Gregory S. Marcus: customers who want a fast digital ordering experience but haven't yet downloaded our app. In December, we began testing NCQR code food and beverage ordering for delivery to seats at two of our dine-in movie tavern locations and expanded this test to three more locations in January. The QR code ordering is simple and fast with integrated digital wallet payment options that significantly speed up the transaction process. The early results have shown encouraging growth in F&B per caps at these locations, and we are in the process of rolling out QR code ordering to all our 20 movie tavern and dine-in theaters. This will be followed by a redesigned food and beverage digital purchase experience in our mobile web and app for all locations later this year. For those customers who prefer the more traditional purchase experience at the box office, concession stand, and our bars and restaurants, we began rolling out new tap-to-pay terminals in the fourth quarter, and we expect to have the rollout complete at all points of sale by the end of the first quarter. We expect these investments in technology will not only make the purchasing process easier for our customers and enhance per caps, but we expect to gain additional data and insight into our customers and their preferences through the new payment technology we are integrating across our various sales channels. We expect to leverage these insights to better tailor our communications and marketing with more customized offers that highlight coming events of interest. We believe it's very important to have programs that promote and incentivize repeat moving going And we've created several with this goal in mind, including Marcus Passports, Marcus Mystery Movie, and Marcus Movie Club. These programs can also have the added benefit of bringing customers out to see a broader range of small and mid-sized films, in addition to the blockbuster films, which we believe supports a healthier overall exhibition ecosystem. While these programs offer a lower ticket price in the short term, we believe they are important drivers of long-term future attendance. In November, we reached the one-year anniversary of Marcus Movie Club, our subscription program that offers monthly or annual memberships with several great benefits for customers, including a 20% food and beverage discount, access to additional companion tickets for $9.99, and waived digital ticketing convenience fees. After our first year of Movie Club, we added free Marcus Mystery Movies as a new benefit for members, and we continue to look for ways to drive membership and usage of the programs. Approximately 38% of members have selected the annual membership, which we believe supports our long-term goal of driving repeat moviegoing. Marcus Movie Club is one of several programs that promote and incentivize repeat moviegoing, including Marcus Passports, Marcus Mystery Movie, and our loyalty program, Marcus Magical Movie Rewards, which now has 6.9 million members. As we look ahead, we are very excited by a 2026 movie slate. that includes several potentially very strong titles, including Spider-Man Brand New Day, the Super Mario Galaxy movie, Moana, Jumanji 3, Toy Story 5, Minions and Monsters, The Odyssey, The Mandalorian and Grogu, Dune, Messiah, Dune Messiah, I'll get that right, and Avengers Doomsday, just to name a few. There are many more great films coming, noted in today's earnings release. The current slate has a stronger mix of tentpole films, and the grossing potential of 2026 franchises is greater based on their historical predecessor box office performances. Looking even further ahead, the early look at the 2027 film slate also looks strong with major franchises including Shrek 5, Star Wars Starfighter, Minecraft 2, Frozen 3, The Batman Part 2, Sonic the Hedgehog 4, Spider-Man Beyond the Spider-Verse, The Legend of Zelda, Avengers Secret Wars, and many more. We are excited about the momentum that is building in theaters and the film slate ahead in the coming years, and we remain very positive and optimistic about the long-term future for the industry and our theater business. Moving to our hotel and resorts division. You've seen the segment numbers, and Chad shared the highlights of our performance metrics for the quarter, including our outperformance to the comp sets and upper upscale hotels nationally. So I will focus my comments on the year overall and looking ahead. We're pleased to report that after another strong quarter to end the year, our hotels team delivered another record-breaking revenue and adjusted EBITDA year in fiscal 2025. This is quite the achievement, given that we are comparing against a record fiscal 2024 that benefited from the Republican National Convention and election-related business that did not recur in 2025. It's even more impressive considering that we also completed the largest hotel renovation project in our history at the Hilton Loft. which disrupted operations and negatively impacted results with a significant number of rooms at the hotel out of service during the first half of the year. Even with a negative impact of the renovation, our rampart growth outperformed our competitive set for the year by 1.2 percentage points, and we really saw an inflection point once we completed the renovation, as we outperformed the competitive sets by over 5 percentage points in the