The Marcus Corporation (NYSE:MCS) Q1 2024 Earnings Call Transcript

Mike Hickey: Just to confirm, the — your gross profit margin in concessions in 1Q is 57%. That’s down from 63% prior year, and your average margin prior year was 61.5%. So should we model that closer to the 57% moving forward given the category shift here? Or is that going to go back up to above 60%?

Chad Paris: You can model it at the 57% because that’s where it will continue to come through going forward. But there is an offset in other operating expenses that will run rate at a lower number.

Mike Hickey: But it should be about the net neutral then you’re saying or is there a discretionary pressure on…

Chad Paris: Exactly, net neutral on total profitability…

Mike Hickey: Last question, just on your convertible note, you have some time to deal with that, but just curious the scenarios you’re thinking through. And how you think about managing the potential dilution from that note?

Chad Paris: So you’re right. We do have some time, one and half years until we really have to move on this. Although, on dilution, I don’t think people should be really worried about it because we’ve got a cap call transaction — a derivative over the convert that mitigates the dilution below [17.75], I think is where it is currently. That number changes a little bit as we pay dividends. But at the current share price, investors should not be expecting dilution from that. And I think we’ll continue to look at what’s the right time to take it out, Mike, but it will — high level thinking on it is it will be cash rather than shares in terms of how we settle this.

Operator: Thank you. At this time, it appears there are no other questions. So I’d like to turn the call back to Mr. Paris for any additional or closing remarks.

Chad Paris: Great. Thanks, Lauren. We’d like to thank everybody for joining us again today, and we look forward to talking to you once again in early August when we release our second quarter results. Until then, thank you, and have a great day.

Operator: That concludes today’s call. You may disconnect your line at any time.