The Marcus Corporation (MCS) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Meghan Durkin. I'm the Theaters Analyst at Crédit Suisse. I'm here with our next presentation. We have Marcus Corporation. And we've got the CEO, Greg Marcus; and the CFO, Doug Neis. Greg and Doug, thank you so much for being here.

Hi, Meghan.

Hi, Meghan.

I'm marketing [indiscernible].

So it's a really interesting time for this conversation. I think we've got some movies that just hit, and you've got a lot coming, as we can see. And we're starting to see some life in your theaters business. So I want to start there, maybe you get a status report. Where -- are you open wherever you're going to open? And what are the capacity restrictions that you still have?

I'll start with that. I don't have a cool background like Greg does, Meghan. But I'll still try to deal with this first question. Look, our theaters are pretty much all open now. I think 94%, 95% of our theaters are open. And for the most part, all operating 7 days a week. The -- we have 1 state -- 1 theater in 1 state still has some governmental restrictions in place. Otherwise, we really aren't living with any restrictions anymore in any of our communities. The -- when we first had the restart kind of with Memorial Day weekend, we expanded our capacity to what I'd call about 70% or so. We still are keeping a seat open between every 2 seats. That was by choice just as we're now starting to bring folks back and reintroducing movie going to our customers. But I would expect that in the next couple of weeks, you'll probably see even that lift and then we'll be back to pretty much operating at 100% capacity, probably certainly by F9. And so that's kind of where we're sitting right now with our theaters.

Got it. So how are your domestic theaters performing? I mean you're all domestic, but how are your theaters performing in the second quarter? You've got some bigger films. Are people starting to come back, and at what level?

You know what, we're starting to see -- I figure I'd go with Quiet Place now. I'd switch it because I'm -- but also -- let's start with what really got us. This is a great bridge from what really kicked things off to where we're going. And it relates actually to -- what we're seeing is a layering effect. And it's funny, you don't think about, what is it because we've been open for a long time. Because we made the decision a while ago. We thought it would be better to be open than closed when we could. We said -- let's look at the math. And when the math says we're at least no worse being open than closed, let's be open and because we own most of the real estate, we don't have to worry about a landlord. And we -- so for us, it made a lot more sense to be open where we could, which we thought was important for our customers, for our associates, for everybody working for us, that mentality of being open. But the truth is, until Quiet Place 2 really opened, we had hits and misses. We had some hits along the way. Godzilla was nice. We had some good stuff, but really, until we got to Quiet Place, that was really the kickoff to what -- where we are now. But what I didn't even think about, what we all didn't think about was, oh, yes, nobody has seen any trailers for Quiet Place 2. Nobody has seen trailers for anything. Nobody is in theaters. There's really no other product except that week was Quiet Place 2 and Cruella. Fortunately, 2 great movies. But the -- but there was this -- because what we're seeing now, as I said, I call this layering. So that opens up. It opens up very nicely. We're really pleased. Great to see people back in the theaters. And then it starts to build on itself because then Conjuring opens up and Quiet Place 2 comes back as expected. When I say it comes back, it drops off. And then -- but Conjuring then picks up. And then you get In The Heights and you get Peter Rabbit and you're getting people seeing trailers, and you're getting that, again, the buildup of all of a sudden, you look at the -- you go to the theaters website and you are on the app, and you say, "Oh, there's a lot of movies. There's stuff I can go see." But we didn't have that even 3 weeks ago, and that's just building as we go along. And we're seeing it. We're building up to F9, and that's really going to be -- that's the first real big blockbuster, which is good because you start to get people in the habit of going again. Going to the movies is habitual in a way. And you've got to get comfortable and feel it and go back. And I mean, I've said I even forgot what it was like to go to the movies, and I'm in the business. And I went back months and months ago, but I sat there and I thought to myself as the lights went down, "Wow." Even as the lights went down, as the movie was playing, I was watching The Courier, and it was like, wow, you know what? No, I'm not looking at my phone. I'm not scrolling away. The dog is not barking. I'm not pausing. I'm actually enveloped by what's going on. This is a completely different experience than watching something on my couch.