second half of the year. The demand environment was mixed in 2025 with group demand generally remaining strong, particularly at our properties that play well to group business. Leisure demand was mixed across our portfolio in 2025 compared to last year, with some markets seeing softness while others were positive. Demand remains strongest at the upper end of the market. Thus, our upper upscale properties are performing well in an environment where consumers continue to gravitate toward premium experiences. The Hilton Milwaukee renovation wrapped up in the fourth quarter with the lobby and lounge, marking the end of a renovation that updated 554 guest rooms, ballrooms, meeting space, and public common spaces. It looks fantastic, and it is a convention center hotel that Milwaukee can be proud of. While we have made significant capital investments in our hotels over the last few years, we have also been disciplined with the returns required for these projects. Hilton Milwaukee is a good example of our approach, as we chose not to renovate the 175-room west wing of the hotel and remove the rooms from the Hilton system at the end of December. In mid-January, we reopened the west wing as the Mark Hotel, an independent select service hotel connected to the Baird Center via Skywalk. The rebranding and repositioning to create a new hotel with a different type of product allows us to continue to operate with minimal capital investment. As Chad discussed, the heavy part of the capital investment cycle that we've been going through the last few years is now behind us. We are winning in our key markets with our newly renovated room product and meeting space, and we've been able to capitalize on that opportunity. As we look ahead to 2026, we're very excited to open our new 11-hole short golf course at the Grand Geneva, known as WE-NIP. We completed the construction and the growing phase of the course in the late season last year, and play will begin this spring. We believe the course will allow us to capitalize on a growing segment of golf with a great complementary option to our two existing eights and whole courses on the resort, the Brute and the Highlands. With customers looking for distinctive experiential destinations, this added amenity aligns with industry trends, and we expect the short course to enhance the overall appeal of the resort to both leisure customers and group customers looking to mix in another social activity with conferences, training events, and outings. As we look ahead, our outlook for 2026 remains positive with our expectations for low single-digit rev park growth. led by modest growth in group business and steady leisure and business travel. Group bookings remain healthy, with our group room revenue bookings for fiscal 2026 are group pace in the year for the year, running approximately 3% ahead of where we were at this time last year. Looking a bit further out to 2027, group pace is slightly behind where we were at this time last year for the next year out, although this far out, the timing of bookings can vary significantly. Banquet and catering pace for 2026 and 2027 is ahead of where we were at this time last year. Based on the current demand environment and our future bookings, our outlook for 2026 remains positive. We are excited about the opportunities for future growth in the hotels business, and I would like to congratulate Michael Evans and our hotels and resorts team for delivering a great and record year. I'd like to once again express my appreciation for our dedicated associates at the Marcus Corporation. Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all that they do every day. They are our most important asset. So on behalf of our board of directors and our entire executive team, thank you to all of our associates. With that at this time, Chad and I would be happy to open the call up for any questions you may have.
Operator: Thank you. If you would like to ask a question on today's call, please press star followed by one on your telephone keypad. Answer or withdraw your question. It's star followed by two. We'll go to Eric Wald from Texas Capital Securities. Your line's open. Please proceed.
Eric Wald: Thank you. Good morning, guys. I guess the first question on the feeder segment, it was a lot of kind of, you know, shifts in kind of the pricing strategy last, you know, May. You started lapping some of the headwinds. It sounds like you kind of implemented a few more things in the holiday period. Maybe give us a sense of what we should expect throughout 2026, maybe in terms of cadence based on the programs currently in place, kind of what you'll come up against this May, and kind of how that should play out throughout the year.
Chad: Thanks, Eric. Yeah, in terms of the cadence through the year, It's going to be the anniversary of our price changes that we made mid-year in 2025. I don't see big changes to our programs prospectively. Again, we're trying to be very thoughtful about customer sensitivity to price changes, and we do want to continue to drive attendance. I would say through the first two quarters, the year-over-year benefit that we're going to see of the actions that really didn't start to show up until late June in 2025. And then as we look forward, it's really going to be more about driving per caps in that business on the F&B side, and that's where our focus is going to be.
