Good morning, everyone, and welcome to the Marcus Corporation's Second Quarter Earnings Conference Call. My name is Cree, and I will be your operator for today. As a reminder, this conference is being recorded. Joining us today are Greg Marcus, President and Chief Executive Officer, and Doug Neis, Executive Vice President, Chief Financial Officer and Treasurer of the Marcus Corporation. At this time, I'd like to turn the program over to Mr. Neis for his opening remarks. Please go ahead, sir.

Thank you. Good morning, everybody. Again, welcome to our Fiscal 2021 Second Quarter Conference Call. As usual, you know I need to begin by stating that we plan on making 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. Forward-looking statements are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those expected, including, but not limited, to the adverse effects of the COVID-19 pandemic on our theater, hotel, and resort businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness, and the duration of the COVID-19 pandemic and related government restrictions, and social distancing and level of customer demand following the relaxation of such requirements. Our forward-looking statements are based upon our assumptions, which are based only upon currently available information, including assumptions about our ability to manage difficulties associated with or related to the COVID-19 pandemic. The assumption that our theater closures, hotel closures, and restaurant closures are not expected to be permanent or to reoccur. Our assumptions about the release of new movies and the temporary and long-term effects of the COVID-19 pandemic on our business. Listeners are cautioned not to place undue reliance on our forward-looking statements. Additional factors, risks, and uncertainties which could impact our ability to achieve our expectations are included under the heading Forward-Looking Statements in the press release we issued this morning, announcing our fiscal 2021 second quarter results and in the Risk Factors section of our fiscal 2020 annual report on Form 10-K, which you can access on the SEC's website. We will also post our Regulation G disclosures when applicable on our website at www.marcuscorp.com. So with that behind us, let's begin this call. Our format will be that I'll start by spending a few minutes briefly sharing a few numbers from our quarter with you, and I'll also discuss our balance sheet and liquidity. I will then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we're seeing for the near term and longer future. We'll then open the call for questions. You've seen the numbers, the recovery continues, and maybe even at a little faster pace than projected. We're comparing our results this quarter to a quarter where most of our properties were closed for the majority of the quarter last year. I will reference comparisons to prepandemic numbers in fiscal 2019 to provide some added perspective. We did have a few nonrecurring items this quarter and last year, all of which were detailed in a non-GAAP reconciliation included at the end of the press release. The small impairment charge we took this quarter is related entirely to certain surplus theater real estate that we are actively marketing for sale. In GAAP accounting, you never write an asset up if you believe you may sell it for a gain. You're required to write an asset down if you believe you may sell it for a loss. The impairment charge we took this quarter comes from over a half dozen individual assets, with none of the individual charges being particularly large. The lead story of the quarter is the non-GAAP adjusted EBITDA measure that we shared with you in the release, which adjusts for items like the impairment charge and gives one look at how our businesses performed from a cash flow perspective. As I discuss adjusted EBITDA, I do want to refer you to the disclosures we provided in the press release regarding the use of this non-GAAP measure in evaluating our performance and its limitations. Our negative EBITDA has been gradually improving each quarter since bottoming out during the second quarter last year at negative $30 million. We took a big step forward during the second quarter this year, improving from over $17 million negative adjusted EBITDA during the fiscal 2021 first quarter to breaking even during the second quarter. Breaking that down even further, our hotels and resorts division had positive adjusted EBITDA for the entire second quarter. For the first time since the onset of the pandemic, both divisions and the company as a whole delivered positive adjusted EBITDA for the month of June, a huge milestone in our recovery from this pandemic. Greg will go into more detail about these improvements in his remarks. There shouldn't have been anything particularly surprising about our numbers below operating income. As you'd expect, our interest expense increased during the second quarter and first half of the year due to increased borrowings and a higher average interest rate. However, our fiscal 2021 second quarter and first half interest expense included approximately $600,000 during the second quarter and $1.2 million during the first half as noncash amortization of debt issuance costs compared to only about $100,000 to $150,000 during last year's comparable periods. Our total cash capital expenditures during the first half of fiscal 2021 totaled approximately $6 million. Most of these dollars were spent on two projects: a theater renovation and a lobby renovation at our Grand Geneva Resort & Spa. We'll