Right. So you had gained a lot of share in the months when you were open and some were closed. I guess you have less exposure to Regal, is that right, but there were other circuits closed in independent small guys closed, right? So how much of that share have you kept into 2Q? And how much do you expect to keep?

I mean we outperformed in the first quarter, Meghan, by -- I think it was 9 percentage points versus the industry. And you're right, we don't bump up against Regal that much, but we certainly -- certainly, that probably contribute a little bit in a few of the markets where we might see them. We had, as you know, a lot of success with our Marcus Private Cinema, and so that contributed quite a bit to our outperformance as well. We've always outperformed. I mean it's -- for 5, 6 years in a row now, we've outperformed the industry. We're not going to outperform by 9 percentage points every quarter, and no one would expect that to be the case. But it's our team's goal to continually with the amenities that we have, the state-of-the-art theater chain that we have that we would continue to outperform in future quarters as well, but not by what you saw in the first quarter. That's not reasonable to expect.

And ticket pricing has been a surprise, too, because some theaters are just not showing as many showings, some less matinees in the mix, some are closed for the week. So how have your trends been? And how do you expect that to flow in as the business kind of normalizes?

Yes. We've seen -- I mean, even in our first quarter, we had a healthy increase in our average ticket price. Now keeping in mind that when there are fewer movies and just a handful of people want to go see, the natural phenomenon is that people gravitate to the large format screens. We have a very high percentage of theaters that have multiple large format screens, and we have premium pricing associated with that. So there may have been some -- there may be some mix that is going on in the first half of the year a little bit. Again, as Greg has -- Greg's point, where we get the layering going on now, we have more and more films. I think we'll see that normalize a little bit more. We're going to watch our pricing very carefully in each of our markets. We tend to have the best product in our markets, but we also recognize that we're -- look, we're reintroducing movie going to our guests. And so pricing, we're going to be very sensitive to pricing and pricing at different day parts and different days, and everything goes along with that because that frankly has been our strategy pre-COVID.

Right. So let's talk about the flexible windows because this is a hot topic, obviously. Day and date availability, do you have -- have you agreed to some of these shorter window deals with the studios? And what do you expect that it's going to do to movie going over time?

