Marcus Corp (MCS) 2017 Q4 法說會逐字稿

Good morning, everyone, and welcome to The Marcus Corporation Fourth Quarter Earnings Conference Call. My name is Bruce, and I will be your operator for today. (Operator Instructions) As a reminder, this conference is being recorded.

Joining us today are Greg Marcus, President and Chief Executive Officer; and Doug Neis, Chief Financial Officer 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. Welcome everybody to our fiscal 2017 fourth quarter and year-end conference call. As usual, you know I need to begin by stating that we plan on making a number of forward-looking statements on our call today. Our forward-looking statements could include, but not be limited to statements about our future revenue and earnings expectations; our future RevPAR, occupancy rates and room rate expectations for our Hotels & Resorts division; expectations about the quality, quantity and audience appeal of film product expected to be made available to us in the future; expectations about the future trends in the business group and leisure travel industry and in our markets; expectations and plans regarding growth in the number and type of our properties and facilities; expectations regarding various nonoperating line items on our earnings statement and our expectations regarding future capital expenditures.

Of course, our actual results could differ materially from those projected or suggested by our forward-looking statements. Factors, risks and uncertainties which could impact our ability to achieve our expectations are included in the Risk Factors section of our 10-K and 10-Q filings, which can be obtained from the SEC or the company. We'll also put Regulation G disclosures when applicable on our website at wwwmarcuscorp.com (sic) [www.marcuscorp.com].

So with that behind us, let's talk about our fiscal 2017 fourth quarter and our completed fiscal year. As our press release noted, we're reporting record revenues, record operating income and record net earnings for the quarter and the fiscal year thanks to a record performance from our theater division in both periods, once again outperforming the industry, and a nice gain on the sale of one of our hotel treasures. You add to that, of course, that we also had a significant tax adjustment due to the new tax law.

So results from our Hotels & Resorts division were down slightly for the year, but for the fourth quarter, we reported increased operating income versus last year, and we also outperformed our competitive sets in this division during both the quarter and the full year.

Now following our usual format for these calls, I'm going to take you through some of the detail behind the numbers first, both on a consolidated basis and for each division. And then I'm going to turn the call over to Greg for his comments.

Now look, the logical place to start would be the income tax adjustment since it's so significant. First off, I want to reiterate what Greg says in the press release. This was a record fourth quarter and fiscal year even before the tax adjustment. Obviously, the reduction in deferred income taxes of over $21 million made the quarter and the year only that much better. Now the math behind this onetime tax adjustment is really pretty simple. Prior to that adjustment, our deferred income taxes on our balance sheet were approximately $59 million at year-end, with the largest portion of that balance related to accelerated depreciation on our significant capital investments that we've made over the years.

This includes the benefit of a 100% bonus depreciation on our significant personal property additions that we made during the fiscal 2017 fourth quarter, thanks to the new tax law. Now these deferred taxes were recorded over time assuming an effective income tax rate that historically has been in our -- in the 38% to 40% range for our company. Now that the federal income tax rate has been reduced from 35% to 21%, the old saying that a tax deferred is a tax saved has really become a reality for us. We now expect our future effective income tax rate will be in the 25% to 27% range. And we reduced our deferred income taxes by $21.2 million in order to reflect this new expected tax rate. And while the reduction in deferred taxes is a onetime thing, our future reported results will benefit significantly from the new lower effective income tax rate.

So that out of the way, let's quickly -- I'll comment -- I'll quickly comment on a few of the line items below operating income. As I shared with you on prior calls, the majority of the increase in interest expense this quarter and for the fiscal year is due to the fact that we assumed several capital leases in conjunction with the Wehrenberg acquisition last December. Now we also did have increased borrowings compared to last year due to our capital expenditure program that also contributed slightly to the increased interest expense. But our overall average interest rate decreased compared to last year due primarily to a change in the mix of our debt portfolio, offsetting some of the impact of the increased debt.

Looking ahead, based upon an expected decrease in our capital expenditures during fiscal 2018 -- unless, of course, an acquisition comes along -- we think our total borrowings may not change very much or might even decrease in 2018. Conversely, anticipated increases in short-term interest rates may offset some of the impact of any reduced borrowings that we may have during our -- for our interest expense during the year. And of course, changes in our borrowing levels due to variations in our operating results, capital expenditures, share repurchases and asset sale proceeds, among many other items, may impact either favorably or unfavorably our actual reported interest expense in future periods, as may changes in short-term interest rates or the mix of our long-term and short-term debt in our portfolio.

Now another line item I'd like to highlight is the gains on disposition of property, equipment and other assets. Our fourth quarter results were favorably impacted by 2 significant gains. We recorded a gain of over $600,000 this quarter from the sale of our small ownership interest in MovieTickets.com, which was purchased by Fandango. We also reported a gain of approximately $4.9 million from the sale of the Westin Atlanta hotel, in which we had an 11% minority ownership interest. Now partially offsetting these gains in both the quarter and the fiscal year was the continued write-off of disposed theater personal property as we continued our extensive renovation program at multiple theaters. The other line items below operating income, investment income and equity earnings from joint ventures, did not change significantly during the reported periods.

Now before I dig into each division, I do want to briefly shift away from the earnings statement for a moment and tell you about our total capital expenditures during fiscal 2017. And tell you that they came in right near the top of our projected range, totaling approximately $114 million compared to approximately $84 million during fiscal 2016, if you exclude the Wehrenberg acquisition. Now approximately $93 million of that total spend during fiscal 2017 was incurred in our Theatres division, the majority of which related to the 2 new theaters that we opened during the year and the completion of a significant number of DreamLounger seating projects, UltraScreen and SuperScreen DLX screens, and new food and beverage outlets detailed in our press release. We spent approximately $20 million in our Hotels & Resorts division this year, including costs associated with the 29 new villas that we opened up at the Grand Geneva and the new SafeHouse restaurant and bar that we opened in Chicago during 2017. As we look towards capital expenditures for fiscal 2018, we're currently estimating that our fiscal 2018 capital expenditures may be in the $65 million to $80 million range, with approximately $50 million to $60 million estimated for our Theatres division, including about $20 million in carryover from projects already approved and in some cases started in fiscal 2017.

