Good morning, everyone, and welcome to The Marcus Corporation First Quarter Earnings Call. My name is Ruby, and I will be your moderator for today's call. As a reminder, this conference is being recorded. Joining us today are Greg Marcus, President and Chief Executive Officer; Doug Neis, Executive Vice President and Chief Financial Officer; and Chad Paris, Corporate Controller 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 very much, and good morning, everybody. Welcome to our fiscal 2022 first quarter conference call. As usual, I do 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 2022 first quarter results and in the Risk Factors section of our fiscal 2021 annual report on Form 10-K, which you can access on the SEC's website. We'll 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 shareholders. You can look to our website, www.marcuscorp.com, as an important source of information regarding our company. We also refer you to the disclosures that 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. So with that behind us, let's begin. This morning, Chad Paris, our Corporate Controller and Treasurer, and our next CFO, effective May 15, following my retirement. And I will start by spending a few minutes sharing the results from our first quarter with you and discuss our balance sheet and liquidity. We'll then turn the call over to Greg, who will focus his prepared remarks on where our businesses are today and what we're seeing ahead, and then we'll open the call up for questions. This morning, we reported another solid quarter that continues our post-pandemic recovery trend of significant improvement in year-over-year revenues and adjusted EBITDA. We also continued our sequential streak of positive adjusted EBITDA in both of our businesses and on a consolidated basis for the third straight quarter. We were able to deliver these results despite the fact that the outbreak of the Omicron variant negatively impacted both of our businesses. On the theater side, we had a lighter film release calendar, as originally anticipated, as studios waited out this most recent surge. On the hotel side, office reopenings were delayed on top of our normal seasonal winter headwinds at our predominantly Midwestern portfolio of owned hotel properties. Given the significant changes in the state of the business today compared to the environment we were operating in a year ago, Chad will provide comparisons to our pre-pandemic fiscal 2019 first quarter as he gets into the results of each business. But at a consolidated level, revenues increased more than 2.5 times over the prior year, growing from $50 million last year to over $132 million in the first quarter this year. As a result, adjusted EBITDA increased by nearly $21 million, improving from negative $17 million last year to positive $4 million this year. We provided a breakdown of these numbers by operating segment in our press release, where you can see that our theater division again contributed to the majority of our first quarter adjusted EBITDA. We ended the quarter with the divisions contributing a combined $7 million in adjusted EBITDA prior to unallocated corporate expenses. Below operating income, our first quarter interest expense decreased by $750,000, primarily benefiting from lower short-term debt and reduced borrowings resulting from our improved operating results. The reduction in interest expense was partially offset by reduced gains from the disposition of property, equipment, and other assets this quarter compared to last year. I'll now have Chad provide some brief financial comments on our operations for the first quarter, beginning with theaters.

