The Marcus Corporation (NYSE:MCS) Q1 2023 Earnings Conference Call May 4, 2023 11:00 AM ET
Company Participants
Gregory Marcus – President, CEO & Director
Chad Paris – CFO & Treasurer
Conference Call Participants
Eric Wold – B. Riley Securities
James Goss – Barrington Research
Michael Hickey – Benchmark Company
Ryan Hamilton – Morgan Dempsey Capital Management
Chris Potter – Northern Border Investment
Operator
Good morning, everyone and welcome to The Marcus Corporation First Quarter Earnings Conference Call. My name is Maxine, and I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this conference is being recorded.
Joining us today are Greg Marcus, President and Chief Executive Officer; and Chad Paris, Chief Financial Officer and Treasurer of The Marcus Corporation.
At this time, I’d like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Chad Paris
Thank you, operator, and good morning and welcome to our fiscal 2023 first quarter conference call.
I need to begin by stating that we plan to make a number of forward-looking statements on our call today, all of which we intend to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act. Our forward-looking statements may generally be identified by our use of words such as we believe, anticipate, expect, or words of similar import. Our forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected. Listeners are cautioned not to place undue reliance on our forward-looking statements.
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 statements in the press release we issued this morning announcing our fiscal 2023 first quarter results and in the Risk Factors section of our Fiscal 2022 Annual Report on Form 10-K which you can access on the SEC’s website. We will also post all Regulation G disclosures when applicable on our website at www.marcuscorp.com. The forward-looking statements made during this conference call 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.
In addition, we routinely post news releases and other information regarding developments at our company that impact our investors, customers, vendors and other stakeholders. You should look at our website marcuscorp.com as an important source of information regarding our company. We also refer you to the disclosures we provided in today’s earnings press release regarding the use of adjusted EBITDA, a non-GAAP measure used in evaluating our performance and its limitations. A reconciliation of adjusted EBITDA to the nearest GAAP measure is provided in today’s release.
All right. With that behind us, let’s begin. This morning, I’ll start by spending a few minutes sharing the results from our first quarter with you and I’ll discuss our balance sheet and liquidity. 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 quarter of revenue growth as we continue to see demand improvement from the customers in both of our divisions. In theaters, a significantly better first quarter film slate with a greater number of wide releases drove significant attendance and revenue growth, leading our overall improved results. In our hotel division, comparable hotel revenues grew as we continued to see year-over-year improvement in both occupancy and average daily rates.
Consolidated revenues were $152 million in the first quarter, an increase of 15.1% compared to the prior year quarter. Consolidated adjusted EBITDA for the first quarter was $9.5 million, a 182% increase from the prior year’s first quarter. We provided a breakdown of our first quarter numbers by segment in our press release. And as we will discuss today, our earnings growth in the quarter was driven by strong results from our theaters business.
Below operating income, the one item to highlight is our first quarter interest expense decreased by approximately $1 million or 26% as a result of our lower overall debt level, which was approximately $72 million or 28% lower than the end of the first quarter last year.
Turning to our segment results, our first quarter fiscal 2023 admission revenue increased 24% compared to the first quarter of 2022 with an attendance increase of 13.9%, driven by a significant increase in the number of wide release films debuting in the quarter which Greg will discuss further. The film slate for the quarter not only featured more wide releases, but included a more balanced mix of smaller and mid-sized films that exceeded our and industry expectations and attracted diverse audiences.
According to data received from Comscore and compiled by us to evaluate our fiscal 2023 first quarter results, United States box office receipts increased 26.3% during our fiscal 2023 first quarter compared to U.S. box office receipts during fiscal 2022. While our performance lagged by approximately 2.3 percentage points, we believe this was attributable to the Omicron variant of COVID-19 more significantly impacting other regions of the country during the first quarter of fiscal 2022, resulting in a higher percentage of box office growth in 2023 nationally than our primarily mid-western markets. We believe this is supported by our strong results last year when we outperformed the U.S. average box office by 4.7 percentage points during the first quarter of fiscal 2022 as compared to U.S. box office receipts during the first quarter of fiscal 2019.
Our average admission price increased by 8.8% during the first quarter of fiscal 2023 compared to last year. The increase in average admission price in the quarter was primarily driven by an increase in our 3D ticket sales for Avatar: The Way of Water, which like the fourth quarter of last year accounted for approximately half of the admission per cap increase and represented 11% of tickets sold in the first quarter of 2023. In addition, strategic pricing actions taken during fiscal 2022 in response to inflation contributed to the balance of the increase in our admission per caps.
Our average concession, food and beverage revenues per person at our comparable theatres increased by 5% during the first quarter of fiscal 2023 compared to last year’s first quarter. The increase in our concession, food and beverage per caps was driven by three items. First, more customers bought concessions, food and beverage. We refer to this as our hit rate which we define as the ratio of concession, food and beverage transactions to box office transactions. Second, customers bought more resulting in higher check averages. We believe customers are buying more as they make an experience of going to the movies and in part due to a new food and beverage menu introduced in the fourth quarter of last year, which we believe has positively impacted check averages. And third, prices were higher compared to the first quarter of last year as we are still seeing the impact of inflationary price increases implemented during 2022.
Our top 10 films in the quarter represented approximately 74% of the box office in the first quarter of fiscal 2023 compared to 85% for the top 10 films in the first quarter last year. While there was an overall broader slate of films in the quarter, there was not a lower concentration among the performers at the top at higher film cost and the rest of the slate performed better than last year’s first quarter, resulting in an overall film cost as a percentage of admission revenues that was essentially flat.
