Marcus Corp (MCS) Q2 2026 Earnings Call Transcript

Good morning, everyone, and welcome to Marcus Corporation's second quarter earnings conference call. My name is Jonathan, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. If at any time during this call you require assistance, please press star zero, and an operator will be happy to assist you. As a reminder, this conference is being recorded. Joining us today are Greg Marcus, Chairman, 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.

Good morning, and welcome to our 2026 second quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today which may be identified by our use of words such as believe, anticipate, expect, or other similar words. Our forward-looking statements are subject to certain risks and uncertainties which may cause our actual results to differ materially from those expected or projected in our forward-looking statements. These statements 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. 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 2026 second quarter results and in the risk factors section of our fiscal 2025 annual report on Form 10 which you can access on the SEC's website. Additionally, we refer you to the disclosures and reconciliations we provided in today's earnings press release regarding the use of adjusted EBITDA, a non-GAAP financial measure, in evaluating our performance and its limitations, a copy of which is available on the Investor Relations page of our website at investors.marcuscorp.com. All right, with that behind us, let's begin. I'll start this morning by spending a few minutes sharing the results from our second quarter and 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 see ahead. We'll then open up the call for questions. This morning, we reported our best second quarter since 2019, and it was a quarter where the intersection of strong demand and both businesses outperforming their respective industries and comp sets combined to deliver new post-pandemic second quarter records for consolidated Marcus Corporation revenue and adjusted EBITDA. As we shared on our last call, the second quarter got off to a strong start in our theater division with the Super Mario Galaxy movie creating great momentum heading into a strong slate for the summer movie going season. Audiences headed to our theaters for one great movie after another to deliver several positive surprises and our strongest second quarter in theaters since the pandemic in our hotel division we continue to benefit from strong group business and resilient leisure travel demand that drove overall revenue growth and another quarter of outperformance against against our peers and the industry overall we are very pleased with the second quarter results we reported this morning Shifting to the numbers, I'll start with a few highlights from our consolidated results for the second quarter of 2026. Consolidated revenues of $232 million were up 12.5% compared to the prior year quarter, with revenue before cost reimbursements growing in both divisions. Operating income for the quarter was $27 million, more than doubling compared to $13 million in the prior year quarter. Consolidated adjusted EBITDA for the second quarter was 46.2 million, a 43 percent increase over the second quarter of 2025. And finally, net earnings for the quarter increased 116 percent to 15.8 million and net earnings per share increased over 121 percent to 51 cents per diluted common share, both compared to the prior year second quarter. Turning to our segment results. I'll begin this morning with our theater division. Second quarter 2026 total revenue of 150.6 million increased 14.4 percent compared to last year's second quarter. Comparable theater admission revenue for the second quarter increased 16.6 percent and comparable theater attendance increased 10.9 percent compared with our fiscal second quarter 2025. According to data received from Comscore and compiled by us to evaluate our second quarter results, U.S. box office receipts increased 11.5 percent during the 2026 second quarter compared to U.S. box office receipts during the second quarter of 2025, indicating our admissions revenue outperformed the industry by approximately five percentage points. We believe that our box office outperformed during the second quarter was primarily attributable to strategic pricing actions as well as favorable films a favorable film slate that featured a higher mix of films that played well in our midwestern markets particularly family films this contrasts with the second quarter last year when our top markets underperformed the overall increase in the national box office and a quarter that was light on family film product average admission price increased 5.2 percent during the second quarter of 2026 compared to the prior year quarter primarily due to strategic pricing actions our average concession food and beverage revenues per person at our comparable theaters increased by 2.4 percent during the second quarter of 2026 compared to last year's second quarter which was driven by an increase in merchandise sales, pricing, and an increase in incidence rate. Our top five films in the quarter represented approximately 55% of the box office in the second quarter of 2026, compared to 59% for the top five films in last year's quarter. The slightly less concentrated film slate resulted in a less than one percentage point decrease in overall film cost as a percentage of admission revenues compared to last year's second quarter. Finally, Cedar Division adjusted EBITDA during the second quarter of 2026 was $36.3 million, a nearly 37% increase over the prior year quarter. Turning our Hotels and Resorts Division, total revenues before cost reimbursements were $70.8 million for the second quarter of 2026, a 9.6% increase compared to the prior year. RevPAR for our comparable owned hotels increased 13.9% during the second quarter compared to the prior year, which benefited from an overall occupancy rate increase of 5.9 percentage points and a 4.7% increase in our average daily rate, or ADR. Our average occupancy rate for our owned hotels was 73.2% during the second quarter of 2026. Our occupancy rate increase benefited from the Hilton Milwaukee being fully back in service compared to the second quarter last year when the hotel was under renovation and guest rooms were out of service. We estimate that the impact of the renovation in the prior year favorably impacted our REVPAR growth by approximately 4.4 percentage points during the second quarter. According to data received from Smith Travel Research, comparable competitive hotels in our markets experienced RevPar growth of 7.8% for the second quarter of 2026 compared to the second quarter of 2025, indicating that our hotels outperformed their competitive set by 6.1 percentage points. After adjusting for the prior impact of the Hilton Milwaukee renovation, we believe our hotel's RevPAR growth outperformed the competitive set by 1.1 percentage points, which we attribute to continued strength in group business and strong leisure demand. When comparing our RevPAR results to comparable upper upscale hotels throughout the United States, the upper upscale segment experienced RevPAR growth of 5.7 percent during our second quarter compared to the second quarter of 2025. indicating that our hotels outperformed the industry by 8.2 percentage points and outperformed the industry by approximately 3.9 percentage points when adjusting for the estimated impact of the Hilton-Milwaukee renovation. With the steady growth in group business and events, our banquet and catering operations continued to grow with food and beverage revenues up 5.7% in the second quarter of 2026 compared to the prior year. Finally, hotels adjusted EBITDA increased 3.5 million or just over 31% in the second quarter of 2026 compared to the prior year quarter, which primarily benefited from our revenue growth and improved operating efficiencies on higher occupancy. Shifting the cash flow and the balance sheet, our cash flow from our operations was 54 million in the second quarter of 2026 compared to cash flow from operations of 31.6 million in the prior quarter with the increase in cash flow primarily due to higher earnings. Total capital expenditures during the second quarter of 2026 were 10 million compared to 16.9 million in the second quarter of 2025. Our capital expenditures during the second quarter were primarily invested in maintenance and ROI projects in both businesses. For the first half of 2026, our capital expenditures decreased $23 million compared to the first half of fiscal 2025. Given that we are now halfway through the year, our capital investments project planning continues to evolve, and we now expect capital expenditures of $45 to $50 million for 2026. We will continue to update our capital expenditure estimates as the year progresses. As we have discussed since the beginning of the year, we continue to expect our lower capital expenditures to result in a significant increase in free cash flow in 2026. In the second quarter of 2026, we generated $44 million in free cash flow, nearly tripling our free cash flow from the second quarter last year. For the first half of 2026, free cash flow was $22 million, a $65 million increase compared to the first half of fiscal 2025. We ended the second quarter with approximately $26 million in cash and over $245 million in total liquidity, with a debt-to-capitalization ratio of 25 percent and net leverage of 1.1 times. With that, I will now turn the call over to Greg. Thanks, Chad.