Eric Wald: And then on the hotel side, there was a comment in the quarter about seeing increased leisure demand and higher ADR as the renovations have come to fruition last year. Maybe give us a sense of kind of what you're seeing in terms of bookings on leisure versus your business travel group kind of in this year, and if you expect to see more of a shift back to leisure With that, especially given the comments you made around group pace in 27, I know it's early, but should we see more of a shift back to leisure in your mind? And if that is the case, what do you see as the implications of that?
Chad: Yeah, so let me start with the very last part of your question on group pace. You may recall at the beginning of 25, we were seeing very significant increases in group pace. early in the year and then that flattened out a bit and we ended the year with growth that was kind of mid single digits, but we started the year much higher than that. And so we had a huge step up early in the year last year, which is, I think, in part why our pace for 26 is, right at the moment, low single digit and because we had a big step up last year. Um, and when you're looking as far out as 27 timing of when those events get booked really can vary from year to year. And, and so I wouldn't read too much into. Into what, what we're seeing right now for 27, it's still pretty early, uh, group overall remains healthy. And as we've, as we've said a few times over the last few months, a few quarters, our renovated properties are winning really well with groups. What we have seen, at least in the fourth quarter, is we're also doing a really nice job, even in the slow season, capturing strong leisure demand. And we did that here in the fourth quarter around the weekends. Upper upscale continues to perform really well with the premium products performing better than the lower end of the market. Our properties play well to that type of customer. So I think it's going to be one where even in a flat overall demand environment in leisure, we can capture share nicely.
Gregory S. Marcus: The good thing about our properties that we've talked about before is that they play in both group and leisure. That is the nature of our properties. I've called them special assets before. And if you look at them, they're located and they're designed They so so if you know we see softening in one area, we can start to be more aggressive and another if that if that we see a food demand there and and you see a play out year after year.
Eric Wald: helpful Thank you both.
Operator: On it question comes from Mike hickey from so next your lines now open, please go ahead.
Mike Hickey: Yeah, thank you. Hey, Greg, Chad, congrats, guys, on a great 4Q with Outperform. Greg, your 26 setup here sounds very encouraging, both on the hotel side, just getting a level investment and pacing here on group. The theater side slate looks exceptional. It seems like it'll meet your demo really well. Do you see sort of a... Step up's a big word, but, you know, at least, you know, relative to your 25 growth on the top line, do you think you can exceed that? And how much leverage should we expect on sort of a mid-single-digit type growth and free cash flow conversion? I've got a follow-up. Thanks, Gus.
Gregory S. Marcus: Well, you know, hope springs eternal. Hope springs eternal in the theater business. You know, I mean, It's certainly, as you said, on paper, it looks good, you know, and it looks like it plays our markets, and it looks, and we talked about, I think, in 25, we didn't have one blockbuster over 500 million. That, you know, is a challenge, and it looks like the potential for these is better. It's an art form. We don't know how it's going to turn out, but we're prepared to capitalize and maximize, you know, on whatever comes our way, and it's a top line and the bottom line. You know, we're very focused. As you know, our pricing strategies and making sure that our prices are market appropriate and that we're offering the right product to the right customer. We have a very significant PLF footprint. On a relative basis, we have the highest penetration of PLFs in the industry. So when those customers are there, we're going to be able to capture them. And yet we've got lots of programs for the customers that don't want to spend as much. We've got our Tuesday program remains very robust. A big push for us this year is going to be our movie club. If you are in our theaters now, if you don't join the club, you aren't paying attention. I mean, they're just really working hard. to build that base of business. It reminds me a lot of the hotel business, where you sometimes fill a hotel with a base of customers to sort of shrink the size of your hotel. And I think others in the industry who've seen a significant buildup in membership on the theater side enjoy that benefit of a continued income stream. So we're very focused on that as well. On the hotel side, I think that we'll continue to see the benefits of all the investment we've made in these properties. They look so good. and uh and so that's gonna that and that line in milwaukee as our convention center continues to perform better uh that we we opened a few years ago that that will uh that that will don't kill my sleep and we should see good performance as long as the economy stays stays solid we'll be in good shape as you know hotels are very gdp dependent yeah mike i think that's the last one the only thing i
Chad: The only thing I'd add on the film mix is I do think that the family slate that we see ahead for 26 should benefit a circuit like ours in the markets that we're in. In the summer of 25, we didn't really have a family animated film that hit, and we saw the power of that over the holidays with Zootopia, and as we look at the slate for the summer of 26, I do think that's a net positive for Marcus Theaters. In terms of of contribution and leverage on the incremental revenue. Historically, the theater business contributes at around 50% on the contribution margin line historically to EBITDA. And with our step down in CapEx this year, I think our free cash flow conversion on that is going to be very strong.
