Marcus Corporation Third Quarter 2026 Earnings - MARCUS CORP

Good morning, everyone, and welcome to Marcus Corporation's third quarter 2026 earnings conference call. My name is Jonathan, and I will be your operator for today. At this time, all participants are in listen-only mode. We will host a question and answer session towards the end of this conference. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. If at any point during this call you require assistance, please press star 0 and an operator will be happy to assist you. 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 would like to turn the program over to Mr. Paris for his opening remarks please go ahead sir good morning and welcome to our fiscal 2026 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 which may be identified by our use of words such as believe anticipate expect or other similar words our forward-thinking statements are subject to certain risks and uncertainties which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements 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. 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 statement in the press release we issued this morning announcing our fiscal 2026 third quarter results and in the risk factors section of our fiscal 2025 annual report on form 10-k which you can access on the sec's website additionally we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted ebida a non-gap financial measure in evaluating our performance and its limitations a copy of which is available on the investor relations page of our website at investors.marcuscorp.com. All right, with that behind us, let's begin. I'll start this morning by spending a few minutes sharing the results from our third quarter and then discuss our balance sheet, liquidity, and capital allocation. 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. This morning, we reported another record quarter with results that exceeded our expectations and broke third quarter revenue records in both divisions. In theaters, a strong film slate led by blockbuster hits kept audiences coming to the movies deep into the summer to deliver the highest total revenue for the summer movie season in Marcus Theater's history. In hotels, we continued to see strength in leisure demand during our seasonally busiest quarter that drove record third quarter revenue. The record third-quarter revenue in both divisions combined to deliver the highest quarterly revenue for any quarter in company history. I'll start with a few highlights from our consolidated results for the third quarter of 2026. Consolidated revenues of $238 million were up 13.1% compared to the prior year quarter. Operating income for the quarter was $30.3 million, an increase of $7.6 million, or 33% to the prior year quarter. Adjusted EBITDA for the third quarter was 49.1 million, a 21% increase over the third quarter of fiscal 2025. And net earnings for the quarterly quarter were $18.8 million, or $0.60 per share, compared to prior year third quarter net earnings of $13.2 million, or $0.42 per share, excluding the impact of a non-recurring gain on property insurance settlement of $3 million or $ 0.10 per share net of tax. Turning to our segment results, I'll begin this morning with our theater division. Third quarter 2026 total revenue of $145 million increased approximately 21 percent compared to the prior year third quarter, primarily due to the strong performances from Spider-Man Brand New Day and The Odyssey, as well as stronger carryover of films that released in the second quarter compared to last year's carryover. Comparable theater admission revenue for the third quarter increased 21.8 percent, and comparable theater attendance increased 16.8% compared with the third quarterly year. Based on data from Comscore, US box office receipts increased 27% during the 2026 third quarter compared to US box offices receipts during the third quarter of 2025. There are three factors that impacted our admissions revenue growth when compared to the reported national box office growth. First, based on our review of box office data it is important to note that our admissions revenue in the third-quarter of 2025 included box office revenues from two films with national grosses that were not reported by certain streaming content providers to Comscore. The exclusion of the grosses for these films from the prior year resulted in higher national box office growth, and our admission revenue growth rate was negatively impacted by 2.8 percentage points when compared to the national box office growth rate. Second, during the third quarter of 2026, we made the strategic decision to not play two films due to distributor terms, which we believe negatively impacted our admissions revenue growth by approximately one percentage point. While these decisions to pass films are never easy, we are committed to achieving competitive market terms for film rent, and we were pleased to reach a resolution with the distributor going forward. When adjusting for the impact of these two factors, our admissions revenue for the third quarter grew 25.6 percent indicating that our admissions revenue performance trailed the industry by approximately 1.4 percentage points we believe that our slightly lower box office performance relative to the nation during the third quarter was primarily attributable to an unfavorable film mix that included the number two film in the quarter the odyssey that played stronger in other parts of the u.s where we do not have a presence and in premium formats with significantly elevated average ticket prices our average admission price increased 4.3 percent during the third quarter of 2026 compared to last year our admission per caps were favorably impacted by strategic pricing changes a higher percentage of our attendance on plf