MCS 10-K & 10-Q changes, risk factors and insider trading

The COVID-19A pandemic hador epidemic may have a material adverse effectseffect on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness, and future pandemics or epidemics may have similar material adverse effects in the future.

The financial results of our movie theatre business and the motion picture industry in general are heavily dependent on the general audience appeal of available films, together with studio marketing, advertising and support campaigns, factors over which we have no control. The relative success of our movie theatre business will continue to be largely dependent upon the quantity and audience appeal of films made available by the movie studios and other producers. Poor performance of films, a disruption in the production of films due to events such as a strike by actors, writers or directors, or a reduction in the marketing efforts of the film distributors to promote their films could have an adverse impact on our business and results of operations. Our industry experienced a significant reduction in the quantity of films available to exhibit in theatres in the years following the COVID-19 pandemic. The quantity of new film releases available for theatrical exhibition during fiscal 2023 and fiscal 2024 was negatively impacted by the shutdown of movie production during the Writers Guild of America (WGA) and Screen Actors Guild - American Federation of Television and Radio Artists (SAG-AFTRA) labor strikes that occurred during fiscal 2023. Studios may also determine that certain types of films will not be released for theatrical exhibition and will go straight to streaming services, further impacting the quantity of films available. Also, our quarterly results of operations are significantly dependent on the quantity and audience appeal of films that we exhibit during each quarter. As a result, our quarterly results may be unpredictable and somewhat volatile.

Our financial results may be adversely impacted by unique factors affecting the theatre exhibition industry, such as the shrinking video release window, the increasing piracy of feature films and the increasing use of alternative film distribution channels and other competing forms of entertainment.

Over the last decade, the average video release window, which represents the time that elapses from the date of a film’s theatrical release to the date a film is released to other channels, including streaming services, video on-demand (“VOD”) and DVD, has decreased from approximately six months to approximately 45 days and in some more limited instances, films have been immediately released to such alternative channels without any theatrical release. Some studios have created shorter premium VOD (“PVOD”) windows, including a 17-day PVOD window for certain films and a 30 to 60-day PVOD window for certain more successful films. In addition, some studios have released certain films theatrically and on their proprietary streaming services on the same day and date. Although other major studios have not taken this approach and several have reaffirmed their commitment to an exclusive theatrical distribution window for film releases, we can provide no assurance that these release windows, which are determined by the film studios and are subject to negotiation and acceptance by exhibitors, will not shrink further, which could have an adverse impact on our movie theatre business and results of operations. Variable or shorter theatrical-to-PVOD windows may condition consumers to wait for home releases, particularly for non-blockbuster titles.

We face competition for movie theatre patrons from a number of alternative motion picture distribution channels, such as DVD, network, cable and satellite television, video on-demand, pay-per-view television, digital downloads and streaming services. The number of streaming services has been increasing and, inIn some cases, streaming services are producing theatrical-quality original content that is bypassing the theatrical release window entirely. Periodically, internet ticketing intermediaries introduce services and products with the stated intention of increasing movie-going frequency. The actual impact these services and products may have on our relationship with the customer and our results of operations is unknown at this time. We also compete with other forms of entertainment competing for our patrons’ leisure time and disposable income such as concerts, amusement parks, sporting events, family and sports entertainment centers, home entertainment systems, user-generated short-form content platforms such as YouTube, social media, video games and portable entertainment devices including tablet computers and smart phones. An increase in popularity of these alternative film distribution channels and competing forms of entertainment may have an adverse effect on our movie theatre business and results of operations.

A deterioration in relationships with or consolidation of film distributors could adversely affect our ability to obtain commercially successful films or increase our costs to obtain such films.

We rely on the film distributors for the motion pictures shown in our theatres. The film distribution business is highly concentrated, with six major film distributors accounting for approximately 84% of U.S. box office revenues during 2025. Our business depends to a significant degree on maintaining good relationships with these distributors. Deterioration in our relationships with any of the major film distributors could adversely affect our access to commercially successful films or increase our costs to obtain such films and adversely affect our business and results of operations. Consolidation of major studios and distributors or the acquisition of a major studio and distributor by industry participants who do not distribute films to theatrical exhibition could significantly reduce the supply of film releases and have an adverse effect on our business. Because the distribution of motion pictures is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases and consent decrees, we cannot ensure a supply of motion pictures by entering into long-term arrangements with major distributors. Rather, we must compete for licenses on a film-by-film and theatre-by-theatre basis and are required to negotiate licenses for each film and for each theatre individually. Consolidation of major studios and distributors could limit our ability to maintain or negotiate favorable licensing terms, increasing our costs to obtain such films and adversely effecting our business and results of operations. We are periodically subject to audits on behalf of the film distributors to ensure that we are complying with the applicable license agreements.

In each of our businesses, we experience intense competition from national, regional and local chain and franchise operations, some of which have substantially greater financial and marketing resources than we have. Most of our facilities are located in close proximity to other facilities which compete directly with ours. The motion picture exhibition industry is fragmented and highly competitive with no significant barriers to entry. Theatres operated by national and regional circuits and by small independent exhibitors compete with our theatres, particularly with respect to film licensing, attracting patrons and developing new theatre sites. Moviegoers are generally not brand conscious and often choose a theatre based on its location, its selection of filmsfilms, amenities and its amenities.showtimes. With respect to our hotels and resorts division, our ability to remain competitive and to attract and retain business and leisure travelers depends on our success in distinguishing the quality, value and efficiency of our lodging products and services from those offered by others. If we are unable to compete successfully in either of our divisions, this could adversely affect our results of operations.

Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. Our second and third fiscal quarters often produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, prior to the change in our fiscal year in fiscal 2025, the specific timing of the last Thursday in December hashad an impact on the results of our fiscal first and fourth quarters in that division.

We expect to derive most of our business from traditional channels of distribution. However, consumers nowalso use internet travel intermediaries regularly. Some of these intermediaries are attempting to increase the importance of price and general indicators of quality (such as “four-star downtown hotel”) at the expense of brand/hotel identification. These agencies hope that consumers will eventually develop brand loyalties to their reservation system rather than to our hotels. If the amount of sales made through internet travel intermediaries increases significantly and consumers develop stronger loyalties to these intermediaries rather than to our hotels, we may experience an adverse effect on our hotels and resorts business and results of operations.

For certain periods during fiscal 2020, all of fiscal 2021 and certain periods during fiscal 2022, we suspended the payment of dividends on shares of our common stock. We resumed paying a quarterly dividend in September 2022. Under our debt agreements, we may pay a cash dividend or repurchase common stock provided we have satisfied certain financial covenants in, and are not in default under, the debt agreements. During periods of significant business disruption in the past we have suspended the payment of dividends on shares of our common stock. Ultimately, the declaration of future dividends on our common stock and authorization of common stock repurchases will be at the discretion of our board of directors and will depend upon many factors, including our results of operations, financial condition, earnings, capital requirements, limitations in our debt agreements and legal requirements.

Beginning onin Decemberfiscal 27, 2024,2025, our fiscal year changed from a 52- or 53-week fiscal year ending on the last Thursday in December of each year to a fiscal year ending on December 31 of each year. Fiscal 2025 was a 370 operating day year beginning on December 27, 2024 and ending on December 31, 2025 (comprised of five operating days between December 27-31, 2024, plus 365 operating days in calendar year 2025). Accordingly, effective for our fiscal year endingended December 31, 2025, our quarterly results will bewere for three month periods endingended March 31, June 30, September 30 and December 31 of each year.31.

Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. The quality of film product in any given quarter typically impacts the operating results in our theatre division. Our second and third fiscal quarters generally produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December impactshas historically impacted the results of our fiscal first and fourth quarters in that division. TheDue to the transition in our fiscal year during fiscal 2025 described above, the first quarter of fiscal 2025 will includeincluded five days during the week between Christmas and New Year’s Eve, and willthe endfourth onquarter Marchof 31,fiscal 2025 due toincluded the changeentire inweek ourbetween fiscalChristmas yearand discussedNew above.Year’s Eve.

Our primary operations are reported in two business segments: theatres,theatres and hotels and resorts. This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses fiscal 2025 and fiscal 2024 items and year-to-year comparisons between fiscal 2025 and fiscal 2024. Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023. Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this MD&A can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28,26, 2023.2024. Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.

Our aggregate cash capital expenditures, acquisitions and net purchases of interests in, and contributions to, joint ventures were $83.2 million during fiscal 2025, compared to $83.3 million during fiscal 2024,2024 compared toand $38.8 million during fiscal 2023 and $36.8 million during fiscal 2022.2023. We currently estimate that cash capital expenditures during fiscal 20252026 will be in the $70$50 - $85$55 million range, with significant investments in our hotels division now behind us as discussed below. We will, however, continue to monitor our operating results and economic and industry conditions so that we may adjust our plans accordingly.

◦UltraScreen DLX®, SuperScreen DLX® (DreamLounger eXperience) and ScreenX conversions. As of December 26,31, 2024,2025, we had a total of 125126 PLF screens at 6564 of our theatre locations (31 UltraScreen DLX auditoriums, one traditional UltraScreen® auditorium, 8987 SuperScreen DLX auditoriums - a slightly smaller screen than an UltraScreen but with the same DreamLounger seating and Dolby Atmos sound - four ScreenX auditoriums, and three IMAX® PLF screens). In fiscal 2023, we introduced our first ScreenX auditorium featuring 270-degree projection providing guests with an immersive viewing experience.experience, and we added three additional ScreenX auditoriums at additional theatres in fiscal 2025. As of December 26,31, 2024,2025, we offered at least one PLF screen in approximately 83% of our company-owned theatres, once again a percentage we believe to be the highest percentage among the largest theatre chains in the nation. In addition, as of December 26,31, 20242025 we offered more than one PLF screen in approximately 62% of our company-owned theatres, which we believe gives us significant operational flexibility to maximize revenue by showing more than one major film on PLF screens at a theatre, particularly during opening weekends for films and at peak times during the year. Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience.

◦Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. As of December 26,31, 2024,2025, we offered bars/full liquor service under the concepts Take Five Lounge, Take Five Express and The Tavern at 4948 theatres, representing approximately 63%62% of our company-owned theatres. In select locations without a Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. As of December 26,31, 2024,2025, we also offered one or more in-lobby dining concepts, including the pizza concept Zaffiro’s® Express and hamburger and other Americana fare concept Reel Sizzle, in 4039 theatres, representing approximately 69%68% of our company-owned theatres (excluding our in-theatre dining theatres). In select locations without a Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. We also operate three Zaffiro’s® Pizzeria and Bar full-service restaurants.

◦In-theatre dining concepts. As of December 26,31, 2024,2025, we offered a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 2920 theatres, representing approximately 37%26% of our company-owned theatres, through two service models. At 2114 theatres we offer in-theatre dining operating under the BistroPlex® and Movie Tavern by Marcus brands.brands with ordering at the bar, online, mobile app/web, and in select locations with servers, for food delivery to seats. In addition, at 86 theatres with in-theatre dining operating under the Movie Tavern by Marcus and Marcus Theatres brand,brands, we also offer the same complete menu available forto order at the concession stand,stand bar,in oraddition ourto online/ordering with online, mobile app/web withfor fooddelivery to seats or pickup at the concession stand.

◦Expanding and evolving our food and beverage operations described above. We will continue to test new concepts and enhance our existing concepts in order to provide further options to our guests and increase our average concession/food and beverage revenues per person. In fiscal 2025, we began testing new lobby concession stand queuing line configurations that integrate merchandise displays for grab-n-go candy, snacks, select food items and souvenir merchandise as part of the queuing line. We expect to expand the use of these queuing line merchandise displays to additional theatres in fiscal 2026. Strategies may also include expanded sports programming, live bingo and other entertainment options in our signature bars. Additionally, we expect to continue refining the service model at our Movie Tavern by Marcus locations to optimize the use of serversservers, mobile ordering, and/or add additional concessionsconcession stands and maximize our food and beverage revenues. In fiscal 2025, we began testing QR code mobile food and beverage ordering for delivery to seats at select in-theatre dining locations. We expect to expand the number of locations with QR code mobile ordering, both for seat delivery and for concession stand order pickup, in fiscal 2026.

◦Evolving and investing in what we believe to be our best-in-class customer loyalty program called Magical Movie RewardsSM (“MMR”). We currently have approximately 6.56.9 million members enrolled in the program. Approximately 48%50% of all box office transactions and 41%44% of total transactions in our theatres during fiscal 20242025 were completed by registered members of the loyalty program. We believe that this program contributes to increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and, ultimately, improved operating results. In fiscal 2025,2026, we plan to make additional investments in technology that will provide further insights intoenhance loyalty data insights on customer preferences, habits and tendencies, facilitating more targeted and effective marketing efforts that are tailored to MMR members.

◦Modernizing pricing strategies based upon consumer demand. We currently offer a number of very successful pricing promotions, including “Value Tuesday,” “Student Thursday” and a “Young-at-Heart” program for seniors on Friday afternoons. During fiscal 2024, we also introduced a $7an Everyday Matinee for seniors and children, offering a discounted $7 admission for showtimes before 4 p.m. and have continued to make strategic price alterations to the program throughout fiscal 2025 to optimize revenue. We believe these promotions have increased movie going frequency and reached a customer who may have stopped going to the movies because of price, without adversely impacting the movie-going habits of our regular weekend customers. Conversely, we charge a higher ticket price for PLF screens and have implemented higher pricing on Friday and Saturday evenings during certain peak moviegoing times of the year. We expect to continue to optimize revenue management and implement additional pricing strategies based upon consumer demand.

◦ExpandingDelivering thea usebest-in-class ofdigital technologyexperience inthrough alla facetsfeature-rich ofapp ourand business.website ensuring a frictionless customer journey. We continue to enhance our mobile ticketing capabilities, our downloadable Marcus Theatres mobile application and our marcustheatres.com website. WeOur addedmobile application offers food and beverage ordering capabilities to our mobile application at all of our theatres in fiscal 2020.theatres. In fiscal 20252025, we launched a redesigned ticketing website, including enhancements to streamline the ticket ordering process for mobile users with digital wallet payment methods. In early fiscal 2026, we launched a redesigned marcustheatres.com website that improves the overall customer experience, and we plan to make additional investments in both our website and mobile app technology to further improve ease-of-use and the overall customer experience for both ticketing and food and beverage ordering. We have continued to install additional theatre-level technology, such as new ticketing and food ordering kiosks, new digital menu boards and concession advertising monitors. Each of these enhancements is designed to improve customer interactions, both at the theatre and through mobile platforms and other electronic devices, while enhancing add-on food and beverage sales opportunities through promotion and on-screen offers. We also believe that maximizing the use of these technology enhancements will improve labor productivity and efficiency.

◦LaunchingExpanding aMarcus Movie Club, our subscription program that encourages more frequent movie-going. In fiscal 2024, we introduced Marcus Movie Club, replacing the previously piloted test programs, MovieFlex® and MovieFlex®+.Club. For $9.99 per month or $109.89a annually,discounted annual membership, moviegoers who join Marcus Movie Club receive a credit to see any 2D movie each month with rollover of unused credits, a 20% discount on food and beverage, unlimited access to additional tickets for $9.99, and waived ticket surcharge fees.fees, and free Marcus Mystery Movies. We plan to promote and grow this program in fiscal 2025,2026, and we believe that the program will drive increased recurring moviegoing over the long-term and increased loyalty to Marcus Theatres.

