[Management View]
Consolidated revenue for Q3 2025 was $210 million, a 9.7% decrease YoY, primarily due to a 16% decline in theater segment revenue. Net earnings were $6.2 million, or $0.52 per share, including a $3 million nonrecurring insurance settlement gain. Excluding this, net earnings were $13.2 million, or $0.42 per share, compared to $24.8 million, or $0.78 per share, in Q3 2024. The theater segment underperformed national box office trends by 3.8 percentage points, while the hotel segment outperformed market competitors in RevPAR by 5.2 percentage points.

[Outlook]
Management highlighted a promising 2026 film slate with four franchise films expected to drive higher box office potential. Group room pace for 2026 is approximately 14% ahead of the previous year, and banquet and catering revenues are also trending positively. Free cash flow in 2026 is expected to grow significantly as capital expenditures decline.

[Financial Performance]
- Consolidated revenue: $210 million, down 9.7% YoY
- Net earnings: $6.2 million, or $0.52 per share (including a $3 million nonrecurring gain)
- Theater revenue: $119.9 million, down 16% YoY
- Comparable theater admission revenue: down 15.8%
- Comparable theater attendance: down 18.7%
- Hotels and resorts revenue: $80.3 million, up 1.7% YoY
- Comparable owned hotel RevPAR: down 1.5%

[Q&A Highlights]
Question 1: You mentioned rate growth in four of the seven hotels. For the other three, is this a short-term issue or a competitive market problem? (Line breaks here)
Answer: The three hotels without ADR growth faced market dynamics, with two experiencing persistent supply issues and one seeing recent demand softening. No significant CapEx investments are planned for these hotels, only normal refreshes included in the $50-$55 million CapEx for next year.

Question 2: Does the $50-$55 million CapEx include maintenance? (Line breaks here)
Answer: It includes both maintenance and ROI capital, with some ROI activities in both businesses.

Question 3: With increased share repurchases and new buyback authorization, how comfortable are you with taking on leverage for M&A opportunities? (Line breaks here)
Answer: We are comfortable with our current leverage at 1.7 times and have a target range of 2.25-2.5 times, providing capacity for M&A opportunities. We will flex up if needed and return to target levels.

Question 4: Have you seen any changes in consumer behavior regarding concessions due to the macro environment? (Line breaks here)
Answer: No significant changes in consumer buying patterns for concessions, with consistent hit rates and basket sizes despite inflationary price increases.

Question 5: How are macro factors affecting the M&A market in hotels and theaters? (Line breaks here)
Answer: The volume of M&A activity is influenced by market conditions, with opportunities evaluated based on strategic fit and financial returns.

Question 6: What are your expectations for admission per cap growth and any changes to pricing strategy? (Line breaks here)
Answer: No significant changes to pricing strategy beyond what was implemented in Q3. The annualization benefit from strategic pricing moves will provide a tailwind.

Question 7: How do you view the film slate mix for Q4? (Line breaks here)
Answer: The mix is tough to predict, with some family films and an Avatar release, but lacking a major family film like Moana from last year.

Question 8: What are your thoughts on growth opportunities in theaters and hotels for 2026? (Line breaks here)
Answer: The 2026 film slate is robust with several franchise films, and the hotel segment is expected to benefit from renovated properties and strong group business.

Question 9: How should we think about EBITDA growth and free cash flow conversion for 2026? (Line breaks here)
Answer: Free cash flow will grow significantly due to lower CapEx, with operating leverage in theaters contributing around 50% of top-line growth to the bottom line.

[Sentiment Analysis]
Analysts and management maintained a cautiously optimistic tone, acknowledging challenges in the theater segment while highlighting strong performance and future potential in the hotel segment.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 |
|-------------------------------|-----------------|-----------------|
| Consolidated Revenue | $210 million | $232.5 million |
| Net Earnings | $6.2 million | $24.8 million |
| Theater Revenue | $119.9 million | $142.6 million |
| Comparable Theater Attendance | -18.7% | - |
| Hotels Revenue | $80.3 million | $79 million |
| Comparable Owned Hotel RevPAR | -1.5% | - |

[Risks and Concerns]
- Theater segment box office weakness due to the absence of major blockbusters and less favorable film slate.
- Hotel RevPAR pressure from challenging prior-year comparisons and local market dynamics.

[Final Takeaway]
Marcus Corporation faced a challenging Q3 2025 with a significant decline in theater revenue and attendance, underperforming national box office trends. However, the hotel segment showed resilience, outperforming market competitors in RevPAR. Management remains optimistic about the 2026 film slate and expects significant growth in free cash flow as capital expenditures decline. Strategic capital allocation, including share repurchases and maintaining ample liquidity, positions the company well for future opportunities and market uncertainties.