screens and a decrease in the percentage of attendance coming on value Tuesday compared to last year's quarter due to one additional Tuesday that fell in last year's calendar third quarter compared to this year's third quarter. We also grew our average concession, food, and beverage revenues per person at our comparable theaters, which increased by 3.8 percent during the third quarter of 2026 compared to the last year, and was driven by an increase in movie-themed merchandise sales and menu pricing. Our top 10 films in the quarter represented approximately 80% of the box office, compared to 72% for the top 10 film in the third quarter last year. The more concentrated film slate weighted towards blockbuster films compared to the less concentrated slate in the 3rd quarter last years resulted in a less than 1 percentage point increase in overall film cost as a percentage of admission revenues. Finally, Theater Division adjusted EVA during the third quarter of 2026 was $46.3 million, an over 46% increase over the prior year quarter, primarily due to the higher attendance volumes. Turning to our Hotels and Resorts Division, total revenues before cost reimbursements were $82 million for the third quarter of 2026, a 2% increase compared to the prior year. RevPAR for our owned hotel portfolio increased 2.1% during the third quarter compared to prior year, which resulted from a 3.3% increase in our average daily rate, or ADR, partially offset by an overall occupancy rate decrease of just less than one percentage point. Our average occupancy rate for our owned hotels was 77.5 percent during the third quarter of 2026. For our comparable owned hotels, which excludes the Mark Hotel that opened in early 2026 as a new independent hotel with a new competitive set, RevPar grew 7.4 percent. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced an increase in rev par of 6.2 percent for the third quarter of 2026 compared to the third quarter last year, indicating that our hotels outperformed their competitive set by 1.2 percentage points. We believe our outperformance resulted primarily from strong transient demand and slightly improved business travel, while we experienced a somewhat softer group demand environment. Group business as a percentage of our total business mix was approximately 39 percent compared to 43 percent in the third quarter last year. When comparing our REVPAR results to comparable upper upscale hotels throughout the United States, the upper upskill segment experienced an increase in REVTAR of 7.8 percent during the third-quarter compared to the third quarter last years, indicating that our hotels underperformed the industry by approximately 5.7 percent. We believe our underperformance to the industry nationally this quarter primarily relates to transient demand related to major events, particularly the World Cup, that occurred in other markets where we do not have a presence, as well as softer group demand in our markets. With the softness in group business and events, our banquet and catering operations decreased modestly, with food and beverage revenues down 1.4% in the third quarter of 2026 compared to the prior year quarter. Finally, hotels adjusted EBITDA decreased $600,000 in the third quarter of fiscal 2026 compared to the prior year corner and was negatively impacted by increased repair and cleanup expenses following severe storm damage at Grand Geneva Resort and Spa, which occurred on July 3rd leading into the Independence Day holiday weekend. While our team worked incredibly hard to recover and serve resort guests that weekend, the storm event resulted in operational challenges, cancellations, golf course closures, and incremental cleanup and repair expenses. We expect the damage to the resort to be recovered by property insurance, and we expect the event led to an approximately $500,000 negative impact on adjusted EBITDA due to incremental cleanup costs and lost revenue during the holiday weekend. When excluding the impact of the storm, our adjusted EBITDA was essentially flat. In addition, adjusted EBIDDA in the third quarter compared to the prior year was also negatively impacted in hotels by adverse property tax assessments and quarterly shifts in timing of annual maintenance projects compared to when those projects occurred in fiscal 2025. Shifting to cash flow in the balance sheet, our cash flow from operations was $38.4 million in the third quarter of 2026 compared to cash flow from operations of 39.1 million in the prior year quarter with the slight decrease in cash flow primarily due to differences in the timing of various working capital payments total capital expenditures during the third quarter of twenty twenty six or ten million compared to twenty point nine million in the third quarter of fiscal twenty twenty five with capex in the quarter primarily going to maintenance projects in both businesses. Our capital expenditures for the year are progressing as planned and we continue to expect capital expenditures of $45 to $50 million. The timing of several projects will impact our final capital expenditure number for the year. We ended the third quarter with approximately $60 million in cash and over $219 million in total liquidity, with debt-to-capitalization ratio of 24% and net leverage of 0.8 times. We are well positioned with a very strong balance sheet, which coupled with confidence in our businesses gives us the ability to continue pursuing growth investments while returning capital to shareholders through our quarterly dividend. We will continue to allocate capital with a balanced approach that supports an appropriate level of reinvestment in our existing assets, pursuing shorter-term payback EBITDA-enhancing investments that provide attractive returns, and investments in our long-term strategic growth priorities. With that, I'll