Turning to our Hotels and Resorts division, revenues were $55.8 million for the first quarter of fiscal 2023, an increase of 6% compared to the prior year. The sale of the Skirvin Hilton late in the fourth quarter of fiscal 2022 had a $3.5 million negative impact on revenues in the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022. Excluding this impact, comparable hotel revenues in the first quarter of fiscal 2023 increased $6.7 million or 13.6% Total revenue before cost reimbursements at our seven comparable owned hotels increased over $4.8 million or 11.5% over the first quarter of fiscal 2022.
Typically, the first quarter is impacted by our normal seasonal winter headwinds that are predominantly Midwestern portfolio of owned hotel properties. And while this winter was certainly no exception, demand was also negatively impacted by an unusual lack of snowfall that limited the ski season at our Grand Geneva Resort & Spa. We did continue to see improved conditions for group events compared to the first quarter last year.
RevPAR for our comparable owned hotels grew 17.5% during the first quarter compared to the prior year. Breaking out the first quarter numbers for the comparable owned hotels more specifically, our overall RevPAR increase during the fiscal 2023 first quarter compared to fiscal 2022 was due to a 6.6% increase in our average daily rate or ADR and an overall occupancy rate increase of approximately 5 percentage points.
Our average fiscal 2023 first quarter occupancy rate for our owned hotels was 50.8%. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced an increase in RevPAR of 25.6% for the fiscal first quarter of 2023 compared to the first quarter of fiscal 2022. Again, our competitors are playing a bit of catch up. We believe that after our owned hotels outperformed the comparable competitive hotels with significant market share gains during 2020, 2021 and 2022, the comparable competitive hotels have begun to catch up resulting in RevPAR growth rates that were higher than our owned hotel portfolio.
With this said, the RevPAR index for our hotels remains in excess of 100, indicating that we continue to take more than our share of the market, while normalizing closer to our pre pandemic index levels, which historically ran above 100. In addition, the impact of the slow ski season, which has a greater impact on room demand at Grand Geneva during the winter months allowed other hotels and our competitive set that are not reliant on the ski season to capture some market share during the quarter and resulted in our lower RevPAR growth.
Finally, our banquet and catering operations continued to perform well. This is reflected in our food and beverage revenues, which were up 4.7% in the first quarter of fiscal 2023 compared to the prior year. The hotel adjusted EBITDA was negatively impacted by approximately $500,000 from the sale of the Skirvin compared to the first quarter of last year. As we compare our adjusted EBITDA to the first quarter of last year, it’s important to point out that in the first quarter of 2022, our expenses benefited from operating the hotels below our targeted staffing levels due to labor shortages in the first half of last year. With an improving labor market, we have been able to sustain more appropriate staffing levels for the current demand and occupancy levels. Resulting in a negative impact to adjusted EBITDA from higher labor costs with increased staffing levels compared to the prior year first quarter.
We continue to work through finding the right balance of labor and there were some pockets of labor staffing and efficiencies in the first quarter resulting from a softer first quarter than expected at some properties. With this said, while our staffing levels are higher than last year, they are below our pre pandemic levels. It is also important to highlight that we have seen a significant improvement in customer satisfaction scores compared to our scores last year in the first quarter when we were short staffed and we believe customer satisfaction is key to the long term performance of our upper — upscale at hotels and resorts.
In addition, in the first quarter of 2022, adjusted EBITDA benefited from an all hotel buyout at one of our condo hotel properties. The event that doesn’t happen every year and did not recur in the first quarter of 2023. Finally, the first quarter of 2023 was negatively impacted by unfavorable timing of maintenance and repairs compared to the prior year.
Shifting to cash flow and the balance sheet, our cash flow from operations was a use of cash of $7.7 million in the first quarter of fiscal 2023, compared to cash provided by operations of $6.5 million in the prior year quarter, which included approximately $28 million of nonrecurring income tax refunds and government grants. Excluding the onetime benefit from receipt of these items in the prior year, cash flow from operations improved approximately $14 million or 64%. As a reminder, our cash flow from operations in the first fiscal quarter is historically impacted by seasonal changes in working capital resulting from the slowdown in our businesses following the peak holiday season and by the timing of various year end accounts payable and compensation payments.
Total capital expenditures during the first quarter of fiscal 2023 were $9.5 million compared to $3.1 million in the first quarter of fiscal 2022. A large portion of our capital expenditures during the first quarter were invested in renovation projects in the hotels business, with the balance going to maintenance projects in both businesses. At this early stage of the year, I have no reason to make any major adjustments to our previous estimate for capital expenditures for fiscal 2023 of $60 million to $75 million, recognizing that the timing of several of our planned expenditures are still just estimates at this time. We are still finalizing the scope and timing of various projects and the actual timing of these projects will impact our final capital expenditure number for the year. We will update our capital expenditure estimates as the year progresses.
We ended the first quarter with $10 million in cash and over $223 million in total liquidity with a debt to capitalization ratio of 30% and net leverage of 2.1 times net debt to adjusted EBITDA. We continue to believe in maintaining a strong balance sheet with a manageable amount of debt, including owning the majority of our assets. We view the strength of our balance sheet as a strategic advantage that provides flexibility and allows us to move quickly to invest in growth for the long term when actionable opportunities are identified.
With that, I will now turn the call over to Greg.
Gregory Marcus
Thanks, Chad, and good morning, everyone. Today is May 4, a very important date to Star Wars fans out there because, as they say, may the fourth be with you. We entered the year with a plan for growth and with the optimism that 2023 was expected to deliver another year of improvement in our businesses. During the last couple of years working through the pandemic. The pace of progress between our two businesses have been different and changes from quarter-to-quarter. Throughout 2022, our hotels division led the recovery back to pre-pandemic levels, revenue levels and delivered a record year, while our theater division has had an extended recovery that continued into 2023.