Another $15 million to $20 million is currently estimated for our Hotels & Resorts division, including a scheduled renovation at the Hilton Madison hotel and preliminary work in our recently announced plans to convert the InterContinental Hotel into an independents hearts -- arts hotel by mid-2019, as well as some additional maintenance capital and dollars set aside for possible growth or ROI opportunities that could be evaluated during the year.

As is always the case at this point in the year, the range of potential capital spending is fairly large at this time because either the timing on several of our planned projects is not finalized yet or because some of the dollars are for several growth opportunities that may or may not come to fruition. As a result, our actual fiscal 2018 capital expenditures certainly could vary from this preliminary estimate. In addition, if another acquisition opportunity would arise, particularly in our theater business, that would obviously impact our capital expenditures as well.

Now I would like to provide some financial comments on our operations for the fourth quarter and fiscal year, beginning with the movie theater division. When looking at the Theatres segment revenues and operating income, the first thing we should do is probably address the fact that this year's results include a full year of our Marcus Wehrenberg theaters compared to 2 weeks of operations of these theaters last year. We also opened 2 new theaters during fiscal 2017 and another one during the fourth quarter of fiscal 2016, so that's going to impact comparisons as well.

So let's dig into the revenues just a little bit here. While the segment totals show that theater revenues increased 19% during the fourth quarter and 22.3% year-to-date, if you take out the revenues from the new theaters, we find that our revenues for comparable theaters increased 0.5% during fiscal 2017 -- during the fourth quarter, and it actually decreased 0.5% for comparable theaters during fiscal 2017. And while I know this is going to get a little confusing, I think even those numbers need to be explained, so please bear with me for a second. If you've been following us for a while, you will remember that last year during our fourth quarter, our total revenues benefited from a $3.3 million onetime incentive payment from our preshow advertising provider, Screenvision. That obviously also impacts your comparisons to last year. So now if you take out that payment from last year's revenues as well, you'll find that our comparable theater revenues increased 4.6% during the fourth quarter and 0.2% during the full year fiscal 2017. Now when you consider where business was after a difficult summer movie season, I think you'd agree that ending the year with comparable revenue slightly ahead of last year is really pretty good.

Let's get even a little more granular and take a look specifically at box office receipts because that's a number we can compare to the rest of the industry. If you exclude the new theaters that I just referenced as well as 2 theaters that are no longer comparable to last year because their pricing policies were changed pretty significantly as a result of the new theaters that we opened nearby, fiscal 2017 fourth quarter box office receipts increased 6.9% for comparable theaters and decreased 1% for those same comparable theaters for the full fiscal 2017, which then allows us to bring a -- to do a comparison to our results to the U.S. box office.

Based upon U.S. box office numbers compiled by Onstream using data from Rentrak, a national box office reporting service for the theater industry, we find that the national box office increased 1.7% during our fourth quarter, during those 13 weeks, and decreased 2.6% during our fiscal 2017. Using the numbers I just shared with you, that calculated our box office increases for comparable theaters, this means we outperformed the industry by a significant 5.2 percentage points during the fourth quarter and 1.6 percentage points during fiscal 2017. And this is still not counting the Marcus Wehrenberg theaters, where we expect to outperform in the future. This means we have now outperformed the industry during 14 of the last 16 quarters, essentially 4 straight years now, something we're very proud of.

Now the fourth quarter comparable theater increase in our box office revenues of 6.9% was partially attributable to an increase in attendance at our comparable theaters of 0.8%. Our comparable theater attendance decreased by 3.1% during fiscal 2017. Offsetting that, however, was -- that excluding the Marcus Wehrenberg theaters, our average admission price increased by 6.9% during the fourth quarter and 2.6% for the full fiscal year. The modest price increases that we took in November of 2016 and October of 2017 as well as an increased number of premium large-format screens, which I'll tell you was particularly important with the Star Wars film, and the favorable change in film product mix contributed to our increased average admission price during the reported periods.

In addition, we're pleased to report very healthy increases in our average concession and food and beverage revenues per person of 5.5% for the fourth quarter and 5.1% for fiscal 2017. And these numbers again exclude the Marcus Wehrenberg theaters. Our investments in nontraditional food and beverage outlets continue to contribute to higher per capita spending.

Shifting to operating income for just a minute. Our theater division operating income increased during fiscal 2017 compared to fiscal 2016 due primarily to the operating income from the acquired Marcus Wehrenberg theaters, decreased attendance at comparable theaters all coming during the second and third quarters, and preopening expenses of approximately $800,000 related to the opening of the 2 new theaters negatively impacted our operating income during fiscal 2017.

In addition, our theater division revenues and operating income during 2017 were also negatively impacted by the fact that we had anywhere from 14 to 40 screens out of service from March through mid-November during fiscal 2017 due to renovations underway at multiple theaters.

In addition, comparisons to operating income during fiscal 2016 were, of course, negatively impacted by the fact that those fiscal 2016 operating results included that significant onetime incentive payment from our preshow advertising provider that I mentioned earlier, which dropped straight to the bottom line, partially offset by the fact that fiscal 2016 operating income was negatively impacted by a -- by onetime transaction costs related to the Wehrenberg transaction.