Good morning, everyone. Today, we are thrilled to report a quarter with great financial performance in both of our businesses. In our theater division, our admission revenue growth outperformed the domestic box office, driven by a strong film slate and a mix of films that played well in our predominantly Midwestern markets. In hotels, momentum built throughout the quarter with strong group bookings and steady leisure demand that delivered a record second quarter for the division with results that exceeded our expectations. Overall, we are very pleased with the results for the quarter and first half of the year and we entered the third quarter with solid momentum. I'll start with our theater division. If there is one overarching takeaway from the second quarter, it is this. The theatrical experience is not merely holding steady, it is thriving. When studios deliver compelling, high-quality stories across diverse genres, consumers choose the big screen first, frequently, and with clear enthusiasm. As we shared on our last call, the second quarter got off to a great start with the Super Mario Galaxy movie and a strong carryover performance from Project Hail Mary. But that was only the beginning. A string of blockbuster successes is followed, with huge audiences coming out to see Michael, The Devil Wears Prada 2, Obsession, Star Wars, The Mandalorian, and Grogu, Backrooms, Scary Movie, and the record-breaking Toy Story 5. The slate was robust and well-balanced, with films that hit across a variety of genres with something for everyone, and meaningful contributions to the box office coming from multiple titles. This year, there were nine films that grossed over $100 million in the second quarter, which compares to seven such films last year, five in 24 and six in 2023. While established IP and sequels were certainly an important core component to the overall box office, the breakout success of new originals, Obsession, and Backrooms, connected with Gen Z and young adult audiences to deliver huge surprise contributions to the box office. The success of small and mid-sized original films played a critical role in diversifying the box office, and making the industry less dependent on the success of individual tentpole films. Original cinema serves as the essential lifeblood of the theatrical ecosystem. It is both the birthplace of tomorrow's legacy franchises and the primary engine of creative innovation. Original films like these are an opportunity to engage new demographics, create fresh cultural touchstones, and deliver the thrill of discovery that draws audiences out of their homes. ultimately a sustainable resilient box office requires strategic balance leveraging trusted sequels to generate dependable cash flow while actively nurturing bold original stories that expand the total movie going audience and this quarter we saw a balance of both the mix of film genres was also favorable to our circuit with a higher mix of family and horror films resulting in our circuit achieving above average market share on seven of the top ten movies in the quarter. As Chad discussed, we again outperform the industry and box office growth, and we remain focused on providing customers with a variety of price points to both optimize pricing for peak demand periods while offering various promotional programs for value-oriented customers, including Value Tuesday, Everyday Matinee, Marcus Mystery Movie, and Marcus Movie Club. These programs have two goals, providing customers with the right price at the right time based on demand levels, and growing attendance through increasing the frequency of moving on. Looking ahead to the third quarter, the streak of hits continued in July with the epic opening of Christopher Nolan's The Odyssey, and pre-sales for this weekend's opening of Spider-Man Brand New Day are very strong. This weekend will be another great example of how our investments in premium large format screens provide a significant operational advantage that continues to pay dividends for us. Not only do we have a PLF screen at 84% of our theater locations, we actually have multiple PLFs at 75% of those PLF theaters, giving us greater opportunity to capture PLF demand. In addition, because our PLF screens are almost entirely our proprietary ultra screens and super screens, we have the scheduling flexibility and PLF film selection to maximize the box office. The remainder of the summer includes Super Troopers 3, Insidious, Out of the Further, End of Oak Street, and Practical Magic 2. We are looking forward to an exciting fall and holiday film slate with Digger, Verity, The Social Reckoning, Clayface, Fokker-in-Law, Hexed, Avengers Doomsday, and Dune Part 3, just to name a few. Looking even further ahead, the 2027 film slate also looks strong with major franchises including Shrek 5, Star Wars Starfighter, Minecraft 2, Frozen 3, Sonic the Hedgehog 4, Spider-Man Beyond the Spider-Verse, Man of Tomorrow, The Legend of Zelda, Avengers, Secret Wars, and many more. There are many more great films coming noted in today's earnings release. In summary, with a great slate of films and audiences, once again, are showing that the best way to see the hottest