continue to keep capital expenditures relatively low in the near term, but we will be prepared to increase expenditures in subsequent quarters and certainly into 2022, assuming conditions continue to improve. Let me provide some brief financial comments on our operations for the second quarter and first half, beginning with theaters. We continue to experience increased per capita spending in our theaters. Our average admission price at our comparable theaters has now increased 7% during the first half of fiscal 2021 compared to last year. Our premium large-format screens continue to outperform our regular screens, contributing to this overall increase in our average admission price. Meanwhile, our average concession and food and beverage revenues per person at our comparable theaters increased by 17.2% for the first half of the year. Shorter lines at the concession stands are the emphasis that we're placing on encouraging guests to purchase concessions and food and beverage items ahead of time, either online or using our mobile app, and possibly pent-up demand for a return to normal likely has contributed to our increased per capita revenues. Since most theaters in both our circuit and the industry as a whole were closed during the second quarter last year, we believe comparing our results to prepandemic results in fiscal 2019 may be the best way to compare our performance this quarter. When you compare our second quarter and first half admission revenues to fiscal 2019, we calculate that our admission revenues were down 70% during the second quarter and nearly 75% for the first half of fiscal 2021. According to data received from Comscore compiled by us to evaluate our fiscal 2021 second quarter and first half results, U.S. box office results decreased 73.9% during the fiscal 2021 second quarter and 80% during our fiscal 2021 first half compared to U.S. box office receipts during fiscal 2019. As a result, we believe our admission revenues decline outperformed the industry average by approximately 4 percentage points during the quarter and approximately 5 percentage points during the first half of the year. Shifting to the hotels and resorts division, comparing our total revenue per available room or RevPAR to last year, when most of our hotels were closed for the majority of the second quarter does not provide particularly meaningful numbers. We believe comparing the same metric to prepandemic levels in fiscal 2019 helps provide perspective on the pace of the current recovery. Our RevPAR for our seven comparable owned hotels decreased approximately 42% during the second quarter and 47% during the first half compared to the same period during fiscal 2019. These numbers exclude the Saint Kate, which was closed for most of the first half of fiscal 2019. According to data received from Smith Travel Research for the fiscal 2021 and fiscal 2019 periods and compiled by us in order to compare our results, our hotels outperformed comparable upper upscale hotels throughout the United States during the second quarter and first half by approximately 4 and 8 percentage points, respectively. The data also indicates that our hotels outperformed competitive hotels in our markets by approximately 7 and 8 points during the second quarter and first half compared to fiscal 2019 results. Breaking out those second quarter numbers for the seven comparable hotels more specifically, our overall RevPAR decreased during the fiscal 2021 second quarter compared to fiscal 2019 due to an overall occupancy rate decrease of approximately 27 percentage points and an 11.8% decrease in our average daily rate, or ADR. Our average second quarter occupancy rate for our owned hotels was approximately 49%, with lighter midweek business partially offsetting strong weekend occupancies at most of our hotels. Finally, before I turn the call over to Greg, let me also briefly comment on our balance sheet and liquidity position. You may recall that we reported cash and revolving credit availability of approximately $213 million at the end of the first quarter, while our cash and revolving credit availability was still an extremely strong $210 million by the end of our fiscal 2021 second quarter. We anticipate an income tax refund of approximately $24 million in the second half of the year, along with tax loss carryforwards that may be used in future periods. We also successfully monetized two life insurance assets early in our fiscal 2021 third quarter, totaling over $18 million and anticipated sales proceeds from real estate sales in the upcoming quarters will further increase our liquidity and strengthen our balance sheet. We have over $10 million of carrying value in assets currently under contract or letter of intent to sell later in 2021. Early in our third quarter, we amended our revolving credit agreement and made an early payment on our term loan facility, reducing the balance of our short-term borrowings from approximately $84 million to $50 million and extending the maturity date of this remaining term loan facility to September of 2022. We also favorably tweaked our existing debt covenants through fiscal 2022. Our confidence in our strong balance sheet and significant liquidity allowed us to make this early payment on our term loan. Once again, our conservative long-term approach to our balance sheet continues to pay off, and we're confident that we're well-positioned to weather any remaining impacts of the pandemic and come out on the other side in really good shape. With that, I'll turn the call over to Greg.