Thanks, Doug. We continue to experience increased per capita spending by our customers in our theater division. Our average admission price increased by 6.4% during the first quarter of fiscal 2022 compared to last year and increased by 18% compared to fiscal 2019. Continued strong customer demand for our large-format premium screens was the primary driver of this overall increase in our average admission price as well as more new films compared to last year, when a limited supply of new films resulted in a higher mix of legacy library titles shown at discounted ticket prices. Meanwhile, our average concession and food and beverage revenues per person at our comparable theaters increased by 5.7% during the first quarter of fiscal 2022 compared to last year and has increased by 36.1% compared to fiscal 2019. We believe our industry-leading mix of nontraditional food and beverage options, the mix of films, shorter lines at the concession stand, the emphasis we are placing on encouraging guests to purchase their concessions and food and beverage ahead of time, either online or using our mobile app, on top of what we believe to be pent-up demand for a return to normal, likely continues to contribute to our increased per capita revenues. As a significant number of theaters in both our circuit and the industry as a whole were closed during large portions of the first quarter last year, we believe a comparison of our results to pre-pandemic results in fiscal 2019 may be the best way to compare our performance to the industry this quarter. When you compare our first quarter fiscal 2022 admission revenues to fiscal 2019, our admission revenues were down 39.4% during this quarter, including the pro forma impact of the Movie Tavern acquisition, which was part of our results for 2 of the 3 months in the first quarter of fiscal 2019. According to data received from Comscore and compiled by us to evaluate our fiscal 2022 first quarter results, United States box office receipts decreased 44.1% during our fiscal 2022 first quarter compared to U.S. box office receipts during fiscal 2019. As a result, we believe our admission revenue decline once again outperformed the industry average by 4.7 percentage points during the first quarter of fiscal 2022. Due to the impact of 2 strong blockbusters released or showing during the first quarter of fiscal 2022, which were The Batman and Spider-Man: No Way Home, the first quarter box office was more weighted towards our top movies as compared with the first quarter of fiscal 2021 and fiscal 2019. These films drove significant PLF sales but, at the same time, resulted in higher film costs as a percentage of admission revenues. With that said, we are thrilled with the success of these films and their contribution to our improved results. During the quarter, we were impacted by several labor challenges, including increasing hourly wages and a ramp-up in staffing levels as we prepare to better serve the growing number of customers returning to theaters for the upcoming movie slate following a busy holiday season, in which we operated well below our targeted staffing levels. While we made progress adding and training new associates and retaining many of our loyal associates, the shifting and uneven movie release schedule further complicated our ability to efficiently manage our labor costs. While we were better positioned with our staffing levels entering the second quarter, we know we can do better, and we expect our labor efficiency to improve as we move to a more steady release of new films. Shifting to our hotels and resorts division, comparisons of our total revenue and total revenue per available room, or RevPAR, to last year do not provide particularly meaningful numbers. We believe comparing to pre-pandemic levels in fiscal 2019, however, does help provide perspective on the pace of the current recovery. First quarter total revenue for the division was over 95% of 2019 levels, which was a post-pandemic high. Now to be fair, the Saint Kate was closed for the majority of the 2019 first quarter during its conversion from a branded property. But even if you take the Saint Kate out of both years' numbers, our fiscal 2022 adjusted first quarter revenues were still a very healthy 91% of adjusted 2019 levels. Greg will further discuss some of the differences between the mix and the business done and where we are today in his remarks. But we are encouraged by the overall continued progress in the recovery of the business. Our RevPAR for our 7 comparable owned hotels decreased just under 16% during the first quarter compared to the same quarter during fiscal 2019. According to data received from Smith Travel Research for the fiscal 2022 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 first quarter by 2.1 percentage points. The data also indicates that our hotels outperformed competitive hotels in our markets by approximately 8.6 percentage points during the first quarter, again, compared to fiscal 2019 results. Breaking out the first quarter numbers for the 7 comparable hotels more specifically, our overall RevPAR decrease during the fiscal 2022 first quarter compared to fiscal 2019 was due to an overall occupancy rate decrease of approximately 15.7 percentage points, offset by an 11.5% increase in our average daily rate, or ADR. Our average fiscal 2022 first quarter occupancy rate for our owned hotels was 48.9%. Shifting to cash flow and the balance sheet. Our cash flow from operations was $6.5 million in the quarter and benefited from 2 significant nonrecurring items. First, as we shared on our last call, we received an income tax refund of approximately $23 million in the first quarter as well as state government grants totaling $4.3 million accrued during our fiscal 2021 fourth quarter and received early in fiscal 2022. 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 cash capital expenditures during the first quarter of fiscal 2022 were $6.6 million. A large portion of these dollars were spent on the first phase of a guest room renovation project at our Grand Geneva Resort & Spa, with the rest going toward normal maintenance projects in both of our businesses. We also had proceeds from the sale of noncore real estate of $3.4 million during the first quarter, and we continue to take advantage of opportunities within our substantial real estate portfolio. We believe we may receive additional sales proceeds from real estate sales during the remainder of fiscal 2022, totaling approximately $5 million to $15 million depending upon demand. Finally, before I turn the call over to Greg, let me also briefly comment on our balance sheet and liquidity position. As our press release notes, our liquidity remains extremely strong, with nearly $241 million in cash and revolving credit availability at the end of the first quarter of fiscal 2022. At the end of the quarter, we had no borrowings on our $225 million revolving credit facility. We ended the first quarter with a debt-to-capitalization ratio of 37%. As we head into the busy summer months for both businesses, we expect this ratio to continue to improve. We remain committed to our philosophy of owning our real estate whenever possible and keeping the balance sheet strong.