The first quarter generally played out as we expected 2023 to develop overall with theaters leading the growth and improvement in our results and with the hotels still growing comparable revenues but at a more moderate rate of growth than in fiscal 2022. With the normal seasonal headwinds in our hotel business, the first quarter is always challenging. So it’s incredibly helpful when we’re able to get off to a good start as we did this quarter. The first quarter that we are reporting today continues to make year-over-year progress, and we’re pleased to be sharing these results with you.
I’ll start with theaters. Chad went over the numbers with you, including our continued significant increases in per person revenues. As we shared with you on our last call, our theater division got off to a much better — to a much stronger start than last year with higher attendance driven by a significantly stronger film slate led by carryover, Avatar: The Way of Water and Puss in Boots: The Last Wish. We were pleased to see the quantity of wide release films with exclusive theatrical windows increase significantly with 21 ride releases in the first quarter of fiscal 2023 compared to 12 in the prior year’s first quarter.
Wide release films are what really drives our theater business. And we’ve talked in the past about the importance of having a more consistent cadence of new theatrical wide releases to rehabitualize audiences to movie going. This year’s release calendar started a run of more steady weekly theatrical releases that began earlier in the year compared to the first quarter of last year. It was also helpful that a number of films outperformed industry expectations for both their openings and their overall runs. We were particularly thrilled to see this outperformance come from a variety of genres and midsized films, including Megan, A Man Called Otto, 80 for Brady and Cocaine Bear.
Having a balanced film slate that includes a healthy portion of box office coming from these midsized films is critically important to the overall ecosystem of film entertainment. Chad shared that our admission revenues per person grew nearly 9% year-over-year, half of which was attributable to an increase in 3D ticket sales driven by Avatar.
I’d like to provide an update on our various strategic pricing initiatives that contributed to the other half of the admission per cap increase in the quarter, and those initiatives that we expect will impact per caps throughout 2023. As we approach ticket pricing, we’re always trying to balance supply with demand to optimize price and maximize attendance. Our company has a long history with revenue management in the hotel business where we are essentially pricing rooms dynamically every day, also known as delivering the right price to the right customer at the right time. We try to apply that philosophy to our theater business. While we don’t go as far with dynamic pricing in our theater business, over the last nine months we’ve made several adjustments to pricing for peak demand periods, while also continuing to provide discounts for our value-oriented customers.
These changes include [tilt] (ph) pricing with higher ticket prices on holidays and weekends as well as lower ticket prices on certain weekdays such as Student Thursday [indiscernible] and, of course, our hugely popular and newly rebranded Value Tuesday. We led the industry in 2013 when we launched our first Tuesday discount program known as $5 Tuesday. The concept was simple. So roughly 50% discounted ticket on a weekday with otherwise low attendance with the goal of appealing to value-oriented customers who stopped coming to the movies at our regular prices.
To make it an even better deal, we provided a free complementary size popcorn, but we quickly discovered that there was a significant group of price-sensitive customers who stopped coming to the movies or never came at all who have become regular movie goers at this price point, and it became an important component of our customer base. I’m proud to say that we’ve been committed to our value-oriented customers since the launch of our Tuesday discount program. And we held the Tuesday ticket price at $5 for a long time, nearly 10 years.
Last year’s inflation put pressure on our costs across the business. We started to explore how to adjust our Tuesday pricing while still providing a great value for our customers and making the program even better. We tested several different Tuesday changes in different markets beginning in October last year, and we were pleased to roll out our new value Tuesday program on March 28. Our new program features $6 missions for members of our free to join Magical Movie Rewards loyalty program, $7 emissions from non-loyalty customers. 50% of surcharges for our UltraScreen and SuperScreen premium large-format tickets, and perhaps, most importantly, 20% of all concessions, food and nonalcoholic drinks for MMR loyalty members.
Instead of a small free popcorn, which appeals to many, but not all, our customers can now enjoy all of our great menu items from [Zucceria] (ph) pizza to burgers, sandwiches, wraps, wings and traditional concessions at a 20% discount on Tuesdays. Whether the customers pick up their order concession stand or have it delivered to their recliner seat in-theater dining, they now can try all of our great food options at a great value. We believe that the expansion of Tuesday discounts to our entire food menu provides a more affordable offering that will increase the number of customers who are buying concessions, food and beverage and also increase how much they’re buying with the goal of increasing our overall F&B per caps.
While our new Value Tuesday program launched on the last Tuesday during the first quarter, in the week since its launch, the results have been positive as we expected from our pilot tests, we have not seen a negative impact on attendance or market share as a result of the admission price changes, and we’re seeing positive impacts on our per caps. Anecdotally, customers have been pleasantly surprised when they learned of our new expanded discounts on food and beverage.
As we look ahead, the second quarter in our theater business is off to a great start. And of course, I have to start with the Super Mario Brothers movie, emphasis on the word Super. It’s a great film that has blown away all expectations, and it has played exceptionally well in our circuit with family audiences. Beyond just this smashing success of Mario, April has continued the recent trend of a more balanced, steady diet of wide release films across several genres with, Dungeons & Dragons: Honour Among Thieves, Air and Evil Dead Rise all exceeding expectations.
