Milwaukee-based Marcus Corp. had its second profitable quarter since the start of the pandemic, but the hotel, movie theater and restaurant operator still lost $43.3 million in 2021 as the impact of COVID-19 lingers.
The company reported fourth quarter net earnings of $6.4 million, or 18 cents per diluted common share, on Thursday, coming back from a net loss of $39 million in Q4 of 2020. The period marked continued, gradual recovery for Marcus, which made it back in the black in the third quarter with $1.8 million in net earnings.
Total annual revenue climbed 92% over 2020, but was still down about 44% from 2019 Revenue in Q4 totaled $169 million, up 15% over Q3 and sharply up from $36.7 million in 2020.
A net loss of $43.3 million, or $1.42 per share, in 2021 pales in comparison to 2020’s deficit of $124.8 million, but in order to return to 2019 pre-pandemic standing, the company will have to turn annual profit of roughly $42 million, or $1.35 per share.
“We view the world through a long term lens,” said Greg Marcus, president and chief executive officer of Marcus Corp. during Thursday’s earnings conference call. “As I’ve said since the onset of the pandemic, the recovery path we are on may not always be a straight line and we recognize that neither of our businesses are back at pre-pandemic levels yet…”
“With two quarters of increasing profitability and improving market dynamics as our tailwind, our optimism for 2022 is bolstered by the resiliency and creativity of our associates who deliver a job well done no matter the circumstance,” he said.
Marcus Theatres recorded an operating income of $18.9 million for the fourth quarter but ultimately lost $27.5 million in 2021. Also in Q4, the division reached positive net earnings for the first time since the start of the pandemic.
December’s release of ‘Spider Man: No Way Home,’ which recently became the third highest performing film of all time was a huge driver of fourth quarter business. Theater admission revenue climbed nearly 50% over Q3, and concession revenue saw a 38% increase. When compared to 2019, admission revenues for the quarter were down 21%.
“As vaccination and booster rates have grown and the Omicron variant fades, we expect future studio film releases to meet consumers’ increasing excitement for seeing movies regularly on the big screen,” said Rolando Rodriguez, chairman, president and chief executive officer of Marcus Theatres.
Marcus Hotels & Resorts made $354,000 in Q4, ending the year with an operating income of $5.9 million. Total revenues for the year were about 71% of pre-pandemic 2019 results. With first and fourth quarters that are already seasonally slow, the division did not bear the brunt of the COVID-19 omicron variant other than a few cancelations and postponements.
However, the surge in cases during Q4 has delayed the recovery of business travel, and group bookings for 2022 continue to lag behind pre-pandemic levels. Booking activity has begun to improve as the spread of COVID-19 weakens.
“We remain optimistic that business travelers will gradually return in 2022 while drive-to-leisure travelers will continue to push demand at our company-owned properties,” said Michael Evans, president of Marcus Hotels & Resorts.
Total cash capital expenditures during fiscal 2021 were roughly $17 million, driven by a theater renovation, lobby renovation and the start of a guest room renovation project at the Grand Geneva Resort. Marcus is projecting capital expenditures this year in the $35 to $45 million range.
Marcus Corp. was able to bolster its balance sheet by selling non-core real estate assets in Q4, ending the fiscal year with more $22 million in asset sale proceeds. The company also received approximately $4.3 million in state government grants and over $22 million of federal income tax refunds last year.
“Our strong liquidity and capital resources, coupled with our majority-owned real estate position, proved to be considerable assets during one of the most significant global crises of our lifetime,” said Doug Neis, executive vice president and chief financial officer of Marcus Corp. “As we move beyond the pandemic, not only do we have sufficient liquidity to meet our obligations as they come due, but we are well positioned to invest in future growth strategies, as appropriate.”