Thanks, Chad. We entered the quarter expecting it to be our most challenging of the year, facing our normal seasonal headwinds during the winter months in hotels, uncertainty as the Omicron variant ran its course, and a limited new film release calendar. I'm pleased to report that we navigated these challenges to deliver results that outperformed the industry and continued our trend of significant year-over-year improvement in both businesses as the recovery from the impact of the pandemic continues. More importantly, we exited the quarter with exciting momentum in both businesses as we head into the spring and summer. As you know, we view the world through a long-term lens. Our recovery path is not a straight line, and our rate of improvement will vary from quarter to quarter, but we continue to make consistent progress. It's particularly gratifying to see our team shifting their focus from navigating through a pandemic to accelerating our recovery and looking ahead to once again growing our businesses in the future. The first quarter that we're reporting today is yet another step in our recovery, and we're pleased to be sharing these results with you. So let me start my divisional remarks with our hotel division. Chad shared some of the numbers with you, including comparisons to our pre-pandemic fiscal 2019 numbers and the fact that the data indicates that we once again outperformed both the industry and our competitive sets this quarter. Chad mentioned it earlier, but it bears repeating, total revenues for the division were over 91% of 2019 levels for the quarter after adjusting for the Saint Kate. The composition of the revenue is different than it was 3 years ago, with higher ADR, lower occupancies, and a different mix of customers. There is more recovery still in front of us, but in aggregate, we are getting closer to where we were. As expected, occupancies were at a seasonal low point for our hotels. But overall, it was a solid quarter in which the division contributed over $2 million in adjusted EBITDA. Leisure customers continue to lead the way, particularly on weekends. We are pleased with the continued strength of our average daily rate during the first quarter, growing more than 10% over last year. Omicron's impact on the quarter was mitigated by this being our seasonally slowest time of the year. We did have some cancellations early in the quarter, resulting in rebookings from later in the year, and in general, it resulted in a delay in a more robust reopening of offices. However, in the last 60 days, there has been a noticeable change compared to where we were at the beginning of the quarter, with more large companies now implementing their return-to-office plans. We continue to believe that in order for the business traveler to return to pre-pandemic levels, it begins with employees returning to offices. That then can lead to businesses becoming comfortable with their employees getting back on the road to see clients, potential clients, remote offices, and plants, as well as attending group events and conferences. While we are still in the early innings of the business travel recovery, our view seems to be playing out in the data. Recent industry surveys have indicated rising expectations for business travelers to take at least one trip to attend conferences, conventions, or trade shows in the next 6 months. Industry meetings volume grew significantly from February to March, and the average number of attendees per meeting continues to increase, nearly returning to its pre-pandemic level in March. These indicators aligned with a significant improvement in our group room booking activity, which accelerated from late February through today. Our group room revenue bookings for fiscal 2022, commonly referred to in the hotels and resorts industry as group pace, are now running within 15% of where we would historically be at this time in pre-pandemic years. And let me pick up where we were. We're running now within 15% of where we would historically be at the same time in pre-pandemic years and are up significantly from where we were at this time last year. We are encouraged by the increased amount of activity and leads we are experiencing, and our sales teams remain focused on continuing to close the gap as business travel activity recovers. Banquet and catering revenue pace for fiscal 2022 is also trending similarly to the improvement in group pace, running behind where we would typically be at this time in prior years but closing the gap. We continue to experience very strong wedding bookings, and some of the bigger clients from the past are once again looking for 2022 and beyond. Overall, we generally expect our revenue trends to track or hopefully continue to exceed the overall industry trends for our segment of the industry, particularly in our respective markets. As in the past, our results from this division will vary by quarter due to the seasonality our properties have historically experienced. But on a relative year-over-year basis, we look for continued improvement during this ongoing recovery. And as I've said in the past, we believe we have special assets that make our portfolio unique. These assets have allowed us to successfully pivot to serve an increasing number of leisure customers during the pandemic, and we will continue to pivot to optimize revenue management and deliver outstanding service to returning business travelers and group events. So now let's shift to our theater division. We shared over the