Last week, Chad and I were with our theater team at CinemaCon, and there were a couple of key observations that we came away with. First, there was a significant increase in the excitement and energy around theatrical exhibition overall. The momentum in our industry feels much more positive than it did a year ago or even just a couple of quarters ago. And our studio partners delivered a message that reaffirmed the importance of theatrical exhibition to the overall filmed entertainment ecosystem and our role in elevating their content. We are encouraged by the additional releases that have been added to the film slate for 2023 in the recent months, and we’re not projecting 100 to 110 wide release films for the year.
Second, we got a closer look at the film slate for the rest of 2023 into 2024. And based on what we saw, we are really excited with what’s coming. There really is going to be something for everyone from action films like Fast X, Indiana Jones and the Dial of Destiny and Mission: Impossible – Dead Reckoning to family and animated films like the Little Mermaid, Elemental and Haunted Mansion, the superheroes like the Flash, Spiderman across the Spider version, Guardians of the Galaxy Volume 3 opening this weekend, plus so many more in genres like comedy, romance, drama and horror. We believe it’s going to be a great summer with films that will continue to bring audiences back to the theaters.
Shifting to our Hotels and Resorts division. You’ve seen the segment numbers and Chad shared some additional detail, including the bridge from our reported results to our comparable hotel results following the sale of the Skirvin hotel late last year. Given that most of our company-owned hotels are located in the Midwest, we typically lose money in the division during the winter months and the first quarter of fiscal 2023 was no exception.
Add the winter without snow in our neck of the woods and you get a very disappointing ski season. So we certainly had some challenges in hotels for the quarter that the team worked hard to navigate through. There are a few highlights in the quarter that I would like to point out. Overall, revenue before cost reimbursements at our comparable properties grew over 11% compared to the prior year. We continue to see a strong average — we continue to see strong average daily rates and improving occupancy. RevPAR grew at all seven of our comparable owned hotels with average daily rate growth at all seven hotels and occupancy growth at five out of seven hotels, resulting in overall RevPAR growth of 17.5%.
As Chad mentioned, while we underperformed the RevPAR growth of our competitive sets, when you dig into why, it was ultimately because the occupancy at our hotels recovered faster in 2022 than the competitive hotels in our markets. In other words, competitive hotels in our markets were able to grow occupancy more than us this year compared to last year because of how far behind they were our occupancy rates last year. We still feel very good about the performance of our assets in their markets and their ability to take more than their share of the market.
Group business in the quarter continued to grow over the prior year, particularly midweek and the bookings continue to look good. Our group room revenue bookings for the remainder of fiscal 2023, a group pace in the year for the year are running ahead of where we were at the same time last year. Banquet and catering pace for the remainder of fiscal 2023 is similarly ahead of where we were at this time last year.
As we prepare to renovate the meeting and banquet space at Grand Geneva in [indiscernible] this year, we feel good about the outlook for group business. According to a recent Expedia survey, 71% of meeting planners surveyed indicated group travel is more important now than pre-pandemic. We believe our properties will be well positioned to capitalize on this trend. Leisure travel, which has been so strong for our owned hotels since the beginning of the pandemic, did show some potential signs of softening. This is not particularly surprising given the cold winter and wet spring we experienced in the region, but we will continue to watch closely for further indicators of broader changes in leisure demand.
Finally, Chad mentioned our investments in the quarter in renovations in our owned hotels. Yesterday, we announced the renovation and redesign of Grand Geneva Resort & Spa’s 358 guest rooms will complete in time for Memorial Day weekend at the end of this month. This is the third investment in a series of recent extensive renovations for the resort, which included a lobby and lobby lounge renovation plus the launch of a 60-seat outdoor dining venue in 2021, completely new guest room bathrooms and heating and cooling for guest comfort in 2022. And now, newly transformed guestrooms and suites featuring a warm contemporary design.
Starting this week, all guest checking in will enjoy the newly redesigned rooms. In the coming months, we will finish this phase of the resort renovation with redesigned meeting and event spaces. I’ve talked in the past about our special hotel assets that performed so well with leisure, group and business travel customers. And Grand Geneva is a truly special asset that has appealed directly to the leisure traveler that attends a midweek conference and stays for the weekend. We are thrilled to complete this project and open the refreshed rooms in time to deliver an exceptional experience to our guests this summer.
Finally, I would like to once again express my appreciation for our dedicated associates at the Marcus Corporation. Their outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all that they do every day. They are our most important asset. So, on behalf of our Board of Directors and our entire executive team, thank you to all of our associates.
And with that, at this time, Chad, and I would be happy to open the call up for any questions you may have.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question today comes from Eric Wold from B. Riley Securities. Please go ahead, Eric. Your line is now open.
Eric Wold
Thank you. Good morning, guy. Two questions on the hotel segment. I guess when you talked about the competitive hotels in your market kind of catching up on the gains that you’ve made over the prior two to three years. I guess maybe what are you seeing as a result of that within your market? Are the markets — and overall demand ramping enough to accommodate kind of everything you need to make changes in your markets on pricing or marketing to adjust around kind of that competitive — changing competitive landscape?
Chad Paris
No, not really. I don’t think so. No. Because it’s not like — what you’re saying is like, are we having to like lower our price to remain competitive? No, We’ve stayed consistent with our philosophy and how we’re charging. I think it’s just — one of the advantages of — if you go back to how we operated during the pandemic, and you all remember, we were very deliberate about saying we want to get open as early as we can. We want to be in business as early as we can. That allowed us to keep our teams in place in ways that others were certainly in our markets. I mean, there were some hotels that were closed in our markets certainly much longer than we were. That gave us a leg up.