now turn the call over to Greg. Thanks, Chad. Good morning, everyone. As we shared with you on our last quarterly call the summer was off to a strong start and with the film slate ahead of us we saw the potential for our best summer box office in years what's played out since our last update has been truly historic breaking many records for both the industry and our company in our theater division a robust film slate that appealed to a wide variety of audiences kept moviegoers coming back to our theaters deep into the summer in our hotels and resorts division strong leisure travel supported the steady trend of average daily rate and REVPAR growth that we've seen all year. While there were a few surprises that we had to navigate in the quarter, our team responded and executed well. Today, we are thrilled to report the highest quarterly revenue in our company's history and a quarter in which both of our businesses achieved their highest third quarter revenue ever. I'll start with our theater division, and as this quarter wrapped up the summer movie-going season, which runs from the first Friday in May through Labor Day, I would like to begin with some perspectives on just how strong this summer was, as this was one for the history books. For the season, with our highest attendance since 2019, Marcus Theaters recorded its highest total revenue in company history, with new records for highest box office, concessions, food and beverage, and merchandise sales. We also set new records für both per capita admissions revenue and per capita concession merchandise, and food and beverage spend for the summer movie-going season. As an industry, we saw four consecutive months from May through August that each topped $1 billion in domestic box office. And a sustained performance only happens when we have a deep film slate that gives audiences a reason to return week after week. In the third quarter, we had a strong carryover of films that opened in the second quarter combined with two blockbuster films in spider-man brand new day and the odyssey that broke opening weekend records and more importantly held strong week after week deep into the summer when you combine these massive tent poles with such a diverse array of counter programming you get a theatrical ecosystem firing on all cylinders beyond the blockbuster films we also had a more balanced slate that included family films such as minions and monsters moana and strong carryover from toy story 5 that played well in our markets or continues to draw audiences with resident evil making a meaningful contribution to the third quarter not only did the top films perform better this quarter than last year but we had more movies with 32 wide releases compared to 30 in the quarter last year chad discussed the puts and takes that made comparisons to the reported national box office growth a bit more challenging this quarter, but when you cut through the noise and look at the numbers on an apples-to-apples basis, there were really two things that drove our underperformance to the national box office growth. First, we intentionally passed a couple of smaller films this quarter as we worked to achieve competitive film terms with a distributor. While we never liked to do this, this was a strategic decision as we are committed to controlling our costs at sustainable levels for the long term. This ability to make decisions for the longer term is just another example of benefits of our strong balance sheet others with a short-term focus may not have that option second the number two film in the quarter the odyssey played stronger in other regions of the country particularly the west coast where we do not have a presence exhibitors exhibitors in these markets were also realizing significantly elevated ticket prices particularly with 70 millimeter showings of the film around the clock while we achieved solid market share within our markets and also had a couple of 70-millimeter prints of the film, the film did disproportionately well outside of our markets. Conversely, I want to highlight that we did very well with the biggest film of the quarter, Spider-Man Brand New Day, which played on all of our PLF screens immediately on opening weekend, with PLF showings representing 49% of the box office over the entirety of its run. We believe that on a relative basis, we have the highest percentage of PLF penetration in the industry, allowing us to take advantage of times just like this. Looking ahead, the fourth quarter is off to a good start, with solid domestic box office growth in October and a few positive surprises, including You Can See Everything. The holiday film slate ahead features the highly anticipated Avengers Doomsday and Dune Part 3, and advance ticket sales for Avengers Doonsday are incredibly strong. Beyond these tentpoles, the fourth quarter slate includes several other exciting films, including The Cat in the Hat, Godzilla Minus Zero, The Hunger Games, Sunrise on the Reaping, Fokker and Law, Hexed, and Jumanji Open World. Looking even further ahead, the 2027 film slate also looks strong with major franchises including Shrek 5, Star Wars Starfighter, Minecraft 2, Frozen 3, Sonic the Hedgehog 4, Spider-Man Beyond the Spider-Verse, Man of Tomorrow, The Legend of Zelda, Avengers, Secret Wars, and many more. There are many more great films coming noted in today's earnings release. In summary, we are thrilled with the year that has taken shape for our theater business. More importantly, this isn't just a post-pandemic recovery anymore. This is a recognition of the importance of the theatrical model to the overall content ecosystem. We see more opportunities ahead of us as we continue to get more film product from new sources and theatrical windows extending out. While this industry has always had some years with huge hits