I don't think anybody knows. What do they say? Nobody knows anything, right? I don't think anybody knows where it's going to ultimately shake out. Do I think that windows are shrinking? Yes. Do I think windows are shrinking? Yes, the answer is they are shrinking. But -- and -- but there are -- and as windows shrink, by the way, let's not forget that there are other doors that open then because some of the -- like the streamers, and you know we did -- everybody did that, not everybody, we did that experiment with Netflix. And so in this experimentation time -- but these guys recognize the importance of theatrical. And though they wanted shorter windows, and so there may be more product available that might make up for some of the degradation we might see in shortening windows on the other side. So you don't -- I don't know that. We don't know where that's going to be. But what you can see -- and by the way, that Netflix experiment, how interesting was it that movie, Army of the Dead, that it opened up #1 on Netflix after being in the theaters. What that points to -- and I'll use the words I happen to watch somebody else's presentation today, who is in the same business as we are. And they talked about differentiating and elevating. And that's the -- I thought those were great adjectives for what happens in our -- in a theatrical environment. It differentiates and elevates film in a way that can't happen on streaming because streaming in a way, it's so hard that there's so much and it does disappear so fast because there's so much product. What's the beauty of streaming? Well, you have an unlimited library, right? It's -- the depth of the pool is unlimited. Well, that unlimited selection does have its downside sometimes. Sometimes that's a big challenge. When you can see everything, then you don't know what to see. We have a very limited ability to show a certain number of things. And so that allows us to differentiate and to highlight. And so in that regard, the window still is important. And it goes back to -- it's a -- as I started with, it's a different experience, watching in a theater than watching at home. We are in a battle against the couch. Now the couch, whether you're watching streaming or linear, it's really not very much of a differentiated experience between 2 other than the amount that you can watch. The -- but going out is very different. And when the customer is going to go out, why get rid of the second sale or the third sale, whether it's PVOD and then ultimately, streaming is another sale. It's an ancillary market, why get rid of that sale by closing the window up so tight that you get rid of it because that customer is just going to go to a baseball game or they're going to go to a basketball game or they're going to go to a concert or they're going to do something else, why not get them to go see your product in a theater? Because they're looking to get out of the house. There's a kitchen in everybody's house, but people still go out to eat. And so in making that second sale, you get the extra money. You get the per capita eyeballs. And then on top of that, you can actually then promote your direct-to-consumer product because it then flows through to that because people see about it and hear about it. And it's -- I think people tend to too quickly say, well, it's just a product. We just got -- we're just creating content, but content is unique. And I'm sorry, if you love Star Wars in the movie theater, you're not going to be able to go see it somewhere else. They can't go replicate that. So when they then exclusively premiere it on their streaming service later on, that after it's been differentiated and elevated in the movie theater, that inures to their benefit in a way that they can't get somewhere else. So I think that they can work symbiotically in an ecosystem where they keep the theatrical, and I saw Bob Chapek actually talk about it, so that it's profitable for everybody. And there's ways for that all to work together. And this whole idea, I go back to -- I made an analogy the other day with the idea of streaming versus theatrical. And I think this is a false debate in a way because they want to maximize the revenue streams. But it's -- it would be like the deli owner who invented with pastrami, saying, "Oh, I meant a pastrami, I guess we're going to done selling corned beef." It doesn't make any sense. Come in twice, get corned beef once and then get pastrami the second time.

All right. So have you done a deal with Warner Bros for next year? I mean they're doing 45-day windows with Regal. Have you signed on for that with them?

Well, we don't talk about specific deals, but let's put it this way. I don't really know how Regal would have a 45-day window, and we'd have something more or less. That would be the impact.

That's true. Good point. So Greg, are you doing anything in your theaters to diversify away from the film like Cinemark just did their e-gaming, new tests and some new live concerts, things like that? Are you doing anything like that?

We are -- we've done some of that stuff, and we've tested soon. We've had -- we haven't done the gaming piece of it yet, but of course, we -- who wouldn't be looking at the e-sports and all that. We all look at that. We do alternative content. I think the important thing that gives -- that I think is very hopeful for us as a business. And that is, in a way, we didn't know our own customers for many, many years, right? People showed up. They gave us a credit card or cash. They went in, and we didn't know who they were. But with the advent of our loyalty program, so we have 4 million members in our loyalty program. Half our transactions are loyalty transactions. We know who our customers are. We have their e-mails. We can reach out to them. And in a way where we couldn't market smaller films or smaller content before, we now have the ability to do that. And so I'm very hopeful that whatever those ideas are that we're able to propagate and use to the extent that we need to fill space that we now have a way to get to our customer and sell that product to them. So I don't know what it will be. But if you asked me this question 10 years ago, I like, "oh, man, I don't know how we're going to do it, but I actually have some ideas now."

So I'd be curious to hear your thoughts on the recent M&A in the marketplace. Do you have any view on Warner Bros changing hands again and then MGM finally up for sale and Amazon is getting more serious?

Well, on Warner Bros, I keep listening to David Zaslav, and he keeps saying, and I look -- he's making the point I'm making in a way, theatrical matters. He said it. He said, look, how do you make movie stars? You make them on the movie screens. And so he understands that there's a place for theatrical in the ecosystem. And he said it multi -- said it publicly multiple times. So I find that to be a very good thing because I agree with that. So -- but Amazon and MGM are much more -- has been a much more closed. No one has talked about it yet. So we don't know where that's going to shake out. So I can't really comment on it.