◦Developing promotions that feature and elevate movies beyond blockbuster films. In fiscal 2024, we debuted Marcus Mystery Movie, a promotion that on two Mondays each month gives customers the opportunity to attend a 7 p.m. screening of an upcoming movie before its official release date for a $5 ticket, while the movie title is not announced until showtime. The program highlights films of all genres and movie types including small and mid-size films, in addition to expected blockbuster releases. BasedWe oncontinued our initialto experience andsuccess customer feedback, we believewith the Marcus Mystery Movie program in fiscal 2025, and we believe this program generates additional attendance by bringing customers out to see films that they might not have otherwise chosen to see, yet find themselves enjoying, while building awareness of coming attractions during the preshow trailers.

◦Expanding electronic passports with packaged film series. In fiscal 2023, we launched Marcus Passport, a program that allows customers to purchase a passport ticket with access to every movie that is playing as part of a Marcus Theatres film series, priced at a discount to purchasing tickets for each movie individually. Our film series showcase multiple movies that celebrate specific genres, holidays, franchises, filmmakers and more. The program launched in fiscal 2023 with a Best Picture Passport featuring the ten Academy Awards Best Picture nominees, followed by additional series throughout the year including winter and summer Kids Dream Passports each featuring twelve family films, Flashback Cinema Passport, Hunger Games Passport, The Chosen Passport, Disney Pixar Passport and a holiday Seasons’ Screening Passport. In fiscal 2024, we grew the program from 19 to 22 passport series, including a mix of newly released films, retro films, and a combination of newly released and retro films. In fiscal 2025, we offered 20 passport series and we sold 6% more passports than we did in fiscal 2024. We expect to continue to leverage our Marcus Passport offerings in fiscal 2026 to promote and increase moviegoing.

◦Testing and subsequently implementing additional entertainment options within theatre auditoriums. Examples of initiatives may include sports bars for viewing live sports (possibly with online gambling where available), sports gaming, and interactive live bingo auditoriums. In fiscal 2022, we introduced a sports viewing auditorium,auditorium branded The Wall® in our theatre in Gurnee, Illinois as part of our initial test of this strategy. The Wall combines multi-screen sports viewing with our complete in-theatre dining food and beverage menu, providing customers a premium sports bar experience. We have since enhanced our sports and events programming in our Take Five Lounges, and we continue to evaluate potential expansion of similar sports viewing auditoriums in additional theatres and markets.

◦Exploring new viewing experiences for our guests. For example, we currently offer a 4DX auditorium at one of our theatres. 4DX delivers an immersive multi-sensory cinematic experience, including synchronized motion seats and environmental effects such as water, wind, fog, scent and more, to enhance the action on screen. In fiscal 2023,2025, we converted onethree of our existing auditoriums to a ScreenX auditorium.auditorium, and now currently offer ScreenX at four of our theatres. ScreenX is a panoramic film format that presents films with expanded, dual-sided, 270-degree screens projected on the walls in a theatre. In fiscal 2025,2026, we plan to convert several additional screens to ScreenX and we will consider additional experiential offerings in the future.

The yearsindustry recovery following the COVID-19 pandemic havehas been challenging for all theatre operators. We will continue to evaluate the opportunities that these challenging situations create, and will consider potential acquisitions in the future. The movie theatre industry is very fragmented, with approximately 50% of United States screens owned by the three largest theatre circuits and the other 50% owned by anhundreds estimated 800of smaller operators, making it very difficult to predict when acquisition opportunities may arise. We do not believe that we are geographically constrained, and we believe that we may be able to add value to certain theatres through our various proprietary amenities and operating expertise.

◦Sales, marketing and revenue management strategies designed to further increase our profitability. The priority will be to focus on capitalizing on strong group demand and improvingleisure business travel trends,demand, maximizing revenue per available room, optimizing event space and growing ancillary revenues.

◦Hotel renovations. We regularly renovate and update our hotels and resorts. For example, at the Grand Geneva Resort & Spa we renovated the lobby in fiscal 2021, completed guest room renovations in fiscal 2023, completed a meeting space renovation project in fiscal 2024, and startedcompleted construction onof a new 10-hole11-hole golf short course late in fiscal 2024.2025 that will open in spring 2026. At The Pfister Hotel, we completed a ballroom and meeting space renovation in fiscal 2023 and completed a guest room renovation project in fiscal 2024. Additionally,At Hilton Milwaukee, in fiscal 2025 we begancompleted an approximatelyover $40 million renovation atthat included the Hilton Milwaukee in late fiscal 2024 that will include a transformation of 554 guest rooms, meeting and event spaces, and the historic hotel lobby, which is expected to be completed in fiscal 2025.lobby.

Our future plans for our hotels and resorts division also include continued reinvestment in our existing properties to maintain and enhance their value. We anticipate additionalsome reinvestmentmoderate reinvestments during fiscal 20252026 and fiscal 20262027 at the Grand Geneva Resort & Spa, Hilton Milwaukee and AC Hotel Chicago.Chicago, and Saint Kate - The Arts Hotel. To maintain our existing hotels and resorts, we currently anticipate that our fiscal 20252026 capital expenditures in this division will total approximately $50$25 - $60$30 million, with the significant investmentreinvestment in the renovation at Hilton Milwaukee.Milwaukee during fiscal 2025 now behind us.

We have been very opportunistic in our past hotel investments as we have, on many occasions, acquired assets at favorable terms and then improved the properties and operations to create value. Unlike our theatre assets where the majority of our return on investment comes from the annual cash flow generated by operations, a portion of the return on our hotel investments is derived from effective portfolio management, which includes determining the proper branding strategy for a given asset, the proper level of investment and upgrades and identifying an effective divestiture strategy for the asset when appropriate. As a result, we may periodically explore opportunities to monetize all or a portion of one or more owned hotels. InWe Decemberwill 2022,consider many factors as we soldactively Thereview Skirvinopportunities Hiltonto execute this strategy, including income tax considerations, the ability to retain management, pricing and individual market considerations. We evaluate strategies for $36.75our million.hotels on an asset-by-asset basis. We have redeployednot set a specific goal for the sale proceeds, netnumber of mortgagehotels debtthat andmay landbe leaseconsidered retirement,for intothis otherstrategy, investmentnor opportunitieshave inwe ourset hotela businessspecific timetable. It is possible that we believemay willsell providea moreparticular attractivehotel investmentor returns.hotels during fiscal 2026 or beyond if we determine that such action is in the best interest of our shareholders.

•Strategic growth. Transactional activity in the hotel industry has been limited during the last threeseveral years due to lingering effects of the pandemic andin itscertain lingering effectsmarkets and the higher cost of debt capital for financing hotel acquisitions. Our hotels and resorts division expects to continue to seek opportunities to invest in new hotels and increase the number of rooms under management in the future. Growth opportunities that we may explore in the future include:

•In addition to operational and growth strategies in our operating divisions, we will continue to seek additional opportunities to enhance shareholder value, including strategies related to our dividend policy and share repurchases. During fiscal 2024,2025, we repurchased 0.71.1 million shares of our common stock for $9.7$18.0 million in the open market under our existing Board of Directors stock repurchase authorizationsauthorizations. andWe continuedincreased our regular quarterly common stock cash dividend rate by 14% during the third quarter of fiscal 2025, increasing our quarterly cash dividend from $0.07 to $0.08 per share of common stock. In prior years, we have periodically paid special dividends.