and others with not as many, we see the long-term trends as very positive, and we like where things are headed. Moving to our hotel and resorts division, you've seen the segment numbers, and Chad shared some additional detail on the performance metrics, including our outperformance to the competitive sets. Once again, the hotel division achieved record third-quarter revenue for the third consecutive year, and we were able to successfully navigate a few challenges along the way. There were several notable items in the quarter that I'd like to highlight. At a high level, for our overall portfolio, rooms demand in the quarter remain steady, and the overall travel environment appears to remain healthy. However, the dynamics continue to vary by market, and there was some shift in our business mix compared with last year's quarter. In some markets, notably Chicago, we saw strength and higher demand due to an increase in the number of citywide events and convention business that drove very high occupancy and rates. This contrasts with our Milwaukee market, where we saw some softness in group business with a weaker citywide event schedule compared with last year. And in some cases, lower attendance at group events resulted in some group room blocks not selling out. This softness resulted in a decrease in group businesses as a percentage of our rooms revenue, with stronger transient leisure and business travel growing as a percent of our room's mix. While this tends to help with average daily rate and total rooms revenue, we did see a decrease in food and beverage revenue tied to the decrease in banquet and catering business for group events. Rev Park grew at six of our seven comparable hotels during the second quarter compared to the prior quarter, with both occupancy and average daily rates growing at five of our seven compatible hotels. As Chad mentioned, early in the third quarter, we navigated through the impact of a major severe storm event that hit our grand geneva property in july first i'm truly grateful that all of our associates and guests were safe and there were no major injuries from the storm which was truly remarkable in light of the sudden approach of the storm high winds and debris and damage to the golf course the july 3rd timing of thestorm was especially challenging during what is always a busy holiday weekend and i'm incredibly proud of the hard work and dedication of our associates to recover from the storm and continue to serve guests while we were able to mitigate the revenue impact of the to the week following the storm it did create a revenue and expense headwind in the quarter looking ahead the fourth quarter in hotels is off to a strong start in october and we benefited from the milwaukee brewers run to the world series as a lifelong brewers fan we were excited and proud to host visiting teams and fans international media and many brewers vips to our hotels during this historic postseason run group bookings for the rest of the year look stable with our group room revenue bookings from 2026 or group pace in the year for the year running approximately five percent of where we were at this time last year looking a bit further ahead to 2027 group room pace is running approximately 10 i have ahead of where were at time last for the next year out although this far out the timing of bookings can vary significantly. Banquet and catering pace for the remainder of 2026 is running in line with where we were at last year at this time, and is running approximately 14% ahead for 2027. Overall, the division had another good quarter, and the current state of our hotel business remains stable and on track with our expectations for the year. While transient demand has remained healthy, volatility and key travel costs, including high gas prices and rising airfares have persisted. If market conditions change and we begin to see softness, we are prepared to react and adjust quickly. Finally, I'd like to close with a brief comment on our balance sheet. We continue to remain on track to deliver very strong free cash flow in 2026, and we're building cash in our balance sheets as dry powder for future growth investments. We are disciplined and patient when evaluating growth investments, and continue to look for opportunities to deploy capital to grow both of our businesses with value of creative investments. Our strong balance sheet allows us to move quickly when we see good opportunities and we have a history of executing when they arise. And again, I want to add my congratulations for the Milwaukee Brewers, the world champions, the winners of the World Series last night in Tampa. Not only is it exciting for the city and for everyone involved with the team and it is exciting for our entire community and for our company because it reflects so well on on milwaukee where we have significant investments we are in the press around the world and that can't help but be beneficial to our community and to our company before we open up the call for questions i want to conclude my remarks by saying thank you to all the hard-working associates of the marcus corporation i especially want to thank our associates at grand geneva that worked so hard on a holiday weekend to recover from the storm and continue serving our guests with excellence to deliver great hospitality. I don't want to ever take for granted what each and every one of them does to contribute to the success of both of our businesses. With that at this time, Chad and I would be happy to open the call up for any questions you may have. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Eric Wold from Texas Capital Bank. Your line is now open. Please go ahead. thanks good morning and uh and congrats on the on the brewers um a couple questions i guess only one one on each segment i guess um if you think about the theater segment and and kind of the pricing environment i know it comes up a lot given the the consumer environment around kind of the tough economy um how aggressive are you being in this environment in terms of you know kind of baseline ticket prices, seeing any signs of resistance, and kind of what are your thoughts kind of early into kind of, you know, how that could play out over the next few quarters? You know, you hit a hot button issue for me, Eric. It is something that we watch very carefully. You know we, well, I would, we've been, you know, we are at market with our pricing. We watch what the market is doing. but what we want is movie going to be a habitual experience it's a momentum business it's going back regularly and for that to happen you know it has to be an affordable experience and and night out and and it remains so you know we not only do we benchmark across we we look at all you know all all the different costs we look the costs uh you know what people are charging to go to other movie theaters we look at what people are charging to go other to other out of home event based experiences which obviously are much higher than going to the movies but we also watch you know the price of streaming which has been going up so we're comfortable with where we are uh we we believe that we also offer ourselves you know a variety of price points so uh we can we can the The customer that wants that premium first night experience and a PLF, well, we have no shortage of PLFs, as you know. But yet our Tuesday is extremely and remains extremely robust where we're offering the value customer value pricing at the concession stand as well as the box office. And so we just, I will tell you, we're probably not going to lead on raising the prices as high as we can. But we're probable also not going lead money on the table either. got it helpful and then you want to on the hotel segment um i know you've recently completed the major renovations um you know the pister a couple years ago the hilton and then obviously adding the uh um the short hole course to uh granted eva you talked about kind of leaving your balances strong kind of look at other um you return generating investments how much more room do you have you think in the hotel cycle with the busy properties to make renovations or changes that would have a decent-sized return in terms of either small additions or changes you have yet to make at the properties? Hey, Eric, I'll take that one. I mean, in terms of balance sheet capacity, as I mentioned on the call, we have a lot of room. And for us, it's really more about finding opportunities that have the right return profile. The hotel hotel business can tend to be fairly capital intensive. And so we're looking for really special assets when we do something new and acquire an asset. And we're also looking at doing more of the joint venture type of structures as we make new investments so that we can deploy smaller chunks of capital into more opportunities and achieve some diversity in the markets that participate in but but um you know we have a lot we have a lot of room to do there uh our as you point out our our core assets uh the three that we recently renovated uh are all in really great condition we're seeing very good uh uplift from those renovations and the returns are playing out generally in line as we expected um and so we'll be it will be thoughtful as other renovations come up at other properties over the next you know several years there's always a cycle we don't have uh anything major that's that's imminent like we just went through but in within the guidance on capex that we provide there's always some level of refresh that's happening and uh and we're keeping our assets in good condition i'd also add you know specific to the grand geneva you know that that is an asset that you know we're actually right in the middle of or we're just sort of just beginning after planning exercise there to look how to to really maximize what we have there it is a really special asset that we've taken great care of and made investments along the way and we think there's going to be some opportunity for further really you know good roi investments property that we know in a market that we know uh you know with land that we own it's a pretty good combination so i think there'll be and I think you'll hear more in the future about opportunity we have there as well. Perfect. Thank you both. Appreciate it. Your next question comes from the line of Patrick Scholl from Barrington's Research. Your line is now open. Please go ahead. Hi, thank you. And congrats on the Brewers. On the theater segment, could you maybe talk about like the mix of attendees and versus like loyalty members versus people that weren't in the program and like when you get a surge of attendance the i guess any sort of like success and like onboarding them onto the loyalty program to help like improve uh maybe your ability to reach them in the future and just kind of just the broader you know retraining of the consumer and how any sort of like progress you're kind of seeing on on that process with the longer more established windows thank you um yeah i can take the first part of that question just on on loyalty and and i'll wrap into that our our uh movie club subscription subscription program uh in the quarter we did we did see a a pretty meaningful uptick in uh in loyalty members and i think that happens in in any quarter when you have as robust of a slate that brings people out to the theaters who maybe haven't been there in a while. And so that was encouraging to see. We also had an uptick in the percentage of our attendance with movie club redemptions. And that's expected. You have customers who are earning credits every month. They may not be going every month, and so when we have a robust