Let's move over to the hotel and resorts division real quickly here. If you do the math, you'll see that our overall hotel revenues were up 4.9% for the fourth quarter and 2.6% year-to-date. We've increased food and beverage revenues from our new SafeHouse Chicago restaurant, certainly contributing to those increases. Increased room revenues from the new villas we opened at the Grand Geneva and increased RevPAR at comparable owned hotels also contributed to our increased revenues. Our total RevPAR for our 8 comparable properties increased 2.7% during the fiscal 2017 fourth quarter and 0.9% for the full fiscal year compared to the same period last year. And as we noted in the past, our RevPAR performance did vary by market and type of property.

According to data received from Smith Travel Research and compiled by us in order to compare our fiscal quarter results, comparable upper -- upscale hotels throughout the United States experienced a decrease in RevPAR of 0.2% during our fiscal 2017 fourth quarter, but competitive hotels in our collective markets actually saw an increase in RevPAR of 1.4% for the fourth quarter.

For the full fiscal year 2017, Smith Travel Research data shows that upper upscale hotels experienced an increase in RevPAR of 0.6% and a -- and competitive hotels in our collective markets experienced actually a decrease in RevPAR of 3%. Thus, if you compare that to our numbers, you're going to see that, in fact, for the full year, we outperformed our competitive hotels by nearly 4 percentage points. Breaking out the numbers a little more specifically, our fiscal 2017 fourth quarter RevPAR increase was due to a 1.4% increase in our average daily rate, and a 0.9 percentage point increase in our overall occupancy rate. For fiscal 2017, our occupancy rate increased 0.5 percentage points and our average daily rate increased 0.3%.

Hotels and resorts division operating income and operating margin increased during the fourth quarter of fiscal 2017 compared to last year. For the full year, division operating income and operating margin decreased by 12.7% and 1 percentage point in the margin during fiscal 2017 compared to 2016, really due entirely to preopening expenses and some startup operating losses related to the new SafeHouse Chicago, and a reduction in profits from our management business due in part to a small onetime favorable adjustment made last year. If you exclude those 2 items, operating income for our Hotels & Resorts division during fiscal 2017 actually exceeded operating income during fiscal 26 (sic) [2016] by about $200,000 for a 1.7%. Excluding the same items, our operating margin during both years was 5.3%.

With that, I'll now turn the call over to Greg.

Thanks, Doug. I'll begin my remarks today with our theater division. I think we can all agree that it was quite the roller coaster year. On the heels of a record fiscal 2016, fiscal 2017 started off with a record first quarter, and everyone was feeling great about our business. Of course, as we now know, everything was about to change and all that momentum came to a halt with a challenging second and third quarter, well our -- where the film product -- it just didn't perform. That naturally led to all the inevitable articles about the future of the movie theater business. Yet here we sit today reporting yet another record quarter and year for Marcus Theatres, once again outperforming the industry. And yes, we had Star Wars in December, but we also are comparing our results to a quarter with a significant Screenvision onetime incentive payment. So this accomplishment should not be minimized. Well, the honest truth is that fiscal 2017 was a very good year, but not quite the year we had hoped for. It's hard to make up for underperforming films during our peak summer movie season. But as you've heard me say many times before, it is difficult to predict the box office over the short term. But over the long term, steady growth has proven to be very predictable. It is our job to continue to execute on our operating and investment strategies so that we'll be prepared to capitalize when the movies are there for us, just like we did during our recently completed fourth quarter.

Thus, I'm going to start my remarks by congratulating Rolando Rodriguez, our management team and the entire theater operational organization for their performance during the fourth quarter, and for that matter, the entire year. Our press release went into a fair amount of detail and now Doug has provided even more information about our theater division's fourth quarter and fiscal year. Other than adding that, not surprisingly, the strength of the fourth quarter film slate were the November and December films. October was actually a little soft. I'm not going to use my time today to talk further about what just happened. Rather, I'm going to focus my remarks today on 2 topics: the progress we made on our capital program during fiscal 2017, particularly with the Marcus Wehrenberg theaters, and our plans for fiscal 2018. If you have additional questions about our reported results, I'll be happy to try and answer them during the Q&A portion of this call.

Doug told you that we incurred over $90 million in capital expenditures in our theater division during fiscal 2017, the most we've ever spent in a year, excluding acquisitions. In addition to 2 new theaters that we've discussed previously, our press release highlights where the dollars went: 15 more DreamLounger recliner seating locations; 5 new UltraScreen DLX screens, 2 of which were newly built; 18 new SuperScreen auditoriums; 5 new Take Five Lounges; 4 new Zaffiro's Express outlets and 2 new Reel Sizzle outlets. Needless to say, it was a busy year for our theater team and they deserve additional credit for getting so much done during the year and managing through a lot of disruption to our operations. All of our theaters were open for business every single day. I will note that we achieved the results we are reporting today despite the reality that our theater division revenues and operating income during fiscal 2017 were also negatively impacted by the fact that we had anywhere from 14 to 40 screens out of service from March through mid-November due to the various renovations underway at these theaters.

I think you might find interesting where all these investments put us the end of 2017. As of December 28, 2017, we offered all DreamLounger recliner seating in 39 theaters, representing approximately 61% of our company-owned, first-run theaters, including the Marcus Wehrenberg theaters. Including our premium large format or PLF auditoriums with recliner seating, as of December 28, 2017, we offered our DreamLounger recliner seating in approximately 65% of our company-owned, first-run screens, including the Marcus Wehrenberg screens, a percentage we believe to be the highest among the largest theater chains in the nation. Currently, 7 Marcus Wehrenberg theaters offer recliner seating in all of their auditoriums. Meanwhile, we currently offer at least 1 PLF screen in approximately 69% of our first-run, company-owned theaters, including the Marcus Wehrenberg theaters. Once again, a percentage we believe to be the highest among the largest theater chains in the nation.