numbers with you, including our continued increases in per person revenues, our outperformance in the industry, and our third straight quarter of positive cash flow, with nearly $5 million of adjusted EBITDA in the quarter. We delivered these results despite a limited film release calendar that was impacted by Omicron, with several films shifting out of January and February to later in the year. The Batman delivered a blockbuster performance leading our box office results for the quarter, with the balance of the box office resulting from a mix of continuing strong runs from several films that debuted in September, including Spider-Man: No Way Home and Sing 2 as well as several films debuting in the quarter that performed well, such as Uncharted, Scream and Dog. All of the top 5 films in the quarter debuted with an exclusive theatrical run prior to release on streaming services compared to where we were a year ago, when 4 of the top 5 films in the first quarter were released day-and-date. The growing audiences in a widening variety of genres for films released to exclusive theatrical runs reinforced several themes related to our customers. First, our customers are increasingly comfortable coming back. Survey data released by the National Association of Theatre Owners regarding consumer sentiment towards movie-going is now indicating that the percentage of those surveyed saying they are, very or somewhat comfortable going to the movies, is at 87%. As the comfort levels have increased, our customer base is broadening. Second, we believe the question of whether our customers would return to watch movies on the big screen has been answered. There is strong consumer demand for affordable out-of-home entertainment, and customers are coming back for the immersive theatrical experience they simply cannot get in their living rooms. The blockbuster performances, Spider-Man: No Way Home and The Batman, illustrated that big movies will bring back huge audiences. But beyond these big movies, solid performances from an increasing number of films are showing there is demand for the theatrical experience for more than just the tentpoles, and we continue to see more customer segments returning to movies. A growing number of family films have returned to theatrical success with Sing 2, Sonic The Hedgehog 2, Fantastic Beasts: The Secrets of Dumbledore, and more recently, The Bad Guys, all delivering solid performances. Films such as The Lost City and Everything Everywhere All at Once are seeing women and older adult audiences return to the movies. So while everything is certainly not yet back to normal, particularly as it relates to the number of films being released theatrically, we continue to gain confidence as we see more of our audiences return. In short, to borrow a line from Field of Dreams, the performances of these films are reinforcing that, if you build it or, in this case, release it, they will come. Last week, I joined our theaters team at CinemaCon and was able to get a firsthand look at some of the exciting films in the slate from many of our studio partners. The strength of the release schedule for the rest of this year and 2023 continues to improve with a fantastic mix of films from not only the major franchises but exciting new original stories as well, with the next few months being particularly strong. Tickets for this weekend's debut of Doctor Strange in the Multiverse of Madness have presold at a post-pandemic pace, second only to Spider-Man: No Way Home. And while there are still several weeks away from their premier, early advanced ticket sales for Top Gun: Maverick and Jurassic World: Dominion are also starting out strong. But beyond the strength of the release schedule, what was extremely important to hear was a commitment to theatrical exhibition from our film studio partners. You've heard me talk before about our belief that no other distribution channel for film content matches the experience of watching a movie on the big screen and our belief in the importance of an exclusive theatrical exhibition window as a means of maximizing the performance and monetization of film content over its life cycle. Last week, we heard our beliefs echoed by film studios as the data is beginning to prove out that an exclusive theatrical exhibition window sets up strong subsequent windows, including premium video on demand and streaming platforms. The magic and gravitas of exclusive theatrical exhibition delivers an experience that elevates the perceived quality of a movie, building long-lasting demand for its brand that other channels of distribution do not. This has long been our belief, and it was encouraging to hear several film studios reaffirm their commitment to exhibition and announce exclusive theatrical exhibition windows for films beyond just the tentpoles. The length of exclusive theatrical windows may vary from film to film. While many windows are settling in around 31 to 45 days, there will also be some films that run shorter and others that may run much longer, such as Spider-Man: No Way Home, which ran for an 88-day exclusive theatrical window. So as we look forward, we continue to believe that 2022 will be the year of the return to an exclusive theatrical release window for the vast majority of new films. And our view was confirmed last week. As an industry, we will also continue to encourage our studio partners to increase the number of films released theatrically as well as encourage additional content providers to take