That is — if you go and you go back and I’ll be in the story, when you go back to different cycles. And remember that we can — we were able to make investments in down cycles. We’re able to perform better in down cycles because of how we structure our balance sheet. And this was no different. And so we — and so what happens is, things turned and we come out ahead. But we do end up having — there is some catch-up. But yet, we still end up ahead at the end of the day in share, but they’re just it’s just catch up.
Gregory Marcus
Yes, Eric, I would just add, it’s not really changing what we’re doing. When you think about our ADR increase, all seven of our hotels grew ADR in the quarter. And we still continue to grow occupancy at five out of the seven for the division overall. So we’re still growing. It’s just the other competitors in our markets have more occupancy to fill, but we’re still leading the market.
Eric Wold
Got it. That’s helpful. And then I know you’re always hesitant to maybe give specific time lines. I’m not looking for that, but kind of after the sale of Skirvin hotel in December, can you just give us a better sense of kind of when — however, general time frame you want to give, when the other kind of pit deadlines may be around kind of the other hotels that may be in that spend or not spend decision process, just so we can get a better sense of kind of when we may or may not see ramp in spending or not kind of flowing into the model.
Chad Paris
Yes. So we’ve got a couple of others that we’re looking at, Eric. And I would expect sometime mid to late summer, we’ll have a real good sense on what the time lines on those projects look like whether or not we’re going to be moving forward with them. We’re still trying to do everything that we can to get cost firmed up to get other external support, frankly, for some of these projects. And so, we’re working through that dynamic and that takes some time. But we’ll have more to say, we hope, in the next couple of quarters.
Eric Wold
Got it. And I guess to follow up on that, what is the main point on that? At this point, do you know kind of what the amount is likely to be on required on those properties and whether or not you think that spend, you’ll get the ROI from it versus the sale? Or at this point, is that amount still a question mark?
Chad Paris
I’ll start, and then I’ll let Greg comment. So we have a real good sense of what the investment required would be. It really is whether or not the ROI on the project is there and then what we can do to help get local support in some cases to make — to get these projects to make sense.
Gregory Marcus
I think at the end of the day, we’re committing dollars to our hotel business. And I don’t — so what the calendar of that is going to be because whether it’s even in the assets we see, it could be — we haven’t really said what is the exact — we don’t want to give a calendar yet because we just can’t, because it will just depend on things that are externally beyond our control in terms of specific assets, as Chad alluded to, what kind of support. The significant assets like these do involve certain levels of external support that you can go beyond our balance sheet. And I think equity financing I’m talking about public finance and things like that.
And how those shake out will have bearing on what we do. But if we don’t do a certain project, we might move that capital somewhere else. But that could take a while. So we just don’t know what the calendar is.
Eric Wold
Got it. Thank you both. Appreciate it.
Operator
Our next question comes from Jim Goss from Barrington Research. Please go ahead, Jim. Your line is now open.
James Goss
All right. Good morning. You mentioned that Avatar was represented about or accounted for about half of the increase in admission prices. And I assume that’s because it was tended to be viewed on PLF screens. So I was wondering if you could talk about the PLS share of the mix in the first quarter and how you think that would work in the following quarters.
Chad Paris
Yes, that’s right, Jim. So the half of the increase in the per cap was due to the increased mix of 3D ticket sales.
Gregory Marcus
3D MPLS, that’s the word.
Chad Paris
Yes, right. So the half represents 3D. The overall PLF mix this quarter was actually a couple of points lower than it was last year in the quarter. And when you look back at the mix of films with Spider-Man playing into Q1 last year, that’s really why. Though we’re not talking about big changes. So our — I’m not going to give our exact PLF percentage of total ticket sales, but that’s generally been pretty stable because we’ve built out the number of PLFs and done that in most of the places where we can do it. We added one PLF screen in the first quarter this year. We continue to look at are there other opportunities in the circuit to add PLFs, but I don’t expect big step function changes in our PLF composition like we were building pre-pandemic.
James Goss
Okay. So were you charging [indiscernible] 3D and PLF separately, both?
Chad Paris
Sorry, Jim, I didn’t catch that.
James Goss
I just meant were — was there an up charge for both PLF plus 3D in the ticket pricing [indiscernible]?
Chad Paris
The impact of the change in PLF percentage of PLF of our total ticket mix was not significant. It was really the 3D. There is — yes. Half of the increase is due to 3D.
James Goss
Okay. Thanks for clarifying. I’m sorry, Greg, were you going to say something?
Gregory Marcus
Well, I was just going to say, what it does reflect is, we have probably one of the more significant installed bases of PLFs in the industry relative to size. And as there’s been a move to customers wanting to experience that way, [indiscernible] liking it because, obviously, ticket prices are higher, it’s been to our benefit.
James Goss
Okay. And the food and beverage increase that you’re referring to, is this sustainable? Is this the new level we should assume in the future that you have customers used to this? And is that the way it should be and we can grow from there in terms of the purchases and more per order and higher prices?
Gregory Marcus
I think — look, it’s — if I had a crystal ball, I don’t know. I would say I don’t know for sure. We don’t know for sure. But there are some things that you can look to, to say, what are the things that we have — I don’t know as we get more customers and the lines go a little bit longer, is that going to impact those per caps. I don’t know. What happens in the economy, I don’t know. But sometimes, that can go either way. All of a sudden, the families are going out for dinner or may just big dinner at a movie theater. And so that can cut both ways.