And one more number for you. After the investments we made this year, we now offer one or more in-lobby dining concepts in 36 theaters, representing approximately 56% of our company-owned, first-run theaters, again, including the Marcus Wehrenberg theaters. The fact that I kept using the phrase, including the Marcus Wehrenberg theaters, is really the other big takeaway from all these numbers I've just thrown at you. You will recall that one of the most attractive aspects of our Wehrenberg acquisition in December 2016 was the fact that we saw an opportunity to add our successful amenities to these theaters. A reminder, only one of the acquired theaters had recliner seating when we purchased it, and there were a limited number of PLF screens and F&B options. We've previously talked about the fact that we faced some unexpected headwinds in 2017 getting started on adding these amenities to the Marcus Wehrenberg theaters, due in part to governmental delays and prolonged lease negotiations. Thus, the reality is, that it wasn't really until December of 2017 that we began to see the real upside that we expect from these acquired locations.

I'll also remind you, the outperformance versus the nation that we've talked about for our fourth quarter and fiscal 2017 was excluding the Marcus Wehrenberg theaters. In 2018, we'll start reporting our performance versus the nation including these theaters. I will tell you this: using historical numbers provided by the seller for these theaters, we believe we outperformed the nation in these theaters in November and December, and that has carried over so far to the first quarter of fiscal 2018.

So now we move on to fiscal 2018. On paper, the film slate looks very good -- and by the way, it always does -- with a large number of titles from well-known series leading the way. An initial look at the film lineup might suggest that the quarters may play out exactly the opposite of last year, with the second and third quarters leading the way and the most difficult comparisons being in the first and fourth quarters. But as history tells us, you never really know how the films are performing. Everyone was pretty down on the fiscal 2018 first quarter. But after a stronger-than-expected January and the record-breaking performance of Black Panther this past week, maybe the comparisons to last year, which included the tremendous performance of the March film, Beauty and the Beast, will be better than originally thought. But as you've heard us say before, our goal is to continue to outperform regardless of what the movies in any particular quarter look like.

Our path to meeting our goals in 2018 starts with many of the same strategies you've been hearing about. It involves continued development of proven marketing programs like our Magical Movie Rewards loyalty program as well as continue to make investments to further enhance the moviegoing experience and amenities in new and existing theaters. Doug shared with you that we may spend as much as $50 million to $65 million in this division during fiscal 2018, and we would do that in a number of ways. We've previously announced plans for our second BistroPlex, and construction is expected to begin on this new location in Brookfield, Wisconsin in 2018. We also are looking for sites with other new theaters -- for other new theaters, and we may spend some dollars towards that end in 2018.

We are currently completing the addition of our DreamLounger premium seating to 3 more locations, including 2 Marcus Wehrenberg theaters. And we are evaluating opportunities to add these recliner seats to 5 to 7 additional theaters during the second half of fiscal 2018, including 2 more Marcus Wehrenberg theaters. As a result, by the end of the fiscal 2018, our percentage of total company-owned, first-run screens with DreamLounger recliner seats may be more than 75%. We also plan to continue expanding our proprietary large-format concepts with several additional screen conversions and additions under consideration for 2018. Our capital budget also includes selected opportunities to further expand our signature food and beverage concepts as well.

So needless to say, while our capital dollars are expected to decrease from the record number spent this past year, our team will continue to be busy. And given how many amenities we added at the end of 2017, we'll also have our hands full as we focus on maximizing the return on the investments we made during fiscal 2017. And I would be remiss if I didn't note that we still have an extremely strong balance sheet, so we remain very interested in further expanding our circuit with selective acquisitions when the right opportunities arise.

With that, let's move on to our other division, Hotels & Resorts. You've seen the segment numbers, and Doug gave you some additional detail. Fiscal 2000 ended on a -- 2017 ended on a strong note. And in fact, when you peel away the unusual items that Doug shared with you, our 8 company-owned hotels performed slightly better in fiscal 2017 than they did last year. There definitely were some headwinds this year, primarily in group business, but the fact that we ended up outperforming our competitive set of hotels by nearly 4 percentage points during fiscal 2017 is something our team is very proud of.

As interim leader of this division, I want to publicly thank our outstanding executive management team in hotel operations and the sales team on a really solid year under some challenging circumstances. As we've discussed in the past, our portfolio of hotels does particularly well with group business, especially some of our largest properties. So our quarterly results are often determined by the strength of group business during the period. When it is soft, it hits us harder than some others. And when it is strong, we do well. Group business also tends to have impact in our food and beverage revenues as well, since groups are more likely to use our banquet and catering services during their stay. The fourth quarter was a good quarter for groups. And not surprisingly, our reported results reflected that. Our team has also continued its unwavering commitment to exceptional guest service and our press release pointed out some of the recent awards our properties have received.

Looking ahead, while it is not easy to read the crystal ball for the hotel industry, and our hotels in particular, there certainly seems to be some level of optimism about [out] business in the near future. Many published reports by those who closely follow the hotel industry suggest that the United States lodging industry will continue to achieve modest, steady growth in RevPAR in calendar 2018. There appears to be some recent improvement in sentiment regarding the possible positive impact that the recent regulatory and tax reforms may have on our business customers, which we would hope might bring an increased business travel in the future. Whether the relatively positive trends in the lodging industry over the last several years will continue depends in large part on the economic environment, as hotel revenues have historically tracked very closely with traditional macroeconomic statistics such as the gross domestic product.