slate, you see a higher uptick in those redemptions. And we think that's a good thing. We're seeing people use the program and it makes it more sticky and they'll stay in the program longer and reduce churn in the program, which has, our experience has been that we're on a net basis. We are, I would say, slowly and steadily growing that program. We did not see a giant uptICK in signups in the quarter, but it's been more slow and steady progress. And And that's in line with what we expect, and we have continued goals for that next year. Pat, can you repeat the second part of the question? Yeah, so the second Part was just on, I think you guys had talked about kind of retraining the consumer to not wait for a movie to be available on streaming, and just kind of just more about that process with the significant increase in the number of films in the quarter and just the more solidity in the window. I just think that's something that's going to take time, you know, as we go along and the consumer starts to see, realize, yeah, it's not available. You know, the thing that we found the most challenging, I think, of all of the, there's two challenges with it. The most is that the idea of a film being available at 17 days, you And even though it's a premium video on-demand customer, a transactional video on demand customer, a lot of people just get an email that says available at home. They're not paying attention to when it's available. It just feels like it's at home and they're thinking it's free when it really could be $20, $25 to rent it for a couple of days. And so really the first thing that the industry needed to do and is moving away from that, because that's very deleterious. And we've seen data. This is the most interesting thing that I think. The data that is put out by the groups that do the research for the industry show that the propensity to buy transactional video on demand at that price really is about the same in week two through week eight. In other words, that customer is a specific customer that is buying in week two, and they'll be the same customer that's sitting there in week eight, And so our position as an industry has been, look, if that same customer is going to be there, you're impacting a lot of other downstream customers when you put it out there in week two. And so if you could wait, you'll have roughly the same number of transactional sales, and yet you will now increase the theatrical box office, which in years to your benefit. So that seems like a win-win for us, and I think that the industry is coming around to that and realizing, because they're seeing the same research that we see. And that idea of pushing out that transactional window, as you see, has been going on, and that's, I think, very helpful. The next thing is we really need to get the time to what we call time to free, which is the time for streaming, pushed out as well. because that customer is also looking, and again, you know, we think that the trade-off, and I think the data shows the tradeoff of being able to have something in a theater that does business that catches the customer's eye, that ultimately when it shows up as a tile on your screen, you're trying to pick what you're going to watch streaming is actually a good trade-offs to push it off just a little while, and then again, make it a win-win for the entire ecosystem, not just theatrical, not just for streaming, but to make the pie larger. That works to all of our benefits, and that's our goal when we as an industry push for longer windows. Okay, thank you. And if I could just get one question in on the hotel segment. Could you maybe just talk a little bit more about the group pace for 2027 and how, I guess, I guess how sensitive you kind of view that being with the elevated kind of travel costs with like higher fuel costs and things like that? Thank you. Yeah, I mean, we're running ahead as we shared in the prepared remarks for next year. A lot of that group business can, you know, the fluctuations in pace and bookings is tied to the calendar of events in the markets that we're in. And what really becomes the variable is the attendance at the events. And so it's really tough to know this far out what type of impact continued high travel costs will have on participation in those events. We haven't seen events getting canceled, but it's more how well attended are they. And I just don't know that we have the visibility to make a call on that relationship for 2027. Okay, thank you. Your next question is from the line of Drew Crum from B. Reilly Securities. Your line is now open, please go ahead. Okay, thanks. Good morning, everyone. And yes, congratulations on the brewers. Maybe to start with the theaters division guys, just looking at 4Q, What are the kind of primary puts and takes when thinking about your performance and specifically admissions revenue relative to the industry? Yeah, I mean, so when we look at the composition of the mix of films and think about the big films in the quarter, a couple of things to keep in mind. One, here in October, the industry's up. Our primary markets actually have been impacted somewhat by really two things. One is this Brewers run has been on weekends for the home games. And so that actually will have some modest impact on our theater business while it benefits the hotel business. But it's happening in the smaller part of the quarter. So a net positive for the company. but it'll impact our performance relative to the nation somewhat, at least in the month of October. On mix of films, just a couple of things stand out. Last year we had Wicked in the fourth quarter, did very well on that film. And when I look at the big films in the quarter this year, we've got a couple OF Family films in Hexed and Cat in the Hat that traditionally family content plays well in our