advantage of the unique theatrical experience as a means to showcase some of their best content. Chad mentioned earlier our opportunity to improve labor efficiencies as the business continues to ramp up. Our response to cost inflation is being addressed on multiple fronts: improving labor efficiency, continuing with cost management discipline we implemented during the pandemic, and growing higher-margin concessions in food and beverage revenues. In the second quarter, we are also implementing targeted price increases for our premium large-format screens on certain days of the week. This is an area where our customers continue to show a strong preference and willingness to pay for this premium entertainment experience. While delivering magical movie memories to our customers will remain at the core of our theater business, we continue to develop additional entertainment options within our theater locations. This quarter, we launched our sports viewing auditorium, The Wall, at our theater in Gurnee Mills. This one-of-a-kind sports viewing experience, combined with industry-leading food and beverage offerings debuted during March Madness to positive customer feedback, and we continue to refine the customer experience and develop the promotional strategy. We're still in the early innings of this project and concept experiment. But personally, there's no place I'd rather watch the games than the experience I get at The Wall. This quarter, we also launched testing in select markets for new subscription models known as MovieFlex and MovieFlex+. We believe these subscription programs are a way to drive recurring traffic through our theaters, and we're testing a unique approach designed to promote attendance for some of the smaller films that play an important supporting role around tentpole features. While we are in the early stages of testing with these programs, we believe they represent potential seeds for future growth in our theaters. Finally, I want to briefly remark on the strength of our balance sheet and liquidity position. We've always maintained the core philosophy of owning our real estate, limiting our exposure to leases, and managing our debt at levels that we believe are prudent for the businesses that we own. We've informed this view with our 86-plus years of experience owning and operating these businesses, and we believe it has served us well, providing operational flexibility and effective risk management for when unexpected occurrences happen. We believe we entered 2022 from a position of competitive strength with less debt and relative leverage, a minimal amount of deferred rent, and a considerable amount of more flexibility than our peers. As opportunities for investment and growth in both businesses develop, we will be well positioned to execute. For me, it is incredibly exciting to get back to focusing on growth, our strategic priorities, and the exciting opportunities that lie ahead. Before I wrap up my prepared remarks, on behalf of our Board of Directors and our Chairman and my dad, Steve Marcus, I want to express my thanks and gratitude to Doug Neis, our Executive VP and CFO, who will retire next week after 36 years of service with The Marcus Corporation and 25 years as our CFO. Many of you may have gotten to know Doug over the years, but for those of you who haven't had the privilege of working with him closely as I have for so long, we could not have asked for a stronger leader to navigate the changes and challenges we faced over his tenure. In particular, his steady leadership over the last 2 years has been critical to our successful recovery. I'm happy to note that Doug has agreed to continue to provide advisory services to the company after his official retirement date in order to ensure the transition of Chad is seamless. He will be very much missed. We wish Doug, his wife, Sue, and their family the very best in his well-earned retirement. Doug, you have not only been a great asset to our company. You have and will continue to be a good friend. I could not ask for more out of our work relationship. I was always grateful for what you brought to our company, but the last 2 years really highlighted that impact even more. Meanwhile, we're extremely pleased to welcome Chad as our new CFO, upon Doug's retirement. Upon joining us last October, Chad has worked closely with Doug and quickly immersed himself in our businesses, systems, and culture. We're fortunate to have found someone with Chad's knowledge and experience, and I'm confident that he will be a great addition to our executive team, and I expect he too will become a good friend as well. I would also like to provide a reminder that our Annual Shareholder Meeting is next week, May 10 at 9:00 a.m. Central Time. We are excited to hold our first in-person Annual Shareholder Meeting in 3 years. And we hope you can join us at the Movie Tavern in Brookfield. Further details regarding the meeting can be found in our proxy statement, which can be accessed on our Investor Relations website, investors.marcuscorp.com. Finally, I'd like to once again express my appreciation for our dedicated associates at The Marcus Corporation. Your outstanding work and commitment to serving our customers is responsible for our success, and we appreciate all that you do every day. So on behalf of our Board of Directors and the entire executive team, thank you to all of our associates. With that at this time, Doug, Chad, and I will be available on the call for any questions you may have.