Mike Hickey: Nice. Very helpful. I guess on M&A, You said actively searching. I don't know if I've heard that from you before. Are you sort of a little bit more aggressive, I guess, now looking at M&A? And I guess specifically, maybe some, regardless of that, maybe some color there, because I wonder with the Warner Brothers deal hanging here, Greg, if that sort of ices theater deals or not. And then on the hotel side, I'm not sure how active the market is, but I don't think it's been great. So just curious where you're focusing your attention. Do you see the biggest opportunity, whether it's theaters, hotels, or maybe another area that could be complementary to your overall business today?
Gregory S. Marcus: That's a very good point. Yeah, you're right. I think everybody knows the hotel transaction market has been pretty slow. uh just across the entire industry uh and so you know we have to just because it goes back to this you know cap rates got elevated uh as interest rates went up um but you know people were doing well enough to know there was no they weren't forced sales the economy is strong enough so it basically gave people the ability to continue to i wouldn't say pretend and extend because there's no pretending i mean they just the businesses are okay but If you wrote a pro forma, you know, so much of these pro formas when you have these investors, not necessarily us, we're not looking at it like this, but a lot of private equity investors with a five-year hold, and they write a cap rate. And if cap rates are 100 or 200 basis points is higher, it messes up the returns pretty significantly. So they can wait, or at least, you know, they're going to try and wait. So it's a waiting game. So that's really slowed up that market a fair amount. So we have to look for other ways to grow that business and other ways to drive some revenue there, which we do in adjacencies. And on the theater side, yeah, again, there's not a lot of transaction activity. There's very little transaction activity that you're seeing. So we'll look at anything that will come our way if we think it makes sense. A big challenge a lot of these guys have are very expensive leases. And so, you know, a lot of that needs to be figured out. But then you bring up a very interesting point, which we talk about, which is, well, okay, well, what other adjacencies can we have? You know, we've worked through these huge capital investments that we've had to go through. And so now when we have free cash flow, you know, we're looking at someone, you know, you'll ask them, what are we going to do? Well, if we can find good investments, we'd like to make them. It's very tax efficient to not pay the capital out. We can keep it invested within the company for our investors. That can be a great return. And if we can't, then we will distribute cash, as we've talked about, as the levers we can pull, whether it's buying back stock or dividends.
Mike Hickey: Nice. Thanks, guys. Good luck.
Chad: Thanks, Mike.
Operator: Our next question comes from Drew Crump from B Reilly Securities. Your line's now open. Please proceed.
Drew Crump: Okay, thanks. Hey, guys. Good morning. I wanted to ask about the occupancy rate. You know, it was down year on year in 4-2. Was that election-related in the year-ago period? Was it the closing of the West Wing of the Milwaukee? Or was it something else? And would you anticipate that rebounding in 2026?
Chad: Hey, Drew. Yeah, I'd start with occupancy in the fourth quarter last year did get a benefit from a bunch of group business related to the election and a number of visits that we had in Milwaukee in our key market. And so that definitely provided a tailwind last year. I do think in some of our markets this year, Tad Piper- There, there is there's clearly some softness and so it's you know it is very much a mixed story and it is market specific and and at times even even property specific. Tad Piper- But you know it's it's it's not not an obvious softening trend in the. in our markets where we're at. And we're outperforming the softness generally because of the quality of the assets and the investments that we've made. So I think the way to think about it is we should look to outperform what our markets do, even if we see some of the softness.
Drew Crump: Got it. Okay. Thanks, Chad. And then, you know, Mike's last question focused on M&A. You know, given the opportunity to review the portfolio, you know, in the past, you guys have made selective divestitures, you know, any, any updates there, any comments you can give us in terms of how you're thinking about that?