•We will also continue to evaluate opportunities to sell real estate when appropriate, allowing us to benefit from the underlying value of our real estate assets. When possible, we will attempt to avail ourselves of the provisions of Internal Revenue Code §1031 related to tax-deferred like-kind exchange transactions. We are actively marketing a number of pieces of surplus real estate and other non-core real estate. During fiscal 2023, we sold one surplus land parcel and two former theatres generating total proceeds of $4.2 million. During fiscal 2024, we sold one former theatre generating total proceeds of $3.1 million. During fiscal 2025, we acquired land for future development in connection with a like-kind exchange following the sale of three excess land parcels in 2024 and 2025 in which the income tax gains were deferred. We believe we may receive total sales proceeds from real estate sales during the next fiscal year totaling approximately $2$1 - $3$5 million, depending upon demand for the real estate in question.

The following table sets forth revenues, operating income, other income (expense), net earnings (loss) attributable to The Marcus Corporation and net earnings (loss) per diluted common share for the past three fiscal years (in millions, except for per share and percentage change data) :

Operating income decreasedincreased during fiscal 20242025 compared to fiscal 2023, primarily2024, due to aan decreaseincrease in operating income from our theatre division and an increase in corporate operating losses,division, partially offset by increaseddecreased operating income from our hotels and resorts division.division and increased operating expenses from corporate items. Operating expenses from our corporate items, which include amounts not allocable to the business segments, increased during fiscal 20242025 compared to fiscal 20232024 due primarily to increased long-term incentive compensation expenses, director compensation, personnel and benefits cost inflation, and increased professional fees related to convertible debt repurchase transactions andlegal, tax planning, and expensesinformation relatedtechnology. toThe theadditional relocationoperating ofdays ourin corporatefiscal office.2025 favorably impacted operating income by approximately $5.3 million.

Our operating income during fiscal 2025 was negatively impacted by impairment charges of approximately $5.2 million, or approximately $0.12 per diluted common share, related to eight operating theatres and one vacant parcel of land. Our operating income during fiscal 2024 was negatively impacted by impairment charges of approximately $6.8 million, or approximately $0.16 per diluted common share, primarily related to four operating theatres, one operating theatre that we closed in early fiscal 2025, and one permanently closed theatre. Our operating income during fiscal 2023 was negatively impacted by impairment charges of approximately $1.1 million, or approximately $0.02 per diluted common share, primarily related to two permanently closed theatres and surplus real estate. Operating income during fiscal 2024 was also negatively impacted by $2.2 million, or $0.05 per diluted common share, related to settlement and legal expenses in connection with an equipment lease agreement impacted by the COVID-19 pandemic in our theatre division.

Investment income was $2.2$0.9 million during fiscal 20242025 compared to $2.4$2.2 million of investment income during fiscal 2023.2024. Investment income (loss) includes interest earned on cash and cash equivalents, as well as increases/decreases in the value of marketable securities and increases in the cash surrender value of a life insurance policy. Investment income (loss) during fiscal 20252026 may vary compared to fiscal 2024,2025, primarily dependent upon changes in the value of marketable securities.

Interest expense totaled $11.0$11.5 million during fiscal 2024,2025, aan decreaseincrease of $1.7$0.5 million, or 13.7%,4.6%, compared to interest expense of $12.7$11.0 million during fiscal 2023.2024. The decreaseincrease in interest expense during fiscal 20242025 was due primarily to $1.1increased millionborrowing oflevels additionaland an increase in our average interest payablerate, onpartially ouroffset convertible notes during fiscal 2023 that did not recur,by a decrease in noncash amortization of debt issuance costs, and lower borrowing levels during fiscal 2024, partially offset by an increase in our average interest rate, as discussed in the Liquidity section of this MD&A below.costs. Interest expense during fiscal 20242025 included approximately $1.1$0.6 million in noncash amortization of debt issuance costs. During fiscal 2025,2026, we estimate that noncash amortization of debt issuance costs will be approximately $0.6 million, excluding the impact of any new debt issuance costs. We currently expect our total interest expense during fiscal 20252026 to remain consistent with interest expense in fiscal 2024.2025. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

We incurredearned other income of $2.8 million during fiscal 2025, an increase of approximately $4.4 million compared to other expense of $1.5 million during fiscal 2024,2024. Other income was favorably impacted by a decreasegain on a property insurance settlement of approximately $0.3$4.5 million comparedrelated to otherinsured expenseproperty ofdamage $1.8at millionone theatre location during fiscal 2023.2025. Other expense consists primarily of the non-service cost components of our periodic pension costs. Based upon information from an actuarial report for our pension plans, we expect other expense to be approximately $1.8$1.9 million during fiscal 2025.2026.

We reported equity losses from two unconsolidated joint ventures of approximately $0.6 million during fiscal 2024,2025 compared with equity losses from one unconsolidated joint venture of approximately $0.1 million duringand fiscal 2023.2024. The equity losses in both years consist ofinclude our pro-rata share of losses from the Kimpton Hotel Monaco Pittsburgh in Pittsburgh, Pennsylvania, acquired in December 2021 and in which we have a 10% minority ownership interest. The equity losses in fiscalboth 2024years also include our pro-rata share of losses from The Lofton Hotel in Minneapolis, Minnesota, acquired in March 2024 and in which we have a 24.7% minority ownership interest.

We reported income tax benefit during fiscal 20242025 of $2.4$4.0 million compared to income tax expensebenefit of $6.9$2.4 million in fiscal 2023.2024. Our fiscal 20242025 income tax benefit was favorably impacted by a $6.1$7.6 million historic tax credit (net of valuation allowance) from the Hilton Milwaukee renovation and by a $0.4 million release of valuation allowances previously recorded against deferred tax assets for state net operating loss carryforwards (net of federal benefit), partially offset by $3.9 million of negative impact from nondeductible debt conversion expense resulting from the Convertible Notes Repurchases and related termination of the Capped Call Transactions (as described below), and $1.8$1.7 million of negative impact primarily from excess compensation subject to deduction limitations. Our fiscal 20242025 effective income tax rate was 23.7%.(45.8)%. The effective income tax rate was favorably impacted 60.087.1 percentage points due to the historic tax credits (net of valuation allowance) and by 4.7 percentage points due to the valuation allowance adjustment (net of federal benefit), and was negatively impacted 38.1 percentage points due to the Convertible Notes Repurchases and termination of the Capped Call Transactions, and 17.519.6 percentage points due to excess compensation deduction limitations.

Our fiscal 20232024 income tax expensebenefit of $2.4 million was favorably impacted by $0.8a $6.1 million release of valuation allowances previously recorded against deferred tax assets for state net operating loss carryforwards (net of federal benefit), partially offset by $1.2$3.9 million of negative impact from nondeductible debt conversion expense resulting from the Convertible Notes Repurchases and related termination of the Capped Call Transactions (as described below), and $1.8 million of negative impact primarily from excess compensation subject to deduction limitations. Our fiscal 20232024 effective income tax rate was 31.7%.23.7%. The effective income tax rate was favorably impacted 3.860.0 percentage points due to the valuation allowance adjustment (net of federal benefit), and was negatively impacted 5.438.1 percentage points due to the Convertible Notes Repurchases and termination of the Capped Call Transactions, and 17.5 percentage points due to excess compensation deduction limitations. We currently anticipate that our fiscal 20252026 effective income tax rate may be in the 26-30% range, excluding any potential further changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax adjustments.