Thanks, Doug. As you saw in the release and heard more about in Doug's remarks, our second quarter marks a continued emergence from the depth of the pandemic for the Marcus Corporation. We reached a milestone in our hotel division with positive adjusted EBITDA for the quarter. While we don't normally highlight the results of any specific month, in June we reached another milestone with both our theater division and our company as a whole generating positive cash flow over the month. Contrast that with what we reported a year ago. We reported negative adjusted EBITDA of $30 million in the second quarter. We've come a long way. We're still reporting a loss for the quarter, and it will take some time to return to prepandemic levels. But we're looking for progress. There was a lot of progress to highlight during our fiscal 2021 second quarter. While the path to a full recovery might not be a straight line, and the pace of that recovery might be faster or slower-than-expected at times, we believe in the long-term viability and strength of our businesses. This quarter was another step on that journey, and we're pleased to be sharing these results with you today. Let me start my remarks with our hotel division. Doug shared some numbers with you, including comparisons to our prepandemic fiscal 2019 numbers and the fact that the data indicates we again significantly outperformed both the industry and our competitive sets this quarter. Our hotels have consistently outperformed their markets in prior years, but the amount of outperformance in recent quarters has widened significantly. While an overall occupancy rate of approximately 50% during the second quarter is below where we were in 2019, I can say that our performance in this division has positively surprised us each month so far this year. The leisure customer is out in force, and our team has done an outstanding job adapting to the temporary reduction in business and group travel, successfully filling our hotels on weekends. With the advent of summer, our weekdays are doing much better as well. The outperformance also reflects the quality of our hotels and resorts. We have some of the best properties in our respective markets, and it's no surprise that they've outperformed during this recovery period. We've highlighted the strong performance of the Grand Geneva Resort & Spa in prior calls, but that's just one of our properties currently exceeding expectations. We reported positive adjusted EBITDA in this division during the second quarter, with several properties also reporting positive operating income. We still have a ways to go with transient and group business, but we see improvements in these segments as well. We're experiencing a very strong wedding season and are seeing increases in smaller group business. We're also successfully booking major league baseball teams, and the Milwaukee Bucks' playoff run was beneficial for our Milwaukee hotel business in June and July. The next step is the gradual reopening of offices in our downtown markets, which will likely be accompanied by an easing and ultimately lifting of travel bans that many businesses put in place during the pandemic. While this might be delayed slightly with the recent uptick in cases, that next step is coming. Our significantly improved second quarter numbers reflect the hard work of our hotel team, who continue to manage costs and provide the exceptional service we are known for, despite the challenging labor market. Looking to future periods, our group room revenue bookings for the remainder of fiscal 2021 and into fiscal 2022, referred to in the hotels and resorts industry as group pace, is currently running approximately 20% behind where we would typically be at this time in prior years. This marks a significant improvement from earlier in the year as our booking activity continues to improve each week. Banquet and catering revenue pace is also running behind where it would typically be at this point in past years, but not as much as group room revenues due in part to the strength of wedding bookings. We hope that as we get to the fall and mid-week leisure travel subsides, we will also see continued improvements in various business segments. Overall, we generally expect our revenue trends to track or exceed industry trends for our segment, particularly in our respective markets. While it will take a while for business travel to return to normal, the speed of overall travel ramping up bodes well for the long-term future of our hotel business. Many of our assets don't rely solely on business travel. These are special assets that make our portfolio unique. Lastly, I want to congratulate our hotel team on the recently announced addition of a new management contract, the Coralville Hotel and Conference Center, soon to become a Hyatt Regency near the University of Iowa. It's a great addition to our portfolio, which already includes two other hotels in the Big Ten cities of Madison, Wisconsin and Lincoln, Nebraska. We look forward to a prosperous relationship with the city of Coralville. Now, let's shift to our theater division. Doug went over the numbers with you. We started the quarter with 74% of our theaters open as we waited for new films to be released. By Memorial Day weekend with the release of A Quiet Place Part II and Cruella, we reopened most of our remaining theaters. We currently have 97% of our theaters open again, almost all operating 7 days a week with normal hours. One of the highlights of the quarter was our continued outperformance versus the industry. Based on available industry data, we believe we've outperformed the industry throughout fiscal 2021, being one of the top-performing theater circuits in the U.S. Comparisons show our admission revenues during the second quarter and first half of fiscal 2021 represented approximately 3.4% and 3.7%, respectively, of the total admission revenues in the U.S. during those periods, a material increase over our reported market share of approximately 3.2% during the comparable periods of fiscal 2019. A great job by the team. In January of this year, our total theater division revenues were only 16% of our theater division revenues in January 2019. Now, in June thanks to increased attendance and increases in our average admission price and average concession revenues per person, our total theater division revenues have increased to 48% compared to our revenues in June 2019. We continue to face challenges in the near term. Recent surveys by the National Association of Theater Owners indicated that the percentage of those surveyed saying they are comfortable going to the movies has been hovering around 70% in recent weeks, likely impacted by concerns over the Delta variant and new masking recommendations in some markets. This percentage was about 47% at the beginning of the year, showing progress. The pandemic is not permanent. We are social creatures with a desire to interact and be together. Going to the movies is still one of the cheapest forms of out-of-home entertainment. Theatrical exhibition remains an essential component of a film's financial model and distribution. Our focus on the theater division remains on addressing short-term challenges while keeping an eye on the long term. We believe in the long-term prospects of this business, which has been resilient for the past 85 years. We are confident in our ability to adapt and thrive in the coming months and years. There are many promising films scheduled for release during the remaining months of fiscal 2021, and the 2022 lineup features successful franchises. In summary, we are pleased with the significant improvements we reported in our theater business and look forward to continuing progress in the periods ahead. I am immensely grateful for our dedicated associates throughout our organization. Looking back to where we were a year ago, it’s incredible what our team has accomplished. I couldn't be prouder. With that, Doug and I would be happy to open the call to any questions you may have.