Sure. So moving back to the business and concessions, are you seeing those strong per caps that everyone else is seeing? Everyone's talking about these like people coming in and just buying everything they can see like is so excited?

We have seen that, certainly, Meghan. I mean just -- I don't know if you remember, the number in our first quarter was a crazy 16% increase in our per capitas on the concessions and food and beverage side. But keep in mind, I mean, that's a little deceiving because this, by definition, when you don't have as many customers at that period of time and you have short lines, it's easier. I mean lines are the bane of our existence from the standpoint of customers because people are trying to get into their show and if they see a long line, they may skip. And so everything we do tries to minimize those lines, it was unfortunately naturally minimized for us in the first quarter. But now what we're trying to do is we're trying to use technology to be able to continue to keep the lines short as now as customers start coming back to our theaters, I do think that there's an element of just people being glad to be back. All I want to have that theater popcorn and things that go along those ways. But I do want to remind you that obviously, we're biased, but we think we're the best food and beverage theater operator that's out there right now. We believe we have the highest per capitas in the industry. If you look at -- never mind what's happened like this year. If you just look at our last 3 years, our average concession food and beverage per capitas went up anywhere from about 6.5% to 7% each year. And that's because we have -- we've really made an investment in the additional food and beverage. We do great with popcorn and soda and candy, particularly, but we have an extremely high percentage of locations that have bars, have in-lobby dining and over 30% of our theaters have some form of in-theater dining. And so that also contributes to kind of a very -- a very big bet we've made on the whole concessions and food and beverage business component of this business.

And are you offering that full menu by now?

We are still operating with a slightly reduced menu, Meghan. And that's somewhat in line with where I think you're probably going to head next when it comes to start talking about costs and labor and things along those lines, right? Because -- so right now, we are actually -- as many of our in-theater dining, we've also been experimenting with a slightly new system of providing the food, where we're trying to use technology and people ordering upfront and then running the food to them. And so in that regard, we want to be able to do it quickly. And so we have been looking at the menu overall, whether we'll get back to a 2019 menu yet, we don't know. But right now, we're operating with a slightly reduced menu.

And it's really more in the Movie Tavern. That's where the menu has been reduced in our traditional theaters, which have expanded food and beverage. So in Movie Tavern, we're doing really a lot of that, we're doing that is dine-in delivery. The -- we have -- but we have very, very robust food and beverage with like great pizza, great burgers. When I say great pizza, we put deck ovens in our traditional theaters, not just the conveyor oven, not to say that that's such a bad thing, I mean, a Domino's -- I don't want to say Domino's, but a late night pizza 2 in the morning on a conveyor oven works great. But we've got great -- we really believe in the importance of the product. And so we've been very good about that. But I want to talk for a minute about the technology because I think it's important. We've been thinking about the technology before the pandemic hit. We were very deliberate about being able to order on an app because we were thinking about the labor component for the most part because as Doug pointed out, we had a delivery system where you have an order taker come in the full serve -- like in the Movie Tavern, they come and they -- you have to have a server, take the order and interact with the guests and then get that thing coordinated and have a runner bring it out. By going to technology and getting the customer to do that, we take out a layer of that labor. And the sophistication is a little -- is not as high because someone can just run it. They don't need to actually be able to communicate with the guest as much. And so by leveraging that, we had the technology in place already. Extending that to our concession stands, we think will be very helpful. And to Doug's point, even if we have longer lines, if you're ordering on the app, the one thing you don't miss is the upsell opportunity. On a Friday night, when they're 10 deep at the concession stand, the 16-year-old kids sitting behind the concession stand is just trying to fill popcorn, the last thing they're thinking generally is, can I get you an extra-large soda for an extra $0.50? That discussion gets muted when we're really cooking, so to speak. The app doesn't miss that. So we think there's opportunity there.