Our first question is from Mike Hickey of Benchmark Company.

Greg, Doug, Chad, congrats guys on a strong quarter in a difficult market. Doug, good luck, man. It's been great. We're going to miss you.

Thank you, Mike. I really appreciate that. Right back at you.

We appreciate you. Welcome, Chad. My first question is about CinemaCon. There were many compelling products and some big-budget movies announced. It's clear that attendance will reflect that. However, when we look at the overall film landscape, particularly wide releases, it seems we're still not back to the volume we saw before the pandemic. I’m curious about your thoughts on how the industry can close that gap. Also, do you think OTT providers like Amazon, Netflix, and Apple, which create experiences that would work well in theaters, might start providing content for your theaters, especially with the film window settling at around 45 days? I have a follow-up.

Mike, you're absolutely right. We haven't fully returned to our previous content levels yet. There seems to be a delay in the industry, even when people intend to shift their perspective. It's encouraging to see some attitudes changing. There was a common belief that streaming was the ultimate solution, which we never subscribed to. If you've been following our discussions long enough, you would recognize that we questioned its viability. This skepticism is proving to be valid. Streaming exists, but the real competition lies between streaming and linear TV. It’s competitive because the increasing amount of content available at home makes it tougher for the TV industry. However, the theater offers a unique experience. I'm repeating myself, but it’s vital to emphasize this point. If you examine the movies that have gone into production, there's a noteworthy statistic I came across recently. In 2020, production faced significant slowdowns. The pandemic really impacted production timelines. Currently, one challenge we face is that post-production houses are extremely busy; they are experiencing the same labor shortages as others and it's causing delays. As we've mentioned several times, this is not a straightforward journey. There will be some bumps along the way. However, the overall trend is encouraging. Many people acknowledge that films perform better on streaming platforms and in theaters when they initially release. This sentiment has been echoed by studios and is being discussed in the media. This positive outlook is beneficial for our business because we offer a unique experience that shines a spotlight on films. We are also noticing a general increase in film production again.

Greg, do you want to touch on Netflix, Amazon, Apple or your thoughts on that?

We are in discussions with various parties to understand how to collaborate with their models. While I don't have any updates to share right now, we are actively engaged in conversations. We have been testing different concepts, especially as different exhibitors have experimented with various strategies during the pandemic. As reported, we are open to showcasing their films. Notably, there is significant overlap between moviegoers and those who stream content, which presents a big opportunity for us. We believe we complement each other rather than compete. Ultimately, they will want to maximize the revenue from their intellectual property in this increasingly competitive streaming environment. Given the high costs involved, they need to find various ways to recoup their investments. Too often, content is treated as a mere commodity rather than something valuable. I apologize, but if I were to visit a hardware store, I wouldn't be able to tell you which screwdriver I was purchasing or which one was superior to another. However, film content is distinctly different from a screwdriver; it is intellectual property and entirely unique. If you want to see a particular movie, such as Doctor Strange, when it becomes available for streaming this weekend, it will only be accessible on Disney+. It is not interchangeable and cannot be compared to a mere screwdriver. Those interested in watching it will need to be part of the Disney+ family. This is also true for content available on other platforms like Netflix or Amazon. When they produce content that audiences want, it will be exclusive to their service during its run, providing an advantage to their subscribers. Additionally, films will retain a certain appeal after being shown in theaters, creating a positive reputation. We believe this approach can be mutually beneficial and could lead to increased revenue without reducing streaming income. Thus, it seems to be a favorable situation for everyone involved. Historically, theatrical releases complement ancillary markets rather than compete with them, and I think we are moving toward this realization as well.

I appreciate the enthusiasm. My second question relates to the current economic uncertainty we are facing, which is evident in the markets this morning. However, it's clear that you're confident, and your business is showing a strong recovery. Although your product cash flow appears flat for this quarter, you have maintained a trend of flat or increasing performance over the last three quarters. Comparing that to the pre-pandemic period, where you recorded a loss of $11 million in free cash flow in the first quarter, your current situation is significantly better. Given all this, how do you view the possibility of reinstating your dividend, and what would your approach be? It seems you might be considering it, especially with your confidence and cash flows. The dividend was a valuable part of your return strategy, and there seems to be market appreciation for capital returns in value stocks.

Yes, that's a great question, Mike. I want to confirm that we are having many discussions about this. Throughout most of our history, we have been a dividend-paying stock, and we do anticipate returning to that status. We are carefully considering the timing, as there are several factors to evaluate. While I can't specify which quarter this might happen, it is on our radar, and we expect to resume paying a dividend. I can say for sure that when we do return, it won't be at the same levels as before the pandemic. We still have some restrictions with our bank agreements until we meet our previous covenants, but we are on track to get back to those old covenants. This situation does allow us to start paying a dividend, but initially, it will be at a lower level than you have seen before.

Great working with you, Doug, over the years. Definitely, it's hard to see you go. A couple of questions. I guess, one, obviously, a lot of the focus on inflationary pressures, wages and labor, has been the case for a while. What have you seen over the past maybe 12 months or even more recent in terms of how price-sensitive consumers have been, both in the theaters and in your hotels? I mean do you expect still continued ability to completely cover increased costs through price? Is there a risk that may not be the case? Where have you seen some pushback, if at all, from your moves around that?