We also continue to monitor hotel supply in our markets as increased supply without a corresponding increase in demand may have a negative impact on our results. We generally expect to track or exceed the overall industry trends, particularly in our respective markets. We are encouraged by the fact that our group room revenue bookings for future periods in fiscal 2018, something commonly referred to in the hotels and resorts industry as group pace, are modestly ahead of our group room revenue bookings for future periods as of the same date last year.

The SafeHouse Chicago is completing its first year of operations so we won't have the preopening expenses to contend with this year. And we expect to report improvement in that restaurant's operating results during fiscal 2018. We also expect to see continued benefit in future periods from the new villas at the Grand Geneva Resort & Spa.

We lost 2 management contracts during fiscal 2017: the Sheraton Madison and the Westin Atlanta. But we've added 3 new ones: the Omaha Marriott, the Sheraton Chapel Hill and the recently announced Murieta Inn & Spa in Rancho Murieta, California. And while I talked about it briefly in our last conference call, I don't want the sizable gains in the sale of the Westin Atlanta that we reported during our fourth quarter to be overlooked just because it is not in our operating income or EBITDA. That entire transaction is emblematic of what we are trying to do with a portion of our growth. We acquired a minority interest in the hotel where we could add value. We earned management fees for 5 years. And then we sold it for a substantial gain, recognizing a portion of the value we helped create.

We also look to create value in our existing assets when opportunities arise. The new villas at the Grand Geneva are an example of that. So was our recent announcement to convert the InterContinental Milwaukee Hotel into an independent arts hotel. We feel the timing is right to reinvent this 221-room hotel with the goal of blending impeccable hospitality with curated exhibits, contemporary installations and engrossing live performances. With this project, we saw a very special opportunity to push the envelope and create an entirely new concept that celebrates the arts. Ultimately, our hope is that a visit or a stay at this hotel will inspire our guests to explore more of what's possible and experience our community in a way that is more personal. As mentioned earlier, most of the capital dollars in this project will be spent in fiscal 2019, but we're already working on getting ready for this conversion, and our team is excited about the possibilities that lie ahead.

So that ends another fiscal year. It was another record year, and we believe we have a lot to look forward to in 2018. Our balance sheet is in great shape with a debt/capitalization ratio of only 40%. And I want to highlight that we hit a major milestone at the end of the year. Our total assets now exceed $1 billion. I don't think my grandfather would have ever believed we would one day reach that incredible milestone. We're also poised to benefit in future periods by the recently enacted tax reform legislation, freeing up cash to invest in our businesses, our associates, our shareholders and our community. I've already talked about our investments in our businesses, and they will continue in the future. We also recently increased our matching contributions to our 401(k) plan and actively -- are actively reviewing additional opportunities to invest in our associates. In addition, during fiscal 2017, we made a significant increase to our contribution to our Marcus Foundation as the needs of the community are increasing as well. And I'm pleased to note that our board expressed confidence in our future yesterday by raising our quarterly dividend by 20%, our fourth dividend increase in the last 3 years and the largest increase yet. We believe we are well-positioned for the future and look forward to continuing our momentum in the year ahead.

With that, at this time, Doug and I would be happy to open the call up for any questions you may have.

(Operator Instructions) And our first question comes from the line of Eric Wold from B. Riley.

A few questions. I guess, one, obviously, great outperformance in the theater division in Q4 relative to the industry. If you drill down from what data you do have to a theater level or maybe a smaller regional level, can you talk about the outperformance you see? Maybe not specifically, but anything you can read from the outperformance trends of one theater or one region versus another in terms of maybe what some theaters offer their consumers in terms of amenities and whatnot versus others that did not and how that will be addressed. And then anything that underperformed noticeably that you can point to?

Well, I guess, I could just say, generally, Eric, and sort of highlights what we talked about in our prepared remarks is that where we are making these investments, we are seeing our outperformance. We are seeing -- and it was what we saw with what we call the legacy circuit. As we made the investments in the amenities, in the recliner, dream -- the DreamLoungers, those investments are paying off. And I can't really point to anything specifically. Does everything work as planned? Well, I wish I could tell you that everything worked -- actually, I wish I could tell you that everything worked better than planned. But overall, we're very pleased with the performance. And we can see it. It is highlighted.

Eric, maybe what I would add to that is -- and you've been with us in this whole journey here. The -- at one point in time, I don't think I was throwing around numbers saying that we thought we were going to get to 65% penetration with the DreamLoungers, for example, when we met a couple of years ago, wherever it might have been. We're up to that number and we've gone farther because I think it's -- one of the reasons is that it's proven to continue to work even as we've started getting into some markets where there was no market share to steal from anybody. I mean the -- we've -- this past year, we've done a few markets where we're the only game in town. And they're smaller markets. And we've seen some results that have been very pleasing. And again, as Greg said, not every single one of them is going to be a home run, but we've had some encouraging results in some markets that probably weren't initially on our radar. And so that's probably allowed us to continue to move this along.

I think what we're seeing there -- I'll build on that a little bit, Doug . And that is, first of all, even in our smaller markets, we tend to have pretty good facilities. We don't chintz in the small markets. But -- so then when we go do this, we really get a state-of-the-art theater in those markets. And then what I think we're seeing -- and I have not borne the data out -- I haven't seen the data yet. So any of the theater people who are listening, they know they're going to hear this question. But we think what we're seeing -- and we can see it because we can see it through our Marcus Rewards data. I think we're going to find that people are driving farther in those outer markets to come to our theaters.

No, that's helpful. And then just on the capital structure, you noted your appetite, obviously, for additional acquisitions. Maybe remind me where you are now in terms of leverage and what would be the high end of your comfort level?