Gregory S. Marcus: Thanks. You know, I look at, we're always looking at our, at our assets and, you know, we have, we come at it from a very, you know, a strong real estate mentality and, you know, these assets, one of the things that's important is you don't, you saw in the last few years is that as, um, as the bubble came across of investment, we have to look and decide, okay, is the investment going to be a good investment for us? And if we don't think the investment is the right investment for us, we can then divest ourselves of the asset, and that will happen occasionally. We don't have any major divestitures planned right this minute, but if something makes sense or the markets get very hot, we're always looking at that and saying, okay, what is the right long-term choice for these assets for our company.
Chad: Yeah, and Drew, we tend to immediately think about hotels in that context, but we own a lot of theater real estate and portfolio management is an ongoing process that we're continuously looking at the performance of individual theater locations and highest and best use for the real estate. And so I would just suggest that store management will continue to be part of a potential source of making changes, and we could add some locations too, but in the past, we have monetized non-core real estate in our theater business.
Gregory S. Marcus: We might take investment and change some of the uses on some of our theater sites, and we can make investments to do that too. Again, we view ourselves, one of our hidden assets is our real estate, and we've come at this for decades from a real estate perspective, and we may make investments on our properties in that would maximize the highest and best use of that real estate.
Drew Crump: Thanks, guys.
Operator: As a reminder, if you would like to ask a question on today's call, please press star followed by one on your telephone keypad. And to withdraw your question, it's star followed by two. Our next question is from Patrick Schell from Barrington Research. Your line is now open. Please proceed.
Patrick Schell: Hi, thanks for taking the question. Just maybe another question around like capital allocation and M&A. Could you sort of discuss some of the, I guess, differences in underwriting, you know, or opportunities in like expansion, whether organic or M&A, and like maybe the differences in underwriting, just additional new builds versus the, I know you talked about the difficulty with some of the leases and potential M&A, but any sort of update on those opportunities? of competing priorities.
Chad: Yeah, Pat. I mean, we're in the theater business, the challenge on M&A, and we have looked at a number of things in the last year plus and done a fair amount of work on different opportunities, and the challenge consistently has been the leases at some of these locations. And the number of locations in a theater circuit that work and don't work when you look at a circuit overall, that mix of locations that don't work has made it very hard to get deals done if you're going to have to assume the lease. And so it really requires a Tad Piper- More of a ground game in looking in doing you know onesie twosie type deals where you're you're picking up individual theaters in that in that space and that's really how we look at. Tad Piper- At the underwriting is is a more granular level than in the past new builds I you know we think about it, we think about attractive markets but. Tad Piper- Right now, I think, with with the the. product supply challenges, it's just tough to get the math to work on new construction. And so we're going to keep looking at it, but at the moment it's not something I think you're going to see us do a lot of in the near term.
Patrick Schell: Okay. And then on concessions, you had mentioned the QR ordering is helping to increase incidents. I was wondering what other components of the per cap trends in the quarter, what other, what else contributed to the per cap trends in the quarter, or if that, yeah, like between pricing or mix and things like that.
Chad: Yeah, so in the fourth quarter, the QR code ordering actually had a really small impact. I think that's more of a 2026 benefit. We were doing a handful of test locations late in the quarter, but at those test locations, and we are really encouraged by what we're seeing. And I think that that's going to be a meaningful piece of our per-cap uplift for our dine-in theaters in the coming year. In the fourth quarter specifically, it was mostly incidence rates and capturing more customers. It was some of the queuing line. benefit that that Greg talked about and in getting the basket size to grow with customers that are going to the concession stand we've seen some traction with that which is really encouraging and there was a little bit of price but price wasn't really the primary component of what we saw in the fourth quarter and I think there was some you know some benefit certainly in a holiday quarter of people making events of going out to the movies and and just generally spending more and i think that's encouraging to see the health of the consumer that we saw uh or continue to see in the fourth quarter okay thank you thank you at this time it appears there are no other questions i'd like to turn the call back to mr paris for any additional or closing comments Thanks, Drew. We would like to thank everybody for joining us today, and we look forward to talking to you once again in May when we release our first quarter 2026 results. Until then, thank you and have a great day.
Operator: That concludes today's call. You may disconnect your line at any time.