Each business is different. We've noticed a fair amount of elasticity in our pricing. On the hotel side, our rates have been very aggressive, similar to the rest of the hotel industry, and we have managed that effectively. We will continue to respond to market conditions, exploring pricing options as necessary. On the theater side, we are being more tactical in our approach as we work to rebuild our business and bring people back to the theaters, which are not as advanced in recovery as hotels. This means we are selective in our actions, but it doesn't mean we aren't taking any. Currently, our theater team is focused on tightly managing labor costs while also implementing selective price increases where feasible. We're implementing a $1 charge for our premium large-format screens on Tuesdays for non-loyalty club members, which we didn't have before. This approach is tactical; we are not increasing the price of individual films as some competitors do. Instead, we are adjusting prices during specific times and there’s flexibility in that strategy. People are eager to go out, as seen in recent reports about how much desire there is to leave home. Historically, during economic downturns, theater attendance tends to improve as people seek affordable entertainment options. Therefore, we have opportunities to adjust our pricing accordingly.

Got it. And then second question, what are your views on kind of the acquisition environment on the theater side right now? Obviously, we've seen some moves by some of the competitors. Are you seeing anything that fits your criteria? Do you think you would get increased inventory and potential targets as funding sources change? Have some of the acquisitions that have been done not checked all the boxes? And I guess trying to see how attractive are you in the environment and how could that change maybe over the next 12 months in your favor.

There has not been much activity lately. We did see a small transaction recently, but overall, the market has been quiet. Although there was an announcement of a transaction, it was relatively minor. We're open to exploring opportunities, but we want to ensure our balance sheet is in strong condition. While having scale can be advantageous, it's not essential. Currently, there's not much to report. The environment is still calm, but as things stabilize, there might be changes, and we may find ourselves in a position to consider options. We'll assess opportunities as they arise.

And I will also begin offering congratulations to Doug. It's been great to be able to work with you for many years, and you're a fine executive and a fine human being. Chad, you've got a tough act to follow, so good luck to you, too. I would actually like to start with exclusive theatrical window comment. Are there any holdouts notably? Or I think most of the major studios have conformed to a 45-day type exclusive window, haven't they?

I can't think of anyone who hasn't had a chance to understand this concept. We don't publicly discuss our conversations with partners, but most people seem aware. I've mentioned this before: the question is why you would want to create an unlimited number of seats on the first day. It really boils down to the laws of supply and demand. Why start with an unlimited inventory on day one? The essence of windowing is about repeatedly selling the same product to the same customer while prioritizing your most lucrative channels. If you do the opposite, you compromise that opportunity. Ultimately, trying to maximize the value and revenue from your intellectual property in that way can be counterproductive. I've always believed that if anyone from Apple is listening, they can correct me if I'm wrong, but I remember how on day one, when Apple launched a new iPhone, people would line up around the block. It’s hard to believe that they wouldn't sell a massive number of iPhones on the first day. Yet they successfully created that demand by limiting the supply, which worked to their advantage. We should all take a lesson from that.

Right. With the issues Netflix has faced lately, has there been any change in the tone of conversation with it in terms of potentially introducing having some sort of window? I think Mike was bringing this up before. But also, I'm wondering, if you were to do a theatrical window for some of the streaming content, would it be day-and-date? Or would there be any chance that you have at least a week or a few days of exclusivity in that?

I'm not going to discuss the specifics of our conversations with various distributors. We've never shared that information in the past, and there's no intention to do so now. We are open to exploring different models and have tested various approaches. We believe it is beneficial for us and everyone involved to implement some form of release window, as it helps to close the gap. In our view, simultaneous releases haven’t proven effective, but we are receptive to any good ideas.

Okay. And I know you've said in the past some time that certain films tend to play in your markets better than others. Are there any of the major releases coming up that you think will be particularly good or bad in the Marcus Midwestern-type markets?

I don't anticipate any significant challenges in our markets. We have performed exceptionally well with family films, so I expect to see strong results there, particularly with Lightyear. We also have a solid track record with horror and thrillers, and there are a few upcoming films that may fall into that category. Reflecting on our slate, I agree with what Greg mentioned; nothing stands out as concerning or unusual for us, so I don't believe there are any material issues.

Okay. And on the hotel side, I know business travel has lagged somewhat. Are there any additional specials you're trying to provide for leisure travels combining stays with food and beverage or anything like that to make the most out of that opportunity?

It's not a situation where we need to offer much discounting. During softer periods, we might package golf in Lake Geneva with our resort selectively to attract demand during quieter times. However, we haven’t had to do this too often because the leisure traveler has remained strong.