Weighted-average diluted shares outstanding was 31.931.3 million during fiscal 2024.2025, Weighted-averagecompared to 31.9 million weighted-average diluted shares outstanding was 41.0 million during fiscal 2023, and included shares from the conversion of the convertible notes (which were repurchased and retired in fiscal 2024).2024. All per share data in this MD&A is presented on a fully diluted basis, however, for periods when we report a net loss, common stock equivalents are excluded from the computation of diluted loss per share as their inclusion would have an anti-dilutive effect.

Our theatre division revenues and operating income decreased during fiscal 2024 compared to fiscal 2023 primarily due to lower attendance in the first half of fiscal 2024 compared to the first half of fiscal 2023. The film slate during the first half of fiscal 20242025 was significantly better, generating stronger box office performance compared to the first half of fiscal 2024, which was negatively impacted by the content supply chain disruption from the shutdown of movie production during the WGA and SAG-AFTRA labor strikes in 2023,2023. whichOperating contributedincome toduring fiscal 2025 was favorably impacted by a weaker$3.6 slatemillion ofdecrease availablein filmsdepreciation and amortization expense and a $0.6 million decrease in rent expense compared to the first half of fiscal 2023.2024, partially offset by increased labor, advertising, benefits, insurance, and other costs. Our operating income during fiscal 20242025 was also negatively impacted by impairment charges of $5.2 million related to eight operating theatres, and one vacant parcel of land, compared to impairment charges of $6.8 million during fiscal 2024 related to four operating theatres, one operating theatre that we closed in early fiscal 2025, and one permanently closed theatre,theatre. comparedOperating to impairment charges of $1.1 millionincome during fiscal 20232024 was also negatively impacted by $2.2 million related to two permanently closed theatressettlement and surpluslegal realexpenses estate.in connection with an equipment lease agreement impacted by the COVID-19 pandemic.

According to the data received from Comscore, our comparable theatres underperformed the industry during fiscal 20242025 compared to fiscal 20232024 by 1.61.3 percentage points. We believe our underperformance was due to an unfavorable mix of filmsfilms, primarily during the first halfthree quarters of fiscal 20242025, that waswere more appealing to audiences in other parts of the U.S. than our Midwestern markets, compared to a favorable film mix during the first half of fiscal 2023.markets. In addition, we believe our underperformance in the fourthfirst quarterhalf of fiscal 20242025 was attributable to strategic pricing decisions made during the release of blockbuster films and holiday periods (we did not raise prices on blockbuster films, unlike many national exhibitors), resulting in lower average ticket prices compared to other exhibitors. We believeimplemented oura blockbuster pricing strategy promoted moviegoing by not raising ticket prices on blockbuster filmslate in athe yearsecond withquarter of fiscal 2025 contributing to our comparable theatres outperforming the industry during the second half of fiscal 2025 compared to the second half of fiscal 2024. We also believe our fourth quarter of fiscal 2025 benefitted from a weakermore filmfavorable slate,mix whichof wefilms, believeparticularly willfamily benefitfilms, that was more appealing to audiences in our long-termMidwestern theatre attendance moving forward.markets. Additional data received and compiled by us from Comscore indicates our admission revenues during fiscal 2025 and fiscal 2024 represented approximately 3.0% of the total admission revenues in the U.S. during theboth periodperiods (commonly referred to as market share in our industry) compared to 3.1% during fiscal 2023.. Our goal is to continue our past pattern of outperforming the industry, but our ability to do so in any given quarter or fiscal year will likely be partially dependent upon film mix, weather and the competitive landscape in our markets.

Our highest grossing films during fiscal 20242025 included InsideA OutMinecraft Movie, Wicked: For Good, Lilo & Stitch, Zootopia 2, Deadpool & Wolverine, Wicked, Moana 2 and Despicable Me 4.Superman. The film slate during fiscal 20242025 was moreless weighted towards our top movies compared to fiscal 2023,2024, as evidenced by the fact that our top ten films during fiscal 20242025 accounted for 45%39% of our total box office results, compared to 39%45% for the top ten films during fiscal 2023,2024, expressed as a percentage of the total admission revenues for the period. An increased reliance on just a few blockbuster films often has the effect of increasing our film rental costs during the period, as there is a less diverse mix of films to offset the higher cost blockbuster films. Generally, the greater a film performs, the greater the film rental cost tends to be as a percentage of box office receipts. AsHowever, in fiscal 2025 the film slate was stronger with a resultbroader range of afilms lessperforming well, resulting in fewer lower cost films to offset higher cost blockbuster films. Despite the more diverse film slate, our overall film rental percentage increased during fiscal 20242025 remained similar compared to fiscal 2023.2024.

Total theatre attendance at comparable theatre locations decreased 3.7%0.3% during fiscal 20242025 compared to fiscal 2023,2024, including the benefit from six additional operating days as described above. The decrease in attendance was primarily due to alower decreasebox inoffice performances from the qualitytop of wide releasefive films induring fiscal 2025 compared to the firsttop halffive offilms during fiscal 2024, resulting in decreases in both admission revenues and concession revenues.2024. In total, we played 529488 films and 304288 alternate content attractions at our theatres during fiscal 20242025 compared to 465529 films and 283304 alternate content attractions during fiscal 2023.2024. The increasedecrease in films played in fiscal 20242025 compared to fiscal 20232024 is primarily due to ana increasedecrease in limited-release films. In general, following the COVID-19 pandemic we have increased the number of limited-release films and alternative content that we play, including independent films, retro series, faith-based content and live events, in response to the slower recovery in the quantity of wide-release films and to promote moviegoing. On a calendar year basis (January 1 through December 31) total theatre attendance for our comparable theatres decreased 4.6% during 2025 compared to 2024.

The second quarter of 2026 and 2025 consisted of the three month periods beginning on April 1 and ended on June 30. The first quarterhalf of fiscal 2026 consisted of the threesix month period beginning on January 1, 2026 and ended on MarchJune 31,30, 2026 and included five fewer operating days compared to the prior year fiscal first quarter.half. The first quarterhalf of fiscal 2025 consisted of the three month period beginning on December 27, 2024 and ended on MarchJune 31,30, 2025 (comprised of five operating days between December 27-31, 2024, plus 90181 operating days in the calendar first quarterhalf of 2025).

The following table sets forth revenues, operating loss,income (loss), other income (expense), net loss,earnings (loss), and net earnings (loss) per diluted common share for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025 (in millions, except for per share and variance percentage data):

Revenues increased during the second quarter and first quarterhalf of fiscal 2026 compared to the second quarter and first quarterhalf of fiscal 2025 due to increased revenues from both our theatre division and hotels and resorts division. OurFirst firsthalf quarterrevenues isincreased typicallydespite the seasonallyfact weakest quarter of our fiscal year due to the traditionally reduced level of winter travel at our predominantly Midwestern portfolio of owned hotels. Additionally,that the first quarterhalf of fiscal 2026 included five less operating days compared to the first quarterhalf of fiscal 2025, negatively impacting revenue growth by approximately $15.3 million.

Operating lossincome during the firstsecond quarter of fiscal 2026 improved by $1.2$14.1 million compared to the second quarter of fiscal 2025, primarily due to increased revenues before cost reimbursements from both our theatre division and hotels and resorts division, a $0.6 million decrease in corporate expenses and a $0.3 million decrease in depreciation expense. Operating income (loss) during the first half of fiscal 2026 improved by $15.2 million compared to the first quarterhalf of fiscal 2025 due to increased revenues from both our theatre division,and hotels and resorts divisions, decreased corporate expenses, and a $0.3 million decrease in depreciation expense, partially offset by a $5.3 million unfavorable impact as a result of five fewer operating days, a decrease in revenue before cost reimbursements from our hotels and resorts division, and an increase in corporate expenses.days. Operating income (loss) during the first quarterhalf of fiscal 2026 was negatively impacted by a $0.1$0.2 million loss on disposition of property, equipment and other assets, compared to a $1.4$1.2 million gain on disposition of property, equipment and other assets related to the sale of surplus land during the first quarterhalf of fiscal 2025.