Well, so our -- from the traditional kind of balance sheet debt/capitalization ratio, we're at 40% right now. And if you look at our debt-to-EBITDA, I mean, we're in the 2s, right, in the mid -- somewhere in that mid -- somewhere in that range, 2.5, something like that. So we've got a lot of room, Eric. We've got -- certainly have plenty of availability in our existing bank agreements. We certainly have access to additional capital beyond that. We have historically said that 50% debt/cap is kind of a number where we -- if you just look historically, I don't know if we've really ever been much above that. Our credit agreements allow us to go farther than that. But that, I mean, again, we play it for the long term. And so if there was some reason to go farther, we could always fix that after the fact. But I got to be honest -- right now, I mean, if we spend $80 million next year in CapEx that I talked about, on the high end of that range, given the cash flow that we're generating from our business, that 40% might even go down. So we certainly have room, Eric.

Yes. We have room and we have desire. But our strategy is, we need to be able to add value. And our value-added is what we think one of our team's skill set, relying on the team, their skill set is going in and taking something and fixing it up, investing capital in something and making more out of it. And that's really the kind of things we look for, and I guess is -- I think you said appetite. And I think all I could think of was Austin Powers, get in my belly. We're certainly not like what -- to use all the movie quotes, we're not in wafer-thin mint time, so...

We throw a lot of movie quotes around here, Eric, just so you know.

I can imagine. Maybe just -- last question, switching to the hotel side. So it's been over a year since the Wehrenberg acquisition. I know at that time, you -- I know the acquisition was not done anticipating a 1031 as a part of kind of the approval process, but you thought there was an opportunity possibly for a reverse 1031 to take advantage of that. Nothing's happened. Obviously, we don't know the time frame of a reverse 1031 versus a normal, which is the normal 6 months, but nothing's happened. So I guess, what should we read into that? Has there been interest in the hotel that you indicated for sale, but no prices you wanted to see. Has there not been interest? And I guess, how does that impact your ability to kind of use hotel monetization and 1031 exchanges as kind of an additional growth strategy going forward?

I'll start and let's see if Doug wants to add anything. Our first choice is to do that, but the pricing has to be right. I think what you saw on the hotel market, which was pretty well-known is that it did get pretty -- the transaction market got relatively quiet last year. The REITs were out of the game. We're starting to hear that there -- we're starting to see some [mall passive] activity picking up as people -- because people were wondering where you are in the cycle, but they're starting to see there's been this discussion where -- well, the cycle's been prolonged or reinvigorated. But again, it comes back to -- we're going to make the best decision that we can make. We're not trying to sell something just to sell. But if the price is right and the opportunity is there and it lines up, we look at all the factors and then make a decision. Now the tax law changing is going to impact that as well.

Yes. I mean, I guess, speaking specifically to those types of issues, Eric, I mean, look, as you correctly noted, it's a little less clear how much time you have on a reverse 1031 versus a 1031. So -- while that certainly, that window is still open for us, all the facts have to be correct. And so it really will depend on things. So again, we're not -- just like when we bought Wehrenberg without counting on anything, we're not sitting here today making these sort of decisions based on assuming that something like that would happen. And then, to Greg's point, obviously, since the tax impact is one of the key components for us in making decisions about what assets could be sold and for how much, the fact that the effective tax rate on gains is going to go down certainly does at least change the math. Whether that makes a difference or not, it's going to be on an asset-by-asset basis, but that certainly does change the math a little bit.

And by the way, it wasn't like there was no activity. You did see, the Sheraton Madison was sold. The Westin Atlanta was sold. And we participated in those.

And our next question comes from the line of Jim Goss with Barrington Research.

Staying on the hotel theme for the moment. You do seem to be having some success in getting some management contracts, which is always a challenge if you're not going to own the property. And I'm wondering how valuable all the awards you point to in terms of the qualities of your hotels and the industry's reception. Are --how valuable those are in terms of securing some of the contracts you've been able to get? And also, are you getting -- are you still looking at sliver equity in some of the new properties?

Well, I'll tell you this much, I don't think the awards hurt. It's good. Look, and again -- I think they just -- they emphasize what I think the sophisticated investors, who are investing in these properties do understand, that is that -- look, we aren't an unknown quantity. We aren't a new entity. We've been in the hotel business 56 years now since 1962 when my dad and grandfather bought The Pfister here in Milwaukee. So I think it just shows our consistency and the fact that we're able to continue to perform at a high level. And yes, we look for sliver equity. We have -- in some of the projects we have, we have some sliver equity as well. So we will continue to do that.

So how active is this -- and methodical is this process of trying to generate these new management contracts? Is it -- are there a certain number of people dedicated as a staff to scouring the country for these sort of opportunities or is it just as they happen to become aware of them?

No. We've been deliberate about it. A management contract is like a -- is a product, I mean I was going to say it's like toothpaste, right? We're out there selling it. So we have people who are devoted to finding these opportunities for us.

And then what I would add to that, Jim, is that, then there's the money side of things. And so we have one effort -- and it kind of works hand-in-hand. But one effort is out there looking for these deals, looking for these transactions, looking for the management contracts. But as we've talked about in the past, on the sliver equity side, on the potential fund side, one of the -- which is also, I think, we believe is an opportunity as we go forward to potentially have a little more say in the process by identifying properties and having money ready to go that -- where we can acquire properties off-balance sheet but with partners, that's a whole different effort that's also been very active and going on as well.

Okay. And when you bought Wehrenberg and perhaps even before, you were talking about getting to a stage where you've executed on the theater reseatings and enhancements and that you were beginning to need additional properties in order to renovate. And now it seems like you're getting close to a very late stage in the process even including Wehrenberg. How likely is additional M&A at this stage? How wide a net geographically are you searching? Could you talk about, without being precise, but just talk in general of where you think the industry stands and your role in the industry right now in that regard?