Okay. Last thing, the Searchlight relationship. Can you provide some insight into the broader expectations regarding the frequency of investment opportunities that may arise from that relationship? I understand it may be inconsistent, but is there anything you can share that would guide us in that direction?

I wish I could provide you with a specific frequency number, Jim, but I don't have one. We're actively seeking opportunities and transactions with our investment partners. Ultimately, our focus is on quality rather than quantity. We're not just looking to invest for the sake of investing; our aim is to ensure our investors perform well. We strive to do our best, and while mistakes happen, we acknowledge that we're not perfect. We will be careful and thoughtful in our decisions. The transaction market on our end has not been exceptionally active; there are opportunities, but it's not overwhelming. However, we are actively searching for opportunities, and we have the capital ready to collaborate with our partners when the right chances arise.

Our next question is from Andrew Shapiro of Lawndale Capital Management.

Can you hear me okay?

Yes, we can, Andrew.

So first off, Doug, congratulations on a retirement well-deserved. It's been more than a decade, I think, we've engaged with you, and I really enjoyed that over the years and look forward to continued discussions with you on the industry, et cetera, and maybe having you on one of the boards that we do stuff with in the future.

Thank you very much, Andrew.

Regarding the earlier comments, I agree that significant events, red carpet premieres, and success at the box office contribute to the popularity of streaming. You also mentioned the uniqueness of studio intellectual property, which incurs costs in the hundreds of millions for studios. When that intellectual property streams, it must be de-encrypted to be accessible, and this is when high-quality pirated versions often appear. Can you share your insights from studios and your private discussions at CinemaCon about the impact of increased piracy that studios have encountered during the COVID period and the day-and-date release strategy? For instance, we heard that Matrix 4 became one of the most pirated movies of all time within just four days. Have you observed similar trends? What conclusions can we draw from this?

Andrew, that's a fantastic question. I want to emphasize that it's not just a way to stall. It genuinely brings up important points, especially regarding day-and-date releases. Piracy is a huge issue, and the studios are aware of it. As soon as a film is available for streaming, it opens the door to high-quality pirated copies, unlike the lower-quality versions that might come from a camcorder in a theater. This issue becomes evident immediately when a film is released on PVOD or streaming, as they consistently see a significant spike in piracy. The studios understand that this is a major downside. This is yet another reason to maximize revenue from theatrical releases before expanding into other markets. Thank you for that insightful question.

Have you received feedback from studio executives indicating that this significant change has influenced their models in such a way that they're motivated to return to exclusive windows? It seems they've learned their lesson and will likely not abandon those exclusive windows anytime soon.

I can't say that I've had those, but our theater team might be having them more directly than I am. However, we know the MPAA is focused on piracy. They mentioned it, and it was a significant topic in Charlie Rivkin's speech about the issues of piracy and their efforts to combat it. It's similar to radar detectors with the police. Unfortunately, there are people who are difficult to stop because they want to steal, and it’s really hard to prevent them from doing so.

Yes, I know. I'm at the end of the line here, so most of my questions have most probably been answered. Just real quick on price increases you talked about on the theater side. Any comments on the concessions, food and beverage? Any comments on price increases on the food and beverage side?

Price increases. I'm sorry. I didn't quite catch that.

Yes, price increases.

I would echo what Greg mentioned earlier regarding the admission pricing. The approach is similar when it comes to concessions. We are implementing selected price increases. Just like with labor cost challenges, we're also facing rising costs for our products. Therefore, we are being strategic and careful with any price increases. This isn't unusual; you can see similar price hikes at restaurants or during events like ballgames. Additionally, as Greg pointed out, we are working on rebuilding the business, so we want to proceed thoughtfully. It's something our team is monitoring closely.

So I'll follow up with the call later. Doug, congrats on a successful career. Fantastic working with you over the years.

Thank you, Ryan.

At this time, it appears there are no other questions. I'd like to turn the call back to Mr. Neis for any additional or closing comments.

Thank you very much. I want to thank everyone for joining us today, especially Greg and all of you who are on the call. I appreciate your kind words. I would like to express my gratitude to everyone listening for your interest and support of The Marcus Corporation over the years and during my time here. I am particularly thankful for the relationships I've built with many of you. It has truly been an honor and privilege to work for such an amazing company and an incredible family for over 36 years. While I look forward to this next stage of my life, I will definitely miss all of you and my second family here at Marcus. Greg and Chad are excited to talk to you again in early August when we release our fiscal 2022 second quarter results. Until then, thank you, and have a great day.

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