Things that we know for sure, with our change to Tuesday, we know it’s impacting our per capital. That’s a positive. So that’s not — that’s going forward. So that’s a positive per caps. It could offset anything. So — and we know as we get better with our app, and we’re really still in the early days of that, the ability to upsell, the ability to do a last time offer. Those features of the app — when you got a long line and you’re a young concession attendant, standing at the concession line, you may not be trying to think how do I upsell that every customer? I’m just trying to get through the flurry that’s coming at me for the 7:30 show. But when the app isn’t worried about that, it just always upsells. And so, we think there’s going to be — we know that there’s up, we’re already starting to see signs of it. So there’s — so again, I can’t — I can tell you what we’re seeing and what different things that can happen, but I think it’s a positive story.
James Goss
Okay. And maybe finally, any sense what share of the Tuesday audiences are second in a week, some who went Friday, I think you’ve talked about that phenomenon. And does your rewards program provide data and all of these.
Chad Paris
It does. We can see who’s coming. I don’t have that now, but we don’t have that data maybe as some from theaters wants to [Indiscernible] number if they have it off the top of their head, but I don’t know that number anymore. We know there was a measurable percentage that did, and that’s one of the things we liked about it as people get — and look, as we get back to that more normal cadence of release, we have more opportunity for that as well. When there’s less releases, there’s just less opportunities for people to double up. But we know — we always knew that was one of the benefits for a certain segment.
And yes, our rewards program can track that and is now again with the change in the — to the value Tuesday and the discount for being in the program, we’re going to obviously have more members in the program. And so, we’ll have more ability to even track and have a better relationship with those customers.
James Goss
All right. Thanks very much. Appreciate it.
Chad Paris
Wait, the text came in. Maybe we can answer your question. Let’s see what the answer was. [indiscernible]
Gregory Marcus
It was the specific on the upcharge for 3D, which is an UltraScreen, 3D is a $3 upcharge. So it’s a $1 — I’m sorry. 3D is an extra dollar in UltraScreen. That was two, I think, Eric’s question.
Chad Paris
Maybe the answer on overlap will come in shortly. Thanks, Jim.
James Goss
All right. Thank you much.
Operator
Thank you. The next question comes from Mike Hickey from Benchmark Company. Please go ahead, Mike. Your line is now open.
Michael Hickey
Nice. Thank you. Hi, Greg, Chad. Good morning, Guys. Nice quarter. Congratulations. Just a few questions from us. Greg, you mentioned CinemaCon, I agree with you, Amanda. The bars was big this year. You touched on, I think, some important narratives spinning out of the conference this year, but just curious if you could double quick on film product. That obviously seems like the crux here when we look to bridge current box office to pre-pandemic. Just curious, any incremental tidbits you might have on sort of the commitment, I guess, from traditional studios in terms of delivering wide release or otherwise film product, I know you raised your numbers for this year than when you think about this year and next year and sort of bridging to where we were in terms of volume pre-pandemic, if you think there’s enough here to get us there?
And then how you’re thinking about streamers. I know you’ve been — at least my view, Greg, you’ve been somewhat cautious there. A lot of that may be windowing, but it looks like Amazon and Apple seemed to stand out this year in terms of real commitment in terms of putting films to theaters and some bigger films at that. But just sort of curious your thoughts there. And I’ve got a follow-up.
Gregory Marcus
Well, I’ll sort of talk generally and Chad can add some specifics on sort of release numbers. But the — I’m not ready to a victory lap. I think we have to keep pressing the case and the case for theatrical, being a part of that ecosystem in a valuable part. And it’s good to see the players recognize that it’s important. And that’s the good vibe that we’re all feeling and hearing and that is people saying, yes, you know what, we would like some additional revenue. And we would — I’d sort of describe it as affinity, awareness and revenue, right? So if you have — if you make film content, well, let’s start with, I like some more money, who doesn’t, right? Put it in the theater. And remember, in the old world of Prince and advertising, Prince has gone. So all they really do is recover your marketing cost.
And you now have in addition to revenue, you have awareness the second point I was making. And that is that film when it now shows up in the ancillary markets, actually has some meaning to people when they’re looking at the 150 tiles as they scroll through their streaming menu, they see that film and they say, Oh, yes, I remember that, I got to meant something. So that catches their eye and drives them to want to see it and then there’s the affinity, which is that something that I think is so important to anyone with as a product, right? This idea that people [indiscernible] because they know who I am and they’ll say, what’s the movies of my dad every month. We go every month, and it’s really important to us to do this.
I think someone come cry the other way the last month and how important it was during the pandemic to go to the movies. No one is going to — no kids are going to say, I remember watching Super Mario for the first time in the cough with my parents. They’ll enjoy it, but they’re not going to say that. They’re going to say, I remember going to the movies for my first time with my parents to Super Mario when I thought Super Mario was real. They hold my hand; they bought me my popcorn. That affinity with the product is so important. And I think that’s — those things combined are what we’re seeing at the — an event like CinemaCon, that realization and the streamers because, again, they’re studios, call them streamer, but that’s — those studios are seeing. And that’s why they want to participate. And that’s a good thing.
And so, we have to keep pressing that business case because that holds the business case for why — there’s a lot of emotional reasons like people like theaters, but frankly, I just laid out the business case for it. And we have to keep pressing that, and we will. And so, we’re seeing the results of that with more film coming into the ecosystem. Chad, if you want to speak to that specific, go ahead.
Chad Paris
Yes. I mean just in the numbers. So as you probably noticed, we took up the guide on the number of wide releases a touch. We’re now at 100 to 110. And I’d just say we tend to be a conservative bunch. So there feels like there’s probably some upside to the range as we progress through the year, things seem to be dropping in this year more than they seem to be sliding out of the calendar year. So that’s a very different feeling than last year. And from what we’re here, what our film buying folks are hearing is there may be a few more things that hopefully dropping to the holiday period later in the year. So we’ll see. But on the bridge back to pre-pandemic wide release numbers at the top end of the range at 110, you’re starting to get within throwing distance of the 115 to 120 that we had before. So we’re not there yet, but we’re making progress. And when the streamers start to lay in incremental content, we’re very encouraged.