movies of the summer is on the big screen, and we are on pace for the best summer box office in years. Moving to our hotel and resorts division, you've seen the segment numbers and Chad shared some additional detail on the performance metrics, including our outperformance to our comp sets in the industry. We set new records for revenue and adjusted EBITDA for any fiscal second quarter in the division's history, which we believe speaks to the quality of our hotel assets and the great execution by our team. We are happy to report that the summer season is off to a good start and we saw growth at most of the properties in our portfolio. Rev Park grew at six of our seven comparable hotels during the second quarter compared to the prior year quarter, with both occupancy and average daily rates growing at five of our seven comparable hotels. While the dynamics in each market vary during the second quarter we generally saw continued strength in group business and a more resilient higher income consumer that has continued to support steady transient leisure demand at our portfolio of upper upscale hotels and resorts the combination of strong group bookings at higher rates at our newly renovated assets along with stronger transient leisure demand drove average daily rate growth, which increased 4.7% overall. Our rate growth has benefited from our ability to command higher rates at our hotels with newly renovated room product, including the Pfister, Grand Geneva Resort and Spa in Hilton, Milwaukee, with these three properties achieving a nearly 9% average increase in ADR over the second quarter of 2025. Group business during the quarter continues to grow. The bookings continue to look solid with our group room revenue bookings for 2026, our group pace in the year for the year, running approximately 3% ahead of where we were at this time last year. Looking a bit further ahead to 2027, group room pace is running approximately 9% ahead of where we were at this time last year for the next year out, although this far out the timing of bookings can vary significantly. Banquet and catering pace is running similarly ahead for the remainder of 2026 and 2027. As we previewed earlier in the year, we opened WeNIP, our new 11-hole short golf course at the Grand Geneva Resort and Spa with a ribbon-cutting ceremony in May. First, I would like to congratulate our entire Grand Geneva team for their successful opening of our new course. In particular, I'd like to thank Skip Harless, Ryan Brown, and our entire golf operations team for all the hard work over the last two years that went into getting the course into great shape for the opening in the first few months of play we nip has enjoyed an overwhelmingly positive reception from golfers and golf critics alike with customers looking for distinctive experiential destinations this added amenity aligns with industry trends and we expect the short course to enhance the overall appeal of the resort to both leisure customers and group customers looking to mix in another social activity with conferences training events and outings we are already well in our way booking group events and outings on we nip for 2027 as event planners see and get to play the course for the first time this summer golf has long been an important part of the guest experience at grand geneva and it continued to be an area of growth during the second quarter the number of rounds played on our 218 hill courses the brute and the highlands grew over 11 and greens fees grew 21 with increases in group outings and higher weekend leisure demand driving our growth overall the division had a very good quarter and the current state of our hotel business remains stable and on track with our expectations for the year. While transient demand has remained healthy, I want to again acknowledge that there continues to be volatility in key travel costs, including gas prices and airfare. If market conditions change and we begin to see softness, we are prepared to react and adjust quickly. Finally, I'd like to briefly comment on capital allocation. As Chad discussed, our free cash flow for the year has significantly improved, which is due to a reduction in capex to a more normal level following several years of significant reinvestment in our hotel business and is also due to our revenue and earnings growth we continue to look for opportunities to deploy capital to both to grow both of our businesses with value accretive investments we have a strong balance sheet that allows us to move quickly when we see good opportunities to acquire quality assets and we have a history of executing when they arise to the extent that we don't see attractive investments that are actionable we expect to return excess capital to shareholders through our long-standing dividend or share repurchases. Before we open the call up for questions, I want to once again thank all the people that work so hard every single day, making our ordinary days extraordinary for our guests. We talk a lot about the investments that we make in our businesses, but we can never lose sight of the fact that our people are our most important asset, and they prove that once again this quarter.