I -- again, I -- there -- these are very unpredictable, as you know, Jim. They are. We don't know when they're going to -- when someone's going to have that desire. They're not -- it's not -- the transaction market is different than like the robust transaction market in the lodging industry [it defines], depending on whether you want to participate in it or not, it is robust. And we continue to be out there. And I think we're viewed as a leader in the industry. I know we're viewed as a leader in the industry. And people know of our interest. And we -- so I think that we're active in the discussions that go on. And we will remain disciplined and look for opportunities. And I wish I could tell you something specifically, but we're active. And as Doug said, we have the capacity to do it, and we will do it.

And Jim, you've heard me say this before, so I'll say this kind of for the larger group as well. I mean, certainly, we do believe that sitting -- that doing nothing in the theater industry is not an option. We think that the -- there's obviously, as evidenced by all the investments we've made. So there are people out there who have got to make some decisions. Some of them are making these investments. And others are having -- are trying to figure out, are they going to come up with the capital to make these investments or not? Do they have access to the capital? Do they really want to double down the family net worth, whatever -- wherever it might be. So certainly, I do think that there will continue to be that pressure in the industry to be able to make these investments. Food and beverage is not easy. It's difficult. We're really good at it. So for all those reasons -- I think, if you look -- going back to our balance sheet, our balance sheet is in great shape. We're certainly a logical player if someone wants to take that next step. It's just -- obviously, again, it's very hard to predict. I mean, I wish I could give [putting a] percentage on it, Jim, but it's just too hard.

All right. Just one last thing, Greg, I liked your comment that fiscal '18 looks good, but it always does, by the way. And that's very true. So I'm wondering, do you always try to guess internally? How has it worked out so far relative to your expectations? And what do you think now?

Okay. I never guess. I mean, maybe in my head, I'll have a few thoughts, but I -- I have been around this long enough. It is impossible to guess. I mean, I could tell you right now, some of the smartest people in my company, in our company here could never have guessed what Black Panther was going to do this weekend. They just didn't -- you know, this business is a business about our -- there was an old saying in Hollywood that every movie is R&D except the sequel. And so I find guessing relatively futile. Our job is to maximize every potential revenue dollar that we can get in the place. And then based on what the -- based on the cards we're dealt, and then to make sure that we bring as much to the bottom line as we can. Those are our key responsibilities. We cannot predict the film for the most part.

What I will add to that, Jim, is that where I think we're really, really good at. And I'm really talking about our whole team and some of them listening to this call right now. We're really good at them being very reactive and quick and moving very quickly when we see what actually happens, right? Everyone tries to guess, I mean the Black Panther, everyone tried to guess what was going to happen. And then when -- what actually happened, happened, I think that one of the places where we add value is we move very quickly and adjust accordingly. And we -- and obviously, with all -- being all-digital, that certainly gives us -- and everyone else is all-digital as well, but I think we're just really good at then reacting and adding screens and showtimes and doing and changing, adapting from a labor model perspective, et cetera, et cetera. And so I think that's been one of the places where we've been quite successful. And I think this past weekend was a prime example of that.

And our next question comes from the line of Mike Hickey from The Benchmark.

So just curious, I guess, on Wehrenberg. You sort of highlighted that, Greg. And it sounds like it's really starting to get some traction at the end of your fiscal and into Q1. Maybe it's obvious it's just the recliners and amenities that you're putting in there, but I'm just sort of wondering if you could perhaps give us a little bit more insight there. Obviously, that network is about 20%, I think, of your total and it was in a fair amount of disarray. Now it looks like it's going to be obviously within your comparable performance for all of '18. And wondering if that's sort of the key here to your upside, if you have it, which we expect obviously in Q1 in '18 on the theater side.

Mike, I think that -- I do want to just add one thing before I start to answer your question directly, Mike. And that I think it's important, and we pointed it out in the call, that yes, a huge thing is physically fixing up the assets, but it's not just that. It is all the marketing programs that we bring along with us. The [foul] whether it's $5 Tuesday, Student Day, Young at Heart, all those specials that we do, the MMR [per] our Magical Movie Rewards program really is -- we're up to about 2.6 million members with -- and there's some opportunity in those markets to grow as well. And that is a very powerful tool, I've talked about it before, I will continue to talk about it. It is so important for us to own our customers. And we're very disciplined about making sure that happens, and maximizing and building a relationship with our customers. For the first time, we can actually build a relationship with our customers, which is -- which I think is going to continue to pay dividends for many years. Now taking that now to your question of, where's the upside. So the upside continues to be in expanding those marketing programs. Yes, the Wehrenberg in St. Louis [trends in] -- the Wehrenberg set of assets is probably the bulk of the opportunity is, but throughout the system, we know, we continue to see opportunities in food and beverage to maximize that potential as well.

Yes. From a number perspective, Mike, I mean, you correctly noted, so the Wehrenberg represents 20-some percent of our overall business. So while -- if they start outperforming by some sizeable number over -- in 2018, when you roll that into our overall results, I mean, you've got to factor that into it, that they're only 20-some percent of our overall results. When you look at our core Marcus circuit, look, for the year, we were -- we outperformed by 1.6%. Yet you saw what happened in the fourth quarter, it was over 500 basis points just because of -- and that's going to happen occasionally, where we're going to have certain quarters where the way those pictures play and everything else. But obviously, we're maturing from the Marcus perspective. Everyone else, to the degree that there is competition, is catching up. And so I'm not -- while we have never once tried to project any sort of outperformance numbers -- and I'm not going to start doing that today -- it's reasonable to expect that the Marcus piece, our goal is to outperform, but it's not -- we're not going out there and saying, we're going to consistently outperform in the core Marcus piece by over 5 points, but I certainly think the Wehrenberg piece is going to continue to outperform now as all these -- and you're going to see some of that higher number and you can factor that in.