Our interest expense totaled $2.6$2.7 million and $5.4 million for the second quarter and first quarterhalf of fiscal 2026, respectively, compared to $2.8$3.0 million and $5.8 million for the second quarter and first quarterhalf of fiscal 2025.2025, respectively. The decrease in interest expense during the second quarter and first quarterhalf of fiscal 2026 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

We did not have any significant variations in investment income, other expenses,expenses and equity losses from unconsolidated joint ventures during the second quarter and first quarterhalf of fiscal 2026, compared to the second quarter and first quarterhalf of fiscal 2025.

Net earnings (loss) and net earnings (loss) per diluted common share improved during the second quarter and first quarterhalf of fiscal 2026 compared to the second quarter and first quarterhalf of fiscal 2025, resulting primarily from aan decreaseincrease in operating lossincome as described above.

We reported income tax benefitexpense of $7.6$8.1 million for the firstsecond quarter of fiscal 2026 compared to benefitexpense of $7.4$2.7 million for the second quarter of fiscal 2025. We reported income tax expense of $0.5 million for the first quarterhalf of fiscal 2026 compared to a benefit of $4.6 million for the first half of fiscal 2025. Our fiscal 2026 first quarterhalf effective income tax rate was 33.2%50.8% compared to our fiscal 2025 first quarterhalf effective income tax rate of 30.4%.32.7%. The effective income tax rate for the first half of 2026 was negatively impacted by discrete tax items related to stock option exercises. The effective income tax rate in both fiscal 2026 first quarterhalf and fiscal 2025 first quarterhalf werewas negatively impacted by excess compensation subject to deduction limitations. We anticipate that our effective income tax rate for fiscal 2026 may be in the 32% to 34% range, excluding any potential changes in federal or state income tax rates, valuation allowance adjustments or other one-time tax benefits. Our actual fiscal 2026 effective income tax rate may be different from our estimated quarterly rates depending upon actual facts and circumstances.

The following table sets forth revenues, operating lossincome, operating margin, Adjusted EBITDA and operatingAdjusted EBITDA margin for our theatre division for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage andpercentage, operating margin and Adjusted EBITDA margin):

(2)See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenues before cost reimbursements. See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations.

Revenues and operating lossincome for the Theatre division improved during the firstsecond quarter of fiscal 2026 compared to the firstsecond quarter of fiscal 2025, primarily due to increased attendance driven by stronger performances from filmsfilms. and a $0.4 million decrease in depreciation expense, partially offset by five fewerAdditionally, operating daysincome in the firstsecond quarter of fiscal 2026 compared to the first quarter of fiscal 2025. The five fewer operating days in the first quarter of fiscal 2026 (which occurred between the Christmas and New Year’s holidays in the prior year period) negatively impacted revenue growth by $12.2 million and the change in operating loss by approximately $5.0 million. Additionally, operating loss in the prior year period was favorably impacted by a $1.4$0.8 million decrease in depreciation expense and $0.3 million gain on disposition of property, equipment and other assets relatedcompared to thea sale$0.2 million loss on disposition of surplusproperty, landequipment duringand theother firstassets in second quarter of fiscal 2025.

Our theatre division Adjusted EBITDA and Adjusted EBITDA margin increased during the firstsecond quarter of fiscal 2026 compared to the firstsecond quarter of fiscal 2025 driven by improved operating leverage from increased revenues and higher labor efficiency, partially offset by increased repairs & maintenance, and general administrative expenses. During the first half of fiscal 2026, theatre division Adjusted EBITDA and Adjusted EBITDA margin increased compared to the first half of fiscal 2025, due to increased revenues and improved labor efficiency, partially offset by a $5.0 million unfavorable impact from five fewer operating days and increases in benefits, insurance,insurance and general administrative expenses.

The following table provides a further breakdown of the components of revenues for the theatre division for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):

According to data received from Comscore (a national box office reporting service for the theatre industry) and compiled by us to evaluate our fiscal 2026 second quarter and first quarterhalf results, U.S. box office receipts increased 5.0%11.5% during our fiscal 2026 firstsecond quarter compared to our fiscal 2025 firstsecond quarter, indicating that our increase in admission revenues for comparable theatres (excluding theatres closed during the past year) of 9.8%16.6% during the firstsecond quarter of fiscal 2026 outperformed the industry by 4.8 percentage points. On a calendar quarter basis (January 1st through March 31st), U.S. box office receipts increased 21.4%, indicating that our increase in admissions revenues for our comparable theatres of 29.0%, outperformed the industry by 7.65.1 percentage points. We believe our over-performanceoutperformance in the firstsecond quarter of fiscal 2026 was largely attributable to strategic pricing changes made late during the second quarter of fiscal 2025, resulting in higher average ticket price growth compared to other exhibitors. We believe our outperformance was also the result of a favorable film mix, that included family films such as Hoppers,The ZootopiaSuper 2,Mario GOAT,Galaxy Movie, Toy Story 5, and AvatarStar Wars: FireThe Mandalorian and Ash,Grogu, that were more appealing to audiences in our Midwestern markets than in other parts of the U.S.

Additional data received and compiled by us from Comscore indicates our admission revenues at comparable theatres during the second quarter and first quarterhalf of fiscal 2026 represented approximately 3.1%3.0% of the total admission revenues in the U.S. (commonly referred to as market share in our industry), compared to 3.0%2.8% and 2.9% during the second quarter and first quarterhalf of fiscal 2025.2025, respectively. Our goal is to outperform the industry, but our ability to do so in any given quarter will likely be partially dependent upon film mix, pricing strategies, weather and the competitive landscape in our markets.

Total theatre attendance for our comparable theatres increased 1.9%10.9% during the firstsecond quarter of fiscal 2026 compared to the firstsecond quarter of fiscal 2025, which was primarily attributable to increased box office performances from films and negatively impacted by five less operating days described above.films. During the firstsecond quarter of fiscal 2026, there were 3031 wide-release films (films shown in over approximately 1,500 theatres in the U.S., excluding re-release films) compared to 2729 wide-release films during the firstsecond quarter of fiscal 2025. On a calendar quarter basis (January 1 through March 31), total theatre attendance for our comparable theatres increased 19.1% during the first quarter of 2026 compared to the first quarter of 2025.

Our highest grossing films during the fiscal 2026 firstsecond quarter included ProjectThe HailSuper Mary,Mario Hoppers,Galaxy Avatar:Movie, FireMichael, Toy Story 5, Obsession, and Ash, Scream 7, and Zootopia 2.Backrooms. Our top five films during our fiscal 2026 firstsecond quarter accounted for 40%55% of our total box office results, compared to 45%59% for the top five films during the firstsecond quarter of fiscal 2025, both expressed as a percentage of the total admission revenues for the relevant period. An increased reliance on just a few blockbuster films during a given quarter often has the effect of increasing our film rental costs during the period, as generally the better a particular film performs, the greater the film rental cost tends to be as a percentage of box office receipts. However,As duringa result of the firstless quarter of 2026, the film slate was stronger, with a broader range of films performing well, resulting in fewer lower cost films to offset higher cost blockbuster films. Despite the more diverseconcentrated film slate, our overall film cost as a percentage of admission revenues during the firstsecond quarter of fiscal 2026 was flatdecreased compared to the same period in the prior fiscal year.