markets. It's a film like Avengers we should get our natural share on, and I think Dune tends to play a little bit better on the coast than it does in our part of the country. So those are really the puts and takes. I think regardless, it's going to be a very robust fourth quarter box office, and it looks like October up, November likely down year over year, with December being up pretty meaningfully. Got it. Okay. Helpful. I'd even add a little color to Drew once I get some color on the movie slate. Not only is October a quieter month for the industry, it generally doesn't play to our strength because you're going to get a lot more of the Oscar contenders, art, film, things like that, which we do okay on, but it's not our bread and butter. So I think historically it's less impactful given where we are. Got it. Okay. And then maybe one more. You know, I know you guys don't provide quarterly guidance, but we can kind of back into what CapEx should be for 4Q. What are the other kind of key swing factors when thinking about your cash flow generation and your ability to grow free cash flow year on year in the fourth quarter? Thanks. Yeah, good question. You know on fourth quarter CapEx, there is no doubt there is a lot of, with the guidance, there is a lot of CapEx to be spent in the fourth quarter. But seasonally, given the timing of our projects and when we try to get things done coming out of the summer season, there is a lot that's going to get done in the fifth quarter. So I do expect that we'll get to the range that we disclosed on CapEx. On the rest of free cash flow, we'll see just normal seasonality in working capital with, in our negative working capital, which is, it tends to be a source of cash as we ramp up the business at the end of the year in theaters. And then there's the big unwind in the first quarter. So those are the puts and takes, and then the, whatever your outlook is on earnings, that'll obviously fall through. Got it. Okay. Thanks guys. As a reminder, if you would like to ask a question, please press star 1 to raise your hand. If you would Like to withdraw your question, press star 1 again. Your next question is from the line of Mike Hickey from StoneX. Your line is now open. Please go ahead. Hey, Greg, Chad. Great quarter, guys. Congrats on the Brewers. Awesome. Just curious, you guys both sort hit on the strength of your balance sheet here and mentioned growth investments. I think you unpacked that a little bit, Greg, on the hotel side. Just sort of curious if you could dig in a little Bit on what you're thinking on the, as much as you can on the theater side, if M&A is becoming more of a possibility, obviously, since, you know, the recovery, it really hasn't reset itself but maybe it's time and then also how you're thinking about premium amenities we talk a lot about screens but I know you've been testing seats as well with D box and sort of curious the early learnings there and maybe some consumer feedback well we we as it relates to start with M&A you know there's what we're starting to hear you know stuff stuff is out there but but it's not much you know it's just such a it's such a weird you know industry in terms of M&A in terms of just when people want to sell you know we got to wait for that time it's no there's not it's now like there's this institutional market where people are trading assets all the time so we you know we stay connected to the industry we've been in it long enough we pretty much know most all the players and we're active in the industry leadership and you know industry participation so should stuff become available and stuff that we will look at and but we will then we'll remain disciplined and if it if it makes sense we'll do it and if doesn't we won't but we will continue to get into how do we get more out of our box that's the question we ask ourselves every day that's something we can control we can't control M&A market as much well not at all but the the and so you're right we know we dbox is is not we're not we don't have it going yet it's just starting to get rolled out so i can't give you any feedback on that we've been doing screen x where we and we're pleased with our with our initial results from the screen you know we had one for a while we've added three more and uh and so we're we're you know, we are uh we're please with the results i think that the feeling on screen x is there's a customer that really likes it you know it is it's not for everybody But it appeals to a, like for me, I actually personally am a big fan of ScreenX. I love it because one of the things that's very interesting about ScreenX is that the sidewalls, and for those who don't know what it is, basically it's a three-screen setup where you have a screen in front of you and then two screens surrounding you, one on each side. And it goes, it's not always running. It doesn't run continuously, which I, which is the thing that I like the most about it because my senses can only take so much assault. And so I like that there's a pause, and it's used for when it's perfect. I mean, I saw the Mission Impossible biplane scene, and it was just incredible to watch it sort of shoot around the theater. When you mix that with great sound, it's a great experience, I think. And so we have a customer for it, and the ones that like it are very enthusiastic about it. And so our biggest question is going to be, How do you price it, and where else do we go with it? And so we'll continue to figure out how do we get more out of our boxes, and it's things like that that do that. I like D-Box. You know, the one good thing about D-box and what we like to see is that it gives you sort of a premium format inside of a standard, which gives you great showtime flexibility. You know one of the challenges we face with premium formats is making sure that we offer, in