What helps, that I’d add to Greg’s comments is when the films from the streamers perform well and over perform like Air did and continues to play really well in our circuit. I think that just hammers home the case as to why they ought to do this. So some of the other titles coming later this year, whether it’s Napoleon or Killers of the Flower Moon, things like that, we’re excited about how those films may perform to continue to persuade value the streamers of the value proposition.
Michael Hickey
Nice. Thanks, Greg. I appreciate your thoughts there. I guess when you — it looks like your theater count, Greg, is down too for the quarter. I’m not sure if that’s just how it owned versus managed or how you’re thinking about that, but it looks like it’s gone down a bit, it sort of adds to the broader shutdown of screens, which I think sort of post sense of pandemic, I think it’s about 5% of the screens have gone dark. So just curious if you think — obviously, we goes back there saying, that’s obviously fluid. But when you think about dark screens here, screens being shut down, whether it’s permanent or temporary, do you think we’ve sort of reached a bottom here? Do you think there’s more screens that need to come out of the system?
And on the flip side, you’ve created a tremendous amount of value over the years by being able to acquire theater networks and adding sort of the Marcus mix into them, whether it’s recliners, food and beverage and sort of growing your overall EBITDA. It seems like that’s been sort of the main driver for you. Obviously, your theaters are going down, not up, but are you actively thinking about deals, trying to find theaters, especially with the backdrop you gave with CinemaCon and all the buzz and the support from studios and streamers and the believability that the theatrical medium is going to continue to grow over time and sustain itself. Are you now in a position to looking to be adding screens, not shrinking.
Chad Paris
Let me take the first part of the question on the contraction, I’ll let Greg take the M&A piece. So we did close a couple of locations, one in the quarter, one since the end of the quarter. We — on an ongoing basis, we’re always looking at the performance of individual locations in terms of financial performance and attendance and local market competitive dynamics and what other locations we have in a market. And so, in these cases, these were underperforming theaters that we just thought our customers, frankly, in one case, would go to one of our nicer theaters also in that market. So I’ll call that pruning, where we’re looking at the portfolio and doing what we think makes sense. I mean, that’s an ongoing process. But as to those specific theaters, you shouldn’t anticipate those reopening, they are permanent closures.
Gregory Marcus
But I think to your point and that is, look, I’ve said there were — as many theaters as people think might close that won’t happen because what happens is the landlords look and say, unless it’s really an obsolete theme, which is like an example for ours. It seems to be an obsolete theater. Either unless it’s obsolete or there’s a higher and better use like for the land because generally the buildings themselves are not really that configurable — reconfigurable with too many other things. They can, and we’ve done it in the past. But it’s not like a sporting goods tenant leaves and a soft goods, holding tenant moves in.
That’s not — that kind of flexibility. And so, as things restructure, leases tend to just get restructured and the theaters don’t go away as much even some of the obsolete probably could go away and won’t affect the country on a national basis in terms of where the grosses will be because the bulk of the grosses don’t come from a chunk from those smaller theaters that are essentially obsolete, but they aren’t going away. And — but again, it doesn’t matter too much because there’s not a lot of — we’re not — there’s not a lot of market share to be picked up in the marker where we operate as oppose to closer – nearby. Again, for us we are actually just looking if we can shift market share when we close the deal. So that’s sort of dynamic, I see it [indiscernible] what’s going on in the industry with those.
As it relates to M&A, look, there hasn’t been much going on. We’re looking at things that are I would tell you that the one circuit that some bankruptcy keeps moving around what they’re rejecting it’s hard to even know where they are right the second and — but they’re keeping. And so — but we’ll look at those where the opportunities where they rejected and the landlords are looking for a new tenant. But — and we would — if the price was right, we could make an acquisition. I do think that basically one of the dynamics on the small — and because most of the space if nobody else, once you get past the big circuits, they’re private, private circuits were really big beneficiaries of the shutters when you operate to grants, the SVOD money. They got a lot of money from the government, and that gave them a lot of breathing room. And so a bunch of I’m sure waiting to sort of see how things shake out, where things stabilize. Some will just like being in the business — we’ve always said this is a business that is — it doesn’t have — there’s not — there’s no — people don’t sell on a pattern.
It’s not like a lot of — not in buying in some of them going to sell it five years or seven years like it a private equity food. They’re family-owned, they sell when it’s on their time. If there’s nobody to continue to run the business, somebody wants to get out. Now that being said, there may be some people who say, okay, yes, this last one wasn’t a lot of fun. And I’m ready once it stabilizes. But the financial pressure is not there way you should think it might be.
Michael Hickey
Okay. Thanks, guys. I guess I’ll sneak one more on the hotel side. The Hilton Milwaukee, I’m just curious, Greg, if you still think that’s sort of a strategic asset for you just given the competitive dynamics that have changed so much, I guess, in your local market. You can add color there, if you want, and sort of where you are in terms of if this meets capital or not and how you think hold versus sell on that property. Thank you.
Gregory Marcus
As it relates to that specific asset, it’s a strategic asset. And — but we evaluate every asset every day. And we will — we’re looking at that asset right now. There’s good things happening in the market in terms of the convention center expansion. But at this point, we’re really not prepared to comment on what’s going on with that asset for a second. But it’s important.