That's interesting. So let's move over to the costs like Doug knew, I was going there. The film rentals, there's a few moving parts, right, because you've got shorter windows, you've got bigger films that are going to start mixing in. And so how are you thinking about this as the demand and the attendance ramp? How are you thinking of that line?

Well, the business is built on scale. So in terms of film costs, that's where we -- so if films aren't performing, the cost goes down on the film. So that's sort of built into the model already. And where we -- again, where we can save money, we're trying to -- we hope that -- using technology is where we see it the most, getting more people to buy their tickets on the app means less people at the box office. You could say -- you could take you to the point where no one even has to rip tickets because you could have the automatic gates that you put your phone in and opens up and you walk in. So we can take a lot of -- our second biggest cost after film rent is labor. And so we can leverage technology to our advantage to as best we can.

Are you -- I mean so back on film rents, are you getting any PVOD from some of the studios, if you're -- have you done the Universal deal that gets some PVOD?

And we...

I don't know if you weren't announced that.

Yes. We did have a little blurb in our 10-K that indicated it. We've also have an agreement with Universal. We have not disclosed the details of that agreement. Any PVOD for us or anyone else, no one's painting that as a major component. But -- so we're not going to disclose what our details are, but we obviously have, I mean, if that -- the whole component, any negotiation with the studios involves multiple components. The marketing, if there is a PVOD, what kind of windows associated with it? What are the terms? What's the scale? So there are a lot of components that all become kind of get mixed up into the soup, and that's what you negotiate.

Got it. So you talked about the labor, I guess, that some are saying that it's difficult to hire this summer. Are you seeing that as well?

We are certainly seeing challenges hiring labor. Again, we tend to have, again, more younger people, which is helpful. In the states, we know -- one of the challenges has been that the supplementary $300 into the unemployment benefits. And again, where now you get into the more sophisticated food and beverage, you have people who are in that. You need a more sophisticated worker who are then subject to dealing with. I think the calculation was a little over $16.70 an hour when you add the whole thing together, the supplementary unemployment plus the regular unemployment, and then it's hard to get them to come back to work. In the states that have removed that, we're starting to see people show up again. So it's obviously a mixture of these, not just a supplementary benefit, and there's a lot of demand for labor across all industries. But that's a piece of it, and that's helping to alleviate it. On the hotel side, because we can talk about the hotels for a minute, we're seeing it as well. It impacts more the restaurants a little bit, but not much. Again, we put a little bit on the margins, and that's not really where we make the money. The money is in the rooms. And since the customer that's come back is the leisure traveler, that's really heavy weekend business. We don't clean the room when they're there. And then you have the week, when the occupancy declines, you don't have to have every room ready Monday morning. You have to -- we do have occupancy on Monday, goodness, but it's not every room has to be ready. And so we have time to clean the room. So it hasn't -- we haven't had to pull rooms out of inventory because we don't have enough people to clean them. That isn't the problem we've had, but we're watching it carefully.

Right. And I'm going to touch on the hotels in a second, but I just wanted to kind of talk about how the cost base has been in the theater because if the box office ramps back to 2019 levels, what's come out of [indiscernible] as far as how much EBITDA can you do? Is it going to be a higher EBITDA than it was in '19 or COVID protocols offsetting some of the costs that you've taken out?

To your point, there's been some puts and some takes, right? And so there certainly are -- feels that there certainly are some COVID protocols that are probably here to stay, including the air filtration, some of the sanitation and things along those lines. The flip side is, Greg's talked a lot about the technology and how that is a significant effort in order to take care of the second biggest cost we have, which is the labor component. And the film rental is harder because until we kind of see where box office goes, it's hard to tell on a percentage basis, whether that's going to change materially or not. It may not move much, but I mean if we get back on your premise, if we get back to 2019 levels, then it probably -- I mean, there still may be some changes in that film rental because of the shorter window, but maybe it won't be significant necessarily. So with the puts and takes, certainly, it's -- we're in the business of trying to deliver that same kind of margin that we had before, if not better.