I know it's a tough question. The -- I guess real quick on theater concession gross margin. It looked like, if I did my math right, Doug, it took a pretty big dip in Q4....

Yes. I'll tell you, Mike, I would -- what I would strongly suggest you do is focus in on the year-to-date numbers. There's always some quarterly stuff that goes on. And last year, there was the -- in that particular line, there was some adjustment. And this year, there was a little bit of a swing between operations and -- the theater operations line and the food and beverage -- the concessions line, not enough to -- enough to have maybe messed with those percentages a little bit, but not enough to be material overall. And so I would certainly suggest that you zoom in on those -- on where our year-to-date percentages are. That's probably more reflective of overall what you're seeing as we continue to add these food and beverage outlets that, by definition, are going to have a little higher cost of sales than our traditional popcorn and soda business.

So it's, if I heard you right, Doug, a little margin pressure maybe in '18 is just a function of sort of the mix there? Is that a fair expectation, I guess, or...

Well, in the -- specifically in the fourth quarter, there was just some stuff going on within those line items, both this year and last year that I'm just saying that I wouldn't zoom in on that. I mean, I know, I did my own math on that, too, and it's -- I think it shows up at like 32% of the concession revenues. That's not our normal percentages. And last year was lower because of stuff going on. So I would really focus in at -- we've been pretty consistent when you look at what that line item is as a percentage of the concession revenues. And if you look at it from a year-to-date perspective, I think that's pretty representative of the kind of the pace that we generally have in that part of our business, if that makes sense.

Yes. I guess just a -- maybe back to the first question a touch. Just obviously, Black Panther has been a outlier performance here. Curious how your circuit is tracking relative to market on that film. And I think you've said Wehrenberg is outperforming in Q1 versus the market. Curious how your entire circuit, including Wehrenberg, is currently performing quarter-to-date, and Black Panther specifically.

I'll let Greg answer the first part of it. The second part of it, I'll just tell you that yes, we're out -- I mean, look, we are -- quarter-to-date, we're outperforming. We're outperforming. I mean, again, I'm not -- we're just -- we're not going to provide numbers because things can change, but we are outperforming, so...

And is the first question specifically about Black Panther?

Black Panther, yes.

Good-oh. I mean, we're outperforming on Black Panther. It was -- I'll tell you, it's very interesting. And this is a testament to our team. I think that we were sort of just tracking a hair behind -- I'm not sure we're close because we look at the numbers literally every day. So on Friday, teams move -- Friday night, the place was a beehive. They made changes. They added screens. And we actually started to outperform. And so it was really cool to see that. And it was a little surprising. That film, we thought might play better in the coastal markets, where we don't have as much of a presence, but it played well for us, too. Look, it played well everywhere. And it's been great. It's really -- it's been nice to see.

Good. Last question for me. The -- I'm just -- I'm not sure how much we've talked about this, [it's get] on MoviePass. But obviously, they've grown their subscriber base. And it looks like they're sort of using that as leverage against some operators in terms of desiring a share or a subsidy. I guess just your thoughts here on that sort of -- what they're up to and how maybe it could impact your business or is impacting it.

I guess all I really want to say is, we're watching what they're doing. They've obviously tapped into something, but I'm not sure what that ultimately means. But what they're doing is -- it's interesting. And I sort of -- I think I'm going to leave it at that.

(Operator Instructions) And our next question comes from the line of Brian Rafn with Morgan Dempsey.

Just a point of clarification. The Wehrenberg circuit, are you guys about finished with renovations there? Because I'm assuming they're kind of -- you're not changing a couple of light bulbs. That's a floor-to-ceiling, turnkey-type renovation.

Yes. It really is, Brian. I mean, when we go into these theaters, pretty much all the time, I mean sometimes, there's economics that comes into play in terms of how extensive we do the other stuff. But in general, we go in, we're really updating these theaters. I mean, the customer ultimately is seeing a brand-new theater. I mean, they really are. And so it's -- so we're not just going in and just adding seats, recliner seats into the auditoriums. I mean, we're really making these things -- improving the moviegoing experience from beginning to end. And so it's pretty extensive.

Yes, now were they digital before you bought them?

They were.

They were. They were. Okay. Okay. Is there anything from the standpoint when you look at -- and I'm going back and looking at some of your Marcus layout, where you might have taken out maybe a birthday room or you might have taken out a video arcade and you put in a Take Five Lounge or a Reel Sizzle. How spacious or space-constrained are their theater for you to be able to do that?

Spacious, enough to build. They had a lot of room. There was a lot of -- they were very -- they were not chintzy on their lobbies.

Okay. All right. No, that's good. That's good. From the standpoint of -- is there anything in -- maybe, Greg, you can answer this. Is there anything that you might have learned from them? Was there anything they might have had, maybe not in food and beverage, any novelties, anything that you might adopt for the overall Marcus chain or is it primarily just you bringing your marketing and that prowess to them?

I mean, yes, you know what, look, we do try to go in -- by the way, we do not have the market cornered on good ideas, so. But they -- actually, they have some arcades. We have -- at Ronnie's, we had a -- which was the -- which is really the flagship down there -- we -- there's an arcade there that we made current. And it really is, it's pretty cool. We've been watching how they're doing some of their pricing and watching what they're doing. So yes, we're looking at them for ideas. I can't tell you that there's been a huge idea that we got from them. But yes, we're always on the lookout for good ideas. And they were good operators, so...

Okay. And then how much progress on your $5 Tuesday, your -- what is it, your $5 college guy at Thursday or whatever? How much progress in either food and beverage ticket or theater concession?

In terms of just -- are you just talking about Wehrenberg still or are you talking about just an overall (inaudible)...

No