’s a tough balance, and we deal with it every day.

Mike Hickey: Greg, wild card question for you, I don’t think Trump is listening to this call. Maybe he is, but obviously, there is some commotion noise yesterday on the tariff commentary. But I think if anything, it did highlight that we have lost a lot of jobs in the U.S. on the film development side, particularly in L.A, so a lot of development going international. I guess if you did have his ear here and you wanted to make a recommendation on how you could sort of get reinvestment back in the U.S., what would you say?

Greg Marcus: We are a fragile business. The whole industry, we know, has had some challenges and try to do no harm.

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

Chad Paris: Alright. Thank you. Well, we would like to once again thank everyone for joining us today. We look forward to talking with you once again in early August when we report the second quarter. Until then, thank you and have a good day.