Michael Hickey
All right. Thanks gentlemen. Good luck.
Gregory Marcus
Thanks, Mike.
Operator
Our next question comes from Ryan Hamilton from Morgan Dempsey Capital Management. Please go ahead. Your line is now open.
Ryan Hamilton
Hey, guys. Thanks for taking my calls. Since I’m kind of at the back of the line, most of my questions have already been answered. You’ve touched in the past about kid-friendly films being better for food and beverage concessions. Are you still seeing that with movies like Mario? And is that being magnified with the use of technology in your app?
Chad Paris
Yes. I mean we — so we’ve had very healthy F&B per caps here in the last quarter that we just reported. And I’d say that it’s I haven’t — frankly, I haven’t seen our numbers for April yet today is the last day of our fiscal April. But as I look at the regular reporting, I think the trend continues. One thing I’d just say with the family films is sometimes you get this phenomena of basket sharing, where families are ordering a menu item and they’re sharing it among multiple people. And so it can have the effect of lowering the per caps. But look, we’re selling more items, and we don’t take per caps to the bank, we take EBITDA and cash. And so families coming is driving volume and driving F&B sales and EBITDA. So it’s — ultimately, it’s a good thing.
Ryan Hamilton
Awesome. Awesome. Well, like I said, most of my questions have been answered. So I appreciate the time and may the fourth be with you. Thanks.
Gregory Marcus
Thank you.
Operator
Thank you. Our next question comes from Chris Potter from Northern Border Investment. Please go ahead, Chris. Your line is now open.
Chris Potter
Hi. Can you talk a little bit about what you think the real estate values might be of your hotels and owned theater properties. I ask because as a longtime shareholder is frustrating to see where the stock is trading, relative to how well the business is now doing and how close you are to getting back to 2019 levels. And I think that if people appreciated more how valuable your real estate holdings are, the stock would not be trading at such a discount to their market values. They might even be putting a 6% or 7% or 8% cap rate on your expected EBITDA. Anyway, anything you can talk to about what you think your real estate values might be would be helpful.
Gregory Marcus
Well, yes. All I want to say is yes. You’re absolutely right. I think it’s — I think that is a hugely important point. I don’t know that we can specifically speak to our estimation of the value — but it is — I believe that our company, when an investor is looking at our company, it deserves a sum of the parts analysis. It’s — because it’s — because they’re all very significant chunks if you say, Well, okay, look, the hotel cash flow is easily identifiable and those have multiples that are easily identifiable in terms of comparable multiples. The theater real estate is derived from a potential rental stream that you can derive by looking at our overall cash flow and saying, Oh, what does the rent coverage need to be? And then applying the multiples that you think are appropriate to that cash flow stream and then have then your theater tenant left and you apply that multiple to that remaining cash flow. That — and so you’re right. The analysis is that is the way to do it. And that’s how I look at it. And we have to get better at telling that story and we’re going to keep talking about this because you’re absolutely right.
Chad Paris
Yes. The only thing I’d add on to that is that from time to time, we do sell the hotel assets, and we sold the hotel in the fourth quarter, providing a data point on valuation for our hotels are worth. And there’s a slide in our investor deck that talks about that. So I agree with Greg, certainly that some of the parts and using different multiples for our two businesses is the right way to look at it. The other thing I’d add is, because we own a significant portion of our theater real estate, we have superior free cash flow generation. And as I think our business continues to improve and our free cash flow gets to a more normal run rate on an LTM basis as we go through this year, evaluating the company on a free cash flow basis is something that investors ought to be looking at.
Chris Potter
Okay. Thanks for that. Just one other question. So given where the stock is trading, the discount is trading at relative to those levels we were talking about, why wouldn’t you be buying back stock now? I mean it’s the equivalent of buying your theater and hotel properties at a huge discount to their market value.
Gregory Marcus
Yes. So good question. With something we continuously reevaluate in returning capital to shareholders. As you know, we turned on the dividend back with the third quarter last year. We’ve paid three of those now. And as we get through a year where we have a significant CapEx that’s going and being reinvested in the business and projects that we believe have very high ROI to benefit our shareholders for the long term as that starts to add and as the business continues to recover and we generate more free cash flow, we will continue to look at the right mix of dividend and potentially share repurchase depending on where the stock is trading. So it will be an ongoing item that we’ll continue to evaluate.
Chris Potter
Okay. Thanks, guys.
Operator
Thank you. That does conclude our Q&A session for today. So I’ll hand the call back over to Mr. Paris for any additional or closing remarks.
Gregory Marcus
Before we get the Chad, to that question, and it was actually Jim, I was talking about the 3D stuff. I just want to be clear, I sort of bubble. In our PLFs, we pay a $3 upcharge for the Ultras and then the 3Ds that added dollars, so you got $4 total. The — in a regular stream 3D is a $3 upcharge. And so we were talking about the benefit of 3D on Avatar. At the end of the day, look, I’m not sure it’s really a material discussion because 3D not the business is — it’s a special thing. It happens once in a while. It’s not — I wouldn’t be adjusting a model on the future of 3D is all I’m suggesting. But I want to make sure that clearly.
Chad Paris
All right. Well, we would like to thank you once again for joining us today. If your schedule allows, please feel free to join us in person or via our webcast for our Annual Shareholder Meeting next week, Thursday, May 11, at the Pfister Hotel in Milwaukee. We look forward to talking to you once again in early August when we release our fiscal 2023 second quarter results. Until then, thank you, and have a good day.
Operator
Ladies and gentlemen, that concludes today’s call. Thank you for joining. You may now disconnect your line.
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