Milwaukee-based Marcus Corp. reported an increase in earnings and operating income during the second quarter driven by a strong performance in group hotel business and food and beverage revenue at its movie theaters.
Operating income was up 3.6 percent to $18.26 million during the quarter, from $17.63 million during the second quarter of 2015. Net earnings were up 4.8 percent to $9.35 million.
Total revenue was down 2 percent to $134.98 million from $137.78 million.
“This was another quarter of strong operating results for Marcus Hotels & Resorts, while Marcus Theatres continued to outperform the industry despite a weaker film slate,” said Gregory Marcus, president and chief executive officer of The Marcus Corp.
The top-performing films for Marcus Theatres in the second quarter were Captain America: Civil War, Finding Dory, Jungle Book, X Men: Apocalypse and Batman v Superman: Dawn of Justice.
The top five movies of the quarter accounted for 49 percent of the overall box office revenue. During the second quarter of 2015, the top five movies accounted for 55 percent of revenue. Food and beverage revenue during the second quarter help to offset a drop in theater admissions revenue.
The third quarter is off to a good start with the July box office strong including The Legend of Tarzan, The Secret Life of Pets, Ghostbusters and Star Trek Beyond.
Anticipated revenue-generating films opening through the end of the third quarter include Jason Bourne, Bad Moms, Suicide Squad, Ben-Hur, Storks and The Magnificent Seven.
“I believe we will outperform the national box office regardless of how the films do,” Marcus said. “We will still be ahead before the slow September and we have to compete against the Olympics.”
Marcus said the ability to outperform is the result of the $150 million the company has spent over the last three years renovating its theaters.
Marcus Corp. added five more all-DreamLounger SM recliner seating locations in March and April 2016, and two more locations are currently under construction. Once those are completed, 48 percent of the theaters will have DreamLounger seating.
On the hotel side, revenue per available room (RevPAR) for comparable company-owned properties increased 6.9 percent in the second quarter and was up 5.9 percent for the first half of 2016.
The majority of the RevPAR increase was due to a higher average daily rate, with all eight of Marcus’s majority company-owned hotels reporting average daily rate increases for the quarter.
Room revenue was flat during the period.
During the earnings call Thursday morning, analysts asked Marcus to comment on the takeover bid announced Monday between Leawood, Kan.,-based AMC Entertainment Holdings for its competitor Columbus, Ga.,-based Carmike Cinemas. The twice-postponed merger will create the nation’s largest movie theater chain and is expected to close by the end of the year.
Marcus hopes it creates an opportunity for the company.
AMC has a theater at Mayfair Mall in Wauwatosa and theaters in Fitchburg and the Wisconsin Dells. Carmike Cinemas has theaters in Eau Claire and Manitowoc.
“We’re trying to figure out what they are going to divest and what it will look like,” Marcus said. “We don’t want to spend too much time (on this right now). We will be competitive and disciplined like we always are with acquisitions.”