Our average ticket price increased 7.8%5.2% and 6.2% during the second quarter and first quarterhalf of fiscal 2026, respectively, compared to the second quarter and first quarterhalf of fiscal 2025. Our average ticket price during the second quarter and first quarterhalf of fiscal 2026 was favorably impacted by anstrategic increasedpricing changes and ticket mix. These increases were partially offset by a decrease in the percentage of our ticket sales coming from premium large format (PLF) screens, strategic pricing changes, and a favorable ticket mix. These increases were partially offset by an increase in the percentage of our attendance coming from Value Tuesday.screens. The overall change in average ticket price favorably impacted our admission revenues of our comparable theatres by $3.2$3.5 million and $6.9 million during the second quarter and first quarterhalf of fiscal 20262026, respectively, compared to the second quarter and first quarterhalf of fiscal 2025.

Our average concession revenues per person increased by 2.4% and 2.6% during the second quarter and first quarterhalf of fiscal 2026, respectively, compared to the second quarter and first quarterhalf of fiscal 2025, resulting from increases in movie-themed merchandise sales, concessions menu prices, and the number of concessions transactions per person or incidence rate. The overall increase in average concession revenues per person favorably impacted our concession revenues of our comparable theatres by $1.0$1.5 million and $2.6 million during the second quarter and first quarterhalf of fiscal 2026, respectively, compared to the second quarter and first quarterhalf of fiscal 2025.

Other revenues during the second quarter and first quarterhalf of fiscal 2026 increased by $0.2$1.0 million and $1.2 million, respectively, compared to the second quarter and first quarterhalf of fiscal 2025, due largely to the impact of increased attendance on internet surcharge ticketing fees and preshow and in-app advertising revenue.

We ended the firstsecond quarter of fiscal 2026 and fiscal 2025 with a total of 961 company-owned screens in 76 theatres and 14 managed screens at one theatre, compared to 971 company-owned screens in 77 theatres and 14 managed screens at one theatre, duringat boththe periods.end of the second quarter of fiscal 2025. We made the decision to close underperforming theatres during fiscal 2025 and 2026, including one underperforming leased Movie Tavern theatre during first quarter of fiscal 2025.2025, and one owned theatre during the second quarter of fiscal 2026.

The following table sets forth revenues, operating income (loss), operating margin, Adjusted EBITDA and operatingAdjusted EBITDA margin for our hotels and resorts division for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage andpercentage, operating margin and Adjusted EBITDA margin):

(1)Operating margin is defined as operating income divided by total revenues before cost reimbursements (2)See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenues before cost reimbursements. See Adjusted EBITDA section below for further discussion and non-GAAP reconciliations.

Hotels and resorts division revenues increased 0.1%9.0% during the firstsecond quarter of fiscal 2026 compared to the firstsecond quarter of fiscal 2025,2025. andDivision revenuesoperating before cost reimbursements decreased 1.1%income during the firstsecond quarter of fiscal 2026 increased $2.5 million compared to the firstsecond quarter of fiscal 2025.2025 Resultsprimarily weredue negativelyto impactedincreased byrevenues fiveand fewerimproved labor efficiency. Conversely, operating daysincome during the firstsecond quarter of fiscal 2026 comparedwas to the first quarter of fiscal 2025. The five fewer operating days during the first quarter of fiscal 2026 negativelyunfavorably impacted revenue growth by approximately $3.1 million and the increase in operating loss by approximately $0.4 million. Operating loss increased $1.9 million during the first quarter of fiscal 2026, compared to the first quarter of fiscal 2025, due to lower revenues, a $0.5 million increase in depreciation expense, asand wella as$0.4 increasesmillion inloss personnel,on benefits,disposition of property, equipment and other costs.assets.

OurDuring hotelsthe andfirst resortshalf divisionof fiscal 2026, Adjusted EBITDA decreasedand duringAdjusted theEBITDA firstmargin quarterincreased ofprimarily fiscaldue 2026to increased revenues compared to the first quarterhalf of fiscal 20252025. andConversely, Adjusted EBITDA during the first half of fiscal 2026 was negatively impacted by approximately $0.4 million due to five fewer operating days, a decrease in other revenue related to certain group business at one of our condo hotel properties, and increases in personnel, benefits,personnel and other costs.

The following table provides a further breakdown of the components of revenues for the hotels and resorts division for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):

Division total revenues before cost reimbursements decreasedincreased 1.1%4.8% during the first quarterhalf of fiscal 2026, compared to the first quarterhalf of fiscal 2025, resultingdue primarilyto fromincreased occupancy at four of our seven comparable owned hotels, partially offset by the negative impact of five fewer operating days due to the change in fiscal year described above and decreases in other revenues driven primarily by a group buyout of one condo hotel property during a portion of the first quarterhalf of 2025 that did not reoccur in the current year quarter and a weaker ski season at Grand Geneva Resort & Spa resulting from unfavorable weather compared to last year. TheseDivision revenuetotal decreasesrevenues before cost reimbursements during the first half of fiscal 2026 were partiallyfavorably offsetimpacted by the favorable impact of Hilton Milwaukee being fully operational compared to the prior year period when the hotel had rooms out of service while undergoing significant renovations.

The following table sets forth certain operating statistics for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025, including our average occupancy percentage (number of occupied rooms as a percentage of available rooms), our average daily room rate, or ADR, and our total revenue per available room, or RevPAR, for comparable company-owned properties:

RevPAR increased at threesix of our seven comparable company-owned properties during the firstsecond quarter of fiscal 2026 compared to the firstsecond quarter of fiscal 2025, driven mainlyby byboth increased occupancy rates and increased average daily rates. Group business as a percentage of our mix of business represented approximately 35.6%45.2% of our total rooms revenue in the firstsecond quarter of fiscal 2026, compared to approximately 34.6%47.1% during the firstsecond quarter of fiscal 2025. Non-group transient pricing decreasedincreased in somemost of our major markets during the firstsecond quarter of fiscal 2026, primarilydriven dueby tostrong lessleisure demand and continued group growth, which resulted in rate compression with the Hilton Milwaukee fully operational compared to the prior year when rooms were out of service due to the renovation, as well asthat increased competitionaverage indaily one market.rates.

According to data received from Smith Travel Research and compiled by us in order to evaluate our fiscal 2026 second quarter and first quarterhalf results, comparable “upper upscale” hotels—hotels identified as our industry— throughout the United States experienced an increaseincreases in RevPAR of 3.9%5.7% and 4.8% during our fiscalsecond 2026quarter and first quarterhalf of fiscal 2026, respectively, compared to our fiscalsecond 2025quarter and first quarter,half of fiscal 2025, leading us to believe we outperformed the industry during the second quarter and first half of fiscal 2026 first quarter by approximately 9.88.2 and 9.9 percentage points.points, respectively. We believe our outperformance during the second quarter and first quarterhalf of fiscal 2026 was partially driven by the favorable impact of the Hilton Milwaukee hotel being fully operational, compared to the second quarter and first quarterhalf of fiscal 2025 when the hotel was undergoing significant renovations.