Your first question comes from Mike Hickey with Benchmark Company.

Congrats on the quarter, guys. Awesome. Yes. Just a couple of questions from me. On the hotel side, great to see the positive EBITDA in June of the company. That's really a remarkable moment. Any opportunity for us to sort of give us some color on July or maybe 3Q in terms of what we should expect on the EBITDA level, Doug?

Well, I certainly would expect it to be positive again, Mike. We don't provide guidance or numbers, but given that we were positive in the second quarter and how strong July is, I'm not sharing anything out of school. The fact is that, as Greg referenced, with the Milwaukee Bucks doing well, it significantly helped our hotels in the city. The percentage of our performance compared to 2019 has significantly improved in July. We have had a good July. However, we are not back to 2019 levels yet due to the absence of business travel, but it's been quite strong. The wildcard will be when we get to the fall, as leisure travel is strong now. We do have the Ryder Cup in September, which is a positive indicator.

Obviously, a lot of discussion on Disney's approach to windowing, starting with Black Widow when they gave some visibility to the data on the VOD side of Disney+. Just curious what you’re seeing in theater, if you think it's impacting attendance, whether it's first or second week and your view on Disney's approach moving forward or the sustainability of that approach.

First of all, we’re pleased they’re releasing these good movies that drive attendance. I think the heartening numbers are coming from the fact that we're doing well with obstacles in our way. Confidence in going out is not spread equally, especially among different age cohorts. When consumers feel more confident, our numbers will improve. Studios must consider how to balance their revenue streams without diluting theatrical performance. It's important to remember that certain films generate audiences that drive viewership. They want to ensure their revenue is maximized while addressing subscriber growth.

Can you give us a sense of what you're seeing in terms of competitive changes in theaters that have closed? Clearly, if they've not opened by now, they probably won't. Has that been the case in your areas?

Not a lot of closures in our markets, Eric. Our numbers are clean since we are strong in our markets. We've enhanced our competitive edge through investments in our theaters, making them appealing and retaining our audiences. We maintained operations during tough times, ensuring our teams remained intact, which will position us well moving forward.

What are you seeing around labor availability and cost pressures in your theater and hotel division? Are the issues comparable or where are you seeing the most pressures? What are you doing to offset that?

We're seeing typical challenges across the labor market. Staying open helped us maintain our teams. I don't want to make long-term judgments yet, but I believe the upcoming end of supplemental unemployment benefits could change things. There’s also a possibility people are delaying job searching until summer ends. We'll monitor the situation closely.

Are you finding greater receptivity towards your interest in management deals, similar to Carville? How many do you feel you need to sign for a meaningful contribution to your results?

Our team is exploring different management deals. Typically, these deals arise during transactions. The transaction market is still slow, which limits activity. However, adding capital is meaningful, and it fosters growth in our team as we continue progressing and being recognized for our value.

What would be needed to position yourselves for improving your capital structure further and reducing your interest expense levels? What are the agencies pointing to in terms of factors you can control?

We don't have public debt, so we don't hold official ratings. Our private senior notes are rated differently. Our credit rating relies on the underlying assets of the company. We have substantial assets with our hotels and theaters, which supports our private senior notes' evaluation. We built provisions to manage our credit agreements through the pandemic to recover our investment-grade pricing once fully repaid.

Can you touch on the role of $5 Tuesdays in your attendance and how that’s being impacted by this turnaround?

It remains an important part of our business and continues to drive attendance. Yesterday was a strong Tuesday with Jungle Cruise as the top film, and it remains significant in our outperformance and market share gains.

You've been creative in finding ways to get people to come to the theater. Can you talk about Marcus Private Cinema and its impact on business?

The Marcus Private Cinema was crucial for our success, especially in the first quarter. With the rise of new films and increased vaccination rates, we intentionally allocated fewer auditoriums to that program, yet there's still a future for it. We're looking to identify optimal days and times for its operation, and we're confident it will remain a beneficial offering.

And there are no further questions.

Sounds like we’re all set here. Thank you, operator. Thank you, everyone, for joining us today. We look forward to talking to you again in about 3 months when we release our fiscal 2021 third quarter results. Until then, thank you, and have a great day.

That concludes today's call. You may disconnect your line at this time.