Got it. So let's really move over to the hotels. What capacity restrictions are you still self-imposing? It sounds like most of your areas capacity restrictions have eased?

Yes, we have. [indiscernible] no more.

So you're selling all the rooms and no -- nothing self-imposed or anything? So what -- the leisure travel, everybody is talking about it, are you sold out? Where is -- the areas that are more sold out than others, what are you seeing so far?

Yes. You look at on the weekends is really where we see it the most. Again, also, it's property dependent as well. So for example, the -- we have a resort in Lake Geneva in between Chicago and Milwaukee, 1,200 acres, golf course is the whole 9 yards. That place really all year along, really, it attracted that customer because the leisure consumer is like, I don't have to ask anyone for permission. I can go and I'm itching to get out. And so we saw that, and that has a real solid performance. The central city stuff the -- we're in the upper-upscale segment. It's -- we're sensitive to the business customer, but our hotels are a bit of a mixture even in that. So for example, in Milwaukee, we have the Fister. It's the grande dame of Milwaukee, if you've been here. It attracts -- it gets all the baseball team to stay there. It's not just the business trip. If I had a portfolio of central city Westins and Marriotts, great properties, we have some of those, but that's all I had, I would have more concern. But where I have a grande dame hotel, I've got a resort. We've got the -- an arts-focused hotel called the Saint Kate, which is, again, plays to not just the business travelers at the consumer level. But we also have a Hilton, the big -- we have a convention center at Hilton, and we need conventions. And so that's more subject to that. And -- but yet still, on the weekends, all these properties are busy because people really have been -- you can see this desire to get off the couch. Our restaurants, we see it in our restaurants. We're starting to see it in the theaters. I think people just don't want to be locked down anymore.

Yes. I was going to ask you, have you seen any roaring 20s yet?

I'll tell you, I mean, it is interesting to see -- Saturday morning I pull up the hotel numbers of Sunday mornings, and I'm like, "Wow, we're 100% sold out [indiscernible] where -- or I look at our restaurants, whether they're in the [ rest ], we have public, we have private, and we have private investments in some restaurants and it's just -- you can feel it, people just itching to get out.

And are they spending a lot more if they are coming?

They spend -- I don't know the -- they are spending. I don't think we're seeing huge check average increases, but they're spending. We're still being with competition. And so some hotels, we're not getting this. The rate may have gone down in some places. And in some places, it's up. It's a mixed bag.

And then where the trade-off is, Meghan, is that -- so now midweek, and can surmise, and that's where the more -- the bigger challenge is, it's going to take a little longer for business travel and for group travel and that dial to kind of turn up a little bit. Talk about the spend, well, we're not seeing the charity galas and the things like that yet. And the big group dinners and things along those lines. And so the -- it's, again, not 100% leisure-focused, but that is the predominant traveling customer right now. Having said that, we're also seeing some encouraging signs there, too. We're seeing the group pace start to increase. The -- we were -- the first groups that came back were the leisure-focused group, which is the weddings and things along those lines. We're going to have an incredible wedding season this year, but we're finally now starting to out book. And I think, Greg, you were saying that like it was just last week, we had our first week where they came and told us that the bookings for group were more business than leisure for the first time since we've had COVID essentially. So we're starting to see some of that gear up as well. Just has a longer lead time. And so we just have to recognize...