this discussion that we had a little bit earlier about what's the right price to charge somebody. You know, not every customer wants the PLF experience. In fact, most of our business really does come from a standard screen. And so, but Showtime, the customer makes their decision to go to the movies based on Showtime primarily. That is their, that is like, that's generally their first decision. And, so, offering the Showtimes is really important in having a variety of formats. So, when you get D-Box, you're able to offer a premium experience at the exact same time you're offering a standard experience and so that's our thesis and we would like to see that play out does the uh how does the family demo which is really strong for you guys how does that index to to dbox i mean normally for a more expensive plf i think families tend to avoid it do families uh adopt more i guess the premium seating than they would the screen i am i i don't have the answer to that yet just because we don't have the experience with it yet yeah mike we're we're a few weeks into the test but that is those are those are exactly the types of things that we're you know trying to understand and learn about how it'll play in our particular circuit okay um last one from us guys when you look at the success of 26 um i kind of want to ask you greg what surprised you the most but I think maybe the question is, what's repeatable? And so you mentioned a lot of it today, whether it's numbers of movies, the quality, the windows. I don't know if there's a trade down or an economic consideration. You've mentioned before the youth, and certainly there's been a lot of momentum. But I guess as you look at sort of the attribution to the growth this year, what would you call out? And what do you think is most repeatable in 27 i think whenever you have a breakout success like this i think the challenge is obviously the durability of it and so that's sort of part one and then part two when you look at the 27 slate and you mentioned the films but a lot of family films frozen shrek minecraft maybe star wars but it really seems like a setup that you guys should index um really well on and i'm guessing just how hollywood you know plays the trends i'm sure we'll have plenty of horror movies too yeah what we need is we need some comedies uh we need more comedies from hollywell here but but you're right you know i think the and you're also right in in that like that the and so we never know how these how things are going to go you know So year to year, month to month, quarter to quarter, it's a very tough industry in that regard to predict. But I think the most interesting thing that I think bodes well for our industry over the long term that is repeatable is the amount of the kids that are back. When we look at the segmentation of who wants to go to the movies, the most the audience is the most robust now is the younger audience which you know i would like the older audience back and if we can get some more dramas and comedies and to program sort of the shoulders so to speak not necessarily in terms of time but sort of the idea of the demo the shoulder demos to get them to get the adults off the couch you know that would be great uh but the having that long-term customer i think you know a kid who's young who starts to build that habit of going to the movies and says, I love going to the movies. Now, in the long run, you know, that's great for the business. And again, we're seeing this data, this data that I talk about that we've been exposed to that we see. We saw the, we usually, we've seen over time this index of, do you want to see this question that they ask in the survey? Do you want to be able to see a movie at home? Where do you prefer, a movie in a theater or at home?" And it, you know... After the pandemic, it flipped in favor of at home but it started to come back and this year they showed this last survey they showed us to it in cohorts and what they showed us is the kids their propensity to see movies in theater versus seeing the home has flipped back to the old relationship where the theater was preferred over the home i think that is really comforting great data that should have some durability over time you know will will it have its periods of ups and downs over time sure of Of course, it will depend on the product, the quality of the product. What, who would say that, who it appeals to, but, uh, but it's seeing that that propensity, that desire to go, uh. At a young age is, is I think very, uh is exciting for us. And then I guess I was on the 27 slate, Greg. I mean, it looks pretty good. You must be pretty excited. Just given the mix of film. yeah i i i always wait to see what shows up and someone says what are you looking for what am i most looking forward to it's whatever is the big surprise and there will be a big surprise i mean just think about the surprise of of the last month with uh with the that the elizabeth holmes movie you know um how all where did that come all of a sudden everyone's supposed to see a three-hour documentary great i'm looking forward i think mike just on 27. i i mean i think you're you're right to point out, as it relates to our geographies and the films that play well, 27 looks more favorable, and we're encouraged by that. And so we think we're well positioned. All right. Thanks, guys. Good luck. Thank you. At this time, it appears there are no other questions. I'd like to turn the call back over to Mr. Parris for any additional or closing comments. All right. Well, we'd like to thank you once again for joining us today. We look forward to talking to you next in late February when we release our fiscal 2026 fourth quarter results. Until then, thank you and have a good day. This concludes today's call. Thank you for attending. You may now disconnect. Thank you.