With that, at this time chad and i would be happy to open the call up for any questions you may have we will now begin the question and answer session if you would like to ask a question please press star one to raise your hand withdraw your question press star one again we ask that you pick up your handset when asking a question to allow for optimal sound quality if you are muted locally please remember to unmute your device please stand by while we compile the q a roster your first question is from the line of Mike Hickey at StoneX. Your line is open. Please go ahead.

Hey, Greg, Chad. Congrats, guys, on a record quarter. Pretty incredible performance. I guess the first question, Greg, obviously obsession and backroom is very topical here. A huge breakout for you and the industry, especially with younger audiences. Are you seeing a broader return of younger moviegoers, and if so, how confident are you that you can convert that demand into more frequent attendance, whether through loyalty or other avenues? I'm also curious if either film indexed materially better at markets than it did nationally.

Let's start. What you're seeing is actually not new you know we've been we've been following the data pretty closely as an industry as to what which demographics have been returning to the theaters and we're seeing it's really positive signs out of the younger demographic they really it is it obsessions and backrooms has highlighted it but it's not new we for the last year or so have been noting that that customer has been coming back at levels that we haven't that are really you know like back to back to old times away and you know we there's a great stat that they track and that is you know where would you prefer to see a movie at home or in a theater and that demographic is back to preferring to see a movie in the theaters which you know I I like having the younger demographic that's coming back and and saying that's what they that's where they want to see it because you know that's got the longest runway for a customer base so it's it's not it's not new it's it's i'd say it's you know everyone's seeing it now and the good news is you know when things work you know they get copied so we're going to i think that that when you ask how we're going to get those customers to be more frequent i think we're going to see you know more more attempts to provide movies that are going to continue to attract that customer out of hollywood you know that's they uh that's the way it works. So, and then we continue to use, you know, our programs, whether it's or our movie club, full frequency, you know, we all, we've got all that, you know, our mystery movie, we've actually over, our mystery movie overlaps with our movie club, because if you're in the movie club, you get to come to the mystery movies included. So, we're trying to lever all those programs.

As I think you are aware, I shouldn't admit this publicly but I because most of the people on this call don't see our social media probably but I think you know I have a pretty the Marcus Theven is a pretty active social media account and they use me and boy we get some real traction and that group is and I promise you none of my contemporaries see my social media posts fortunately like just on just on share on those on those films for for our circuit you know it's on those particular two it's a little bit mixed we were in line with our normal share on obsessions but meaningfully above normal market share for back rooms so um you know it's a it's a space and a demographic where we we do we do well

in nice the um good color uh on theater margins looks like for the quarter incremental even though flow through is about 52 percent. I guess looking forward here, is that the right framework, Chad, to be modeling future box office growth? And sort of what are the biggest drivers of, I guess, levers of leverage here moving forward for you?

Yeah, I mean, the way that I look at it over time, because I think if you look at any given quarter, it can move around a little bit, um call it you know plus or minus two or three points but i i always think of it as the incremental dollar falls through in that business to ebeta at about 50 percent in a quarter like this where you you get the benefits of the additional operating leverage from higher attendance we were a little bit above that and um and so you know we benefit in those kinds of quarters in the seasonally slower periods of the year or when we have a negative surprise at the box office you know execution there can be a little bit tougher but generally on

average about 50% is how to think about it yeah I think it also depends on the cadence because you know what happened one of the things we bump into is when things get slow and we do a floor to demand this demand the theaters and so you know if you have like one pop but a bunch of slow weeks that's more challenging than a better cadence and we just had a better cadence too maybe squeeze one quick one wild card obviously spider-man coming out this weekend that seems like a film that would do exceptional on your network just curious what you guys are seeing in terms of the advanced demand for that film spider-man's opening yeah that's a rumor yeah i heard about yeah it's it's very

positive but even and even better again the thing that i like the most is i was looking at at the review score and and it's it's very high and so you know when you when you mix enthusiasm with a great movie or perceptually a great movie that's i mean just look what happened with the odyssey i mean it's just that's just wild what's happened with that i think on spider-man particularly this weekend mike the other thing for our circuit that i think we will benefit from and that greg started to allude to in in his comments is we have a lot of flexibility on our plf screens and so with our multiple our locations with multiples we we can we can play spider-man and we can play odyssey and we can you know get the show times right to to optimize for demand on the two films and um i think that'll help our our performance on spider-man awesome thanks guys best of luck Your next question is from the line of Patrick Scholl at Barrington Research.

Your line is now open. Please go ahead.

Hi, thanks for taking the question. With the outperformance of the industry in the quarter, I was wondering if you could provide maybe a little bit of an update on how you see your overall market share, maybe just in your markets since the pandemic, or just overall market share in the theater segment.

Yeah, I mean, our market share in our markets has been good. We were immediately coming out of the pandemic. We were quite a bit ahead, and we've seen some normalization of that over time, but still quite strong. And on a national basis, our market share is a touch below where it was, but we've also you know, optimized store footprint and gotten out of some locations that generated some box office but really didn't contribute to the bottom line. So, you know, I think we're comfortable with where we're at. And we've been, as you know, Pat, we've been optimizing price here quite a bit in the last year. That's been a big driver of our admission revenue per cap growth. And I think we should expect to see that certainly moderate in the second half of the year as we anniversary some of those changes that we made mid-year last year. But I still think you're looking at sort of low, low single digit type of inflationary growth, but don't expect additional changes that would drive any meaningful changes in market share in the near term.

Okay. And then just in terms of the potential M&A opportunity, with the longer tail of operators, I guess my understanding is that the lease structures can be kind of a gating factor for the attractiveness of acquisitions. As kind of the long recovery from the pandemic, has that enabled some, I guess, rationalization in some of those lease structures to make a broader pool of potential M&A targets, or maybe just a little bit more commentary on that opportunity?

Yeah, I think it's on the specific issue of leases and how onerous those might be as you look at acquisition targets, at times that can be very challenging depending upon the volume that's going through any specific location. It's a high-operating leveraged business, and so you need a critical mass of attendance to make buildings work. And with attendance where it is today relative to pre-pandemic in some locations, that's certainly more challenging. It's very much a, I would say, a location-by-location analysis. It depends. It's facts and circumstances specific to the location. Our focus in M&A is around quality in a number of different dimensions, but markets, growth profiles, locations within the markets. We think about all of those things as we look at M&A, and hopefully there will be some additional M&A opportunities. That's true in both of our businesses and hotels as well.

Yeah, I mean, I think a commonality to both our businesses is that we obviously want to grow our businesses, and we've exhibited that over time for years, the desire and the ability to grow the businesses. The one advantage we have is that it's not imperative. We will continue to focus on it, and we will make really, we will be disciplined and make disciplined investments. and and if the opportunity is there we of course will we'll do our best to can to capitalize on it but you know i think the good news is it's a business that that we're scale is it's not okay um and then just on the the hotel side was there any sort of benefit from like i guess the the locations of the world cup events in terms of you know how where consumers decided to go for

you know leisure travel uh just in terms of like your markets which i think were largely absent of that but yeah that that might have played into how consumer spending or was it just more macro i think more macro it was not not world cup for us yeah i i think i can just confirm pat it really didn't it didn't really help us in the hotel business one way one way or the other um just because we weren't participating in markets that that had big economic activity from hosting those event.

Okay. Thank you.

Your next question comes from the line of Drew Crum at E. Riley Securities. Your line is now open. Please go ahead.

Okay. Thanks. Hey, guys. Good morning. So I think, entering the year, your expectations for RevPAR growth were more modest. But based on the strength you saw in 2Q and now up, I think, 15% year to date, has your annual outlook changed?

And if so, how do you see rev par shaking out for for 2026 yeah thanks for the question drew i i i don't think we see really a change in the view for the full year um our guide was you know industry growth low single digits and i think that's still where our view is um with some opportunity for our assets to outperform their markets because of the investments that we've made in the quality of of the assets um i would i would just say it's a bit it's a bit lumpy it can be for you know from week to week we see see pockets of real strength and then some some softer pockets as well and on average this quarter it obviously was a really nice result but um visibility is fairly short in that business and uh it is is very much tied to what you know the economy does at a gdp level and And so our view is unchanged, and we'll see how the rest of the year plays out.

I think we were looking at a stat yesterday that I think is a good stat, and that is, you know, what's our booking pace? How much have we booked for the rest of the year? And now remember, every dollar is – the margin of dollars are very profitable, so I'm going to couch that with that. But, you know, 80% of our business is already, you know, on the books. So it's not like we have huge gaps.

It's not like we're really back-end loaded. you know so that's which i which i feel comfortable with but then again as i said and as chad pointed out it can be week to week shorter booking windows and those last dollars are very profitable yeah and just to clarify the 80 is within the group segment yeah just the group segment and the transient part of the business is you know very very shortly time yep yeah okay uh and then you know i guess separately you know there's been some movement and effort to extend theatrical windows I'm curious if you believe the industry has seen any lift, and specifically if you saw any benefit across your circuit in 2Q and in the early 3Q, or if it's too early.

Well, I think just as the discussion is not helpful where everyone's talking about, oh, we're going to shorten the windows, and they're really short, you're right. There's been a lot of discussion about the extension of the window, and we have to continue to talk about it. And it needs to be not just a broad, how long is the window, it's how long is that transactional window, because that got way too short. But we also have to make sure that we maintain an adequate streaming window, that there is an adequate period of time. And, you know, it doesn't just benefit us, it benefits the distributors, the creators as well. because again this idea of windows selling the same thing to the same person over and over again well the tighter you make those windows the less like you likely you are to have those multiple sales and if you're going to invest in the content man i would think you would want as many kicks the can as you can get and sell it as many times as you can get uh and fortunately their marketing has become a lot more efficient they're talking directly to the consumer when they're with their streaming with their transactional they talk directly to the consumer so in the old days It's, oh, we've got to have multiple marketing campaigns. And, yes, you've got to market. You can't not market your film. But it is different, and I actually think that the setting is more conducive to a longer window than it had been historically given the ability to reach the consumers directly. And so if they want to maximize the revenue from their content, you know, everything old is new again, right? let's go back to the understanding how to do that. It benefits us and it benefits them.

Drew, on the quarter on that question, it's great to see our studio partners and distributor partners implement longer windows. It's tough to tell or see this early on.

You see that coming through the results just like when as the windows shortened it didn't it didn't all hit overnight i think it is going to take some time um and you know a year or longer to retrain customers on on how long it will be before product is in the home and um recondition customers and and but you know it's absolutely a net positive yeah i'd even further add to it too i do think it's important Where it will matter the most, actually, in a way, and again, we talk about marginal customers because they're the most profitable, but the most patient audiences are the older audiences, and that customer will wait for free, or even the perception that it's free, and as we're seeing in the numbers, the kids are off the couch. they want to get out they want to be with other humans but I don't think that should just be restricted to just young people it's probably good for older people to get off the couch and stop sitting at home going nuts it's good to get out and be with people but you need to have a window that customer says you know what I'm gonna have to wait I'd like to go see it now and then I'll watch it again because I want to watch the Odyssey again a few times yeah makes Makes sense.

Appreciate the thoughts, guys. Yeah, thanks.

Thanks, Drew.

There are no further questions at this time. We have reached the end of the Q&A session. I will now turn the call back to Mr. Parris for closing remarks.

All right, well, once again, thank you, everyone, for joining us today. And we look forward to talking to you again in late October when we release our third quarter results. Until then, have a great summer.

This concludes today's call. Thank you for attending. You may now disconnect.