You're tempering my comments very well, which is right. And it is right because a huge chunk of our business is, as I said, business related. And the first customer that comes back is the leisure customer. And then you're going to start to see the sales customers come back in the business world. So first you get leisure, get the leisure group, the weddings and then you get -- the business will start to come back. That's going to take some time. That will take -- because people need to get back to the office first and then they can start to go out. And -- but the first one will be the sales customers. The salesperson who walks into their boss's office and says, "Yes, I just lost the XYZ account because our competitors showed up." So we need to get out there. So that will start to drive that. The next will be -- you get the small groups coming back, the conferences, the things that are irreplaceable. I mean this kind of conference you can do, but most of the conference business you see is people -- it's job networking. It's rewards. I worked so hard, boss, please let me go to Milwaukee. Please let me go to Vegas or please let me go to where -- to wherever to that conference where -- but that may take a few years for that to all build back to where it was. But people are going to want a job network. People are going to want to be together to do that. In addition, it's the human condition to be together. And then the stuff that where I see some decline would be the potentially -- and I don't even know if it will, because I do think there's this desire for people to get out and explore, we see it now. And that is -- well, I don't -- we need to go see my satellite office in another city because we can just do it electronically or maybe they'll cut back on some of that. But on the other hand, that could get replaced with, well, a bunch of us work remotely now, we all need to get together. And so where does it all shake out in the end? I don't really know what the end it's -- but I think that's on the margins, and we'll see how it all plays out.

So Doug, while this is all going on, like how are you keeping your costs down? And then how are your margins going to recover as people start to come back slowly?

Well, so look, we've -- you've probably heard me say this before, but we've certainly learned to operate both of our businesses leaner than probably we ever anticipated. And so just like in our theater business, we are trying to use technology to help keep those costs down as well. So the mobile check-in, Greg talked about the fact that not having the room clean during your stay and things along those lines. So there's a variety of things that we have done in order to, again, try to operate as leanly as possible and given the labor market that still remains quite important to do that. So look, I don't think -- our goal here ultimately is, I mean, again, we need to drive the top line. We need to let that dial kind of drive back up, and we'll be very cost conscious throughout that process. I think getting back to our established margins would be a real win in this business.

And then, Greg, would you consider adding theaters to your portfolio?

Yes. Again, it depends on what the deal would look like. We're not going to -- and we've always been a company. I think you know this about us. We're very balance sheet sensitive. We will have to look and see what they -- what it looks like. To the extent that a landlord gets a property back and need someone to run it, we're there. We can do that. I don't think we're going to perform -- we're not going to make big stretches to do things that would put us in financial jeopardy. That doesn't make sense to us, but we believe in the business. And again, it's just is all deal dependent. We look at anything that comes along and -- but if it's too expensive, we'll say, no thank you.

And last question, are there meaningful synergies between hotels and theaters? I mean have you ever thought about splitting them apart to unlock value?

We ever thought about -- we think about all that. We think about structure all the time. We have a very long-term focus. And we think about structure and we think about whether they should be together or whether they should be split up. There's advantages in both directions. And the one thing people don't think about, and it may become more relevant as we go forward, is it just depends on what happens. It's very tax efficient to move money between the 2 businesses, depending on what the opportunities are because you don't have to pay tax on a dividend to get it out. And so if you think about the last, our theaters, state of the art. I mean if you buy our theater circuit today, you are buying, let's say, call it buy stock, you are buying one of the best theater -- theater circuits in the best shape with the highest percentage of recliners and PLFs and food and beverage because we've been making those investments over the last number of years because that's where the opportunity was. And we took them. We were taking money from the hotel cash flow and putting it into the theater side. Frankly, we were trying to figure out, Doug, let's say, what levers do we push before the pandemic, what do we do with our cash flow? It doesn't start to go back towards hotels. Again, we have that -- it's very efficient to move them between the 2. And so we look at that -- and as the hack rates -- tax rates go back up, that might be more meaningful. But you never know, and we look at -- we always -- we don't have the market cornered on good ideas, and we always are looking at ways to improve value. But whatever we do, it's going to be for long term. It's not for a short term. "Hey, let's just get a quick pop out of this."

Well, that's good to hear. I appreciate you guys coming. I think we'll end up there.

Thanks, Meghan.

Thank you very much, Meghan. Appreciate it.