Data received from Smith Travel Research for our various “competitive sets”—hotels identified in our specific markets that we deem to be competitors to our hotels—indicates that these hotels experienced aan decreaseincrease in RevPAR of 2.9%7.8% during our fiscal 2026 firstsecond quarter, again compared to our fiscal 2025 firstsecond quarter. Therefore, we significantly outperformed our competitive sets during the firstsecond quarter of fiscal 2026 by approximately 16.66.1 percentage points. We believe our outperformance to our competitive sets during the firstsecond quarter of fiscal 2026 resulted primarily from strong performance in our group customer segment, in particular at our renovated hotel properties.properties, coupled with a strong start to the summer golf season at Grand Geneva Resort & Spa. We believe the outperformance to our competitive sets during the firstsecond quarter of fiscal 2026 was also partially attributable to the renovation of Hilton Milwaukee in the prior year period which we believe unfavorably impacted our RevPAR in the firstsecond quarter of fiscal 2025 while favorably impacting competitive hotels. After adjusting for the estimated impact of the Hilton Milwaukee renovation on the prior year, we believe our hotels outperformed their competitive sets during the firstsecond quarter of fiscal 2026 by approximately 11.51.1 percentage point. During the first half of fiscal 2026, hotels in our competitive sets experienced an increase in RevPAR of 5.3%, indicating that we outperformed our competitive set hotels by approximately 9.4 percentage points. After adjusting for the estimated impact of the Hilton Milwaukee renovation on the prior year, we believe our hotels outperformed their competitive sets during the first half of fiscal 2026 by approximately 4.6 percentage points.

We generally expect our revenue trends to track or exceed the overall industry trends for our segment of the industry, particularly in our respective markets. Hotel revenues have historically tracked very closely with traditional macroeconomic statistics, such as the Gross Domestic Product. The U.S. economic outlook remains in a period of heightened uncertainty. In the near term, we expect business travel demand to soften, and we expect our group business to remain stable. Leisure travel demand has softened in the midscale and economy segments of the market, while generally remaining stable in the upper upscale segment of the market that includes most of our properties. Leisure travel in our markets has a seasonal component, peaking in the summer months and slowing down as children return to school and the weather turns colder in our primarily Midwestern markets.

As of the date of this report, our group room revenue bookings for fiscal 2026 - commonly referred to in the hotels and resorts industry as “group pace” - is running approximately 5%3% ahead of where we were at the same time last year. Group room revenue bookings for fiscal 2027 is running in-lineapproximately with9% ahead of where we were at the same time in fiscal 2025 for fiscal 2026. Banquet and catering revenue pace for fiscal 2026 is running in-lineapproximately with4% ahead of where we were at the same time last year. Banquet and catering revenue pace for fiscal 2027 is running approximately 12%9% ahead of where we were at the same time in fiscal 2025 for fiscal 2026.

The following table sets forth Adjusted EBITDA by reportable operating segment for the second quarter and first quarterhalf of fiscal 2026 and fiscal 2025 (in millions, except for variance percentage):

Our movie theatre and hotels and resorts businesses each generate significant and consistent daily amounts of cash, subject to previously-noted seasonality, because each segment’s revenue is derived predominantly from consumer cash purchases. We believe that these relatively consistent and predictable cash sources, as well as the availability of unused credit lines, would be adequate to support the ongoing operational liquidity needs of our businesses. However, our cash position may fluctuate from time-to-time based on seasonality of our businesses, the timing of interest payments on our debt as well as timing of payment of other operating expenses that are paid on an infrequent basis.

Maintaining and protecting a strong balance sheet has always been a core value of The Marcus Corporation during our 90-year history and our financial position remains strong. As of MarchJune 31,30, 2026, we had a cash balance of approximately $11.2$26.3 million, $194.3$219.3 million of availability under our $225 million revolving credit facility, our debt-to-capitalization ratio was 0.28,0.25, and our net leverage ratio was 1.70x1.14x net debt to Adjusted EBITDA. With our strong liquidity position combined with cash generated from operations, we believe we have sufficient liquidity to meet our obligations as they come due and to comply with our debt covenants for at least 12 months from the issuance date of the consolidated financial statements, as well as fund our longer-term capital requirements.

Net cash usedprovided inby operating activities totaled $15.2$38.7 million during the first quarterhalf of fiscal 2026, compared to net cash used in operating activities of $35.3$3.7 million during the first quarterhalf of fiscal 2025. The $20.1$42.4 million decreaseincrease in net cash usedprovided by operating activities was primarily due to ana $8.9$10.7 million favorable impact from the timing of payments of accounts payable, a $1.9$5.0 million decrease in prepaid and other assets, a $4.1$6.8 million increase in accrued compensation, $3.0 million in proceeds from the sale of historic tax credits, and a $1.5$10.0 million decreaseincrease in net loss.earnings.

Net cash used in investing activities during the first quarterhalf of fiscal 2026 totaled $6.6$16.5 million, compared to net cash used in investing activities of $22.8$31.5 million during the first quarterhalf of fiscal 2025. The decrease in net cash used in investing activities of $16.2$15.1 million was the result of a decrease of $16.4$23.3 million in capital expenditures.expenditures, partially offset by a $8.2 million decrease in proceeds from the sale of trading securities in the prior year that did not recur. Total cash capital expenditures (including normal continuing capital maintenance and renovation projects) totaled $6.6$16.6 million during the first quarterhalf of fiscal 2026 compared to $23.0$39.9 million during the first quarterhalf of fiscal 2025.

Fiscal 2026 first quarterhalf cash capital expenditures included approximately $3.8$10.1 million incurred in our theatre division, including construction related to insured property damage at one theatre location, and normal maintenance capital projects. We incurred capital expenditures in our hotels and resorts division during the first quarterhalf of fiscal 2026 of approximately $2.7$6.2 million, including several smaller capital improvement projects and normal maintenance capital projects. We incurred corporate capital expenditures during the first quarterhalf of fiscal 2026 of approximately $0.1$0.3 million,million related to technology implementation.

Net cash providedused byin financing activities during the first quarterhalf of fiscal 2026 totaled $9.6$17.9 million compared to net cash provided by financing activities of $29.3$7.4 million during the first quarterhalf of fiscal 2025. During the first quarterhalf of fiscal 2026, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As short-term revolving credit facility borrowings became due, we replaced them as necessary with new short-term revolving credit facility borrowings. As a result, we added $51.0$82.0 million of new short-term revolving credit facility borrowings, and we made $36.0$92.0 million of repayments on short-term revolving credit facility borrowings during the first quarterhalf of fiscal 2026 (net $15.0$10.0 million increasedecrease in borrowings on our credit facility). We ended the firstsecond quarter of fiscal 2026 with $25.0 million ofno outstanding borrowings under our revolving credit facility. During the first quarterhalf of fiscal 2025, we increased our borrowings under our revolving credit facility as needed to fund our cash needs and used excess cash to reduce our borrowings under our revolving credit facility. As a result, we added $69.0$105.0 million of new short-term revolving credit facility borrowings, and we made $29.0$84.0 million of repayments on short-term revolving credit facility borrowings during the first quarterhalf of fiscal 2025 (net $40.0$21.0 million increase in borrowings on our credit facility).

Our debt-to-capitalization ratio (excluding our finance and operating lease obligations) was 0.280.25 at MarchJune 31,30, 2026, compared to 0.26 at December 31, 2025.

During the first quarterhalf of fiscal 2026, we repurchased 0.1 million shares of our common stock for $1.3 million in the open market, compared to 0.4 million shares of our common stock for $7.1 million in the open market during the first quarterhalf of fiscal 2025. As of MarchJune 31,30, 2026, approximately 4.4 million shares remained available for repurchase under prior Board of Directors repurchase authorizations. Under these authorizations, we may repurchase shares of our common stock from time to time in the open market, pursuant to privately-negotiated transactions or otherwise, depending upon a number of factors, including prevailing market conditions.

Dividends paid during the first quarterhalf of fiscal 2026 were $2.4$4.8 million. Dividends paid during the first quarterhalf of fiscal 2025 were $2.2$4.3 million. We have the ability to declare quarterly dividend payments and/or repurchase shares of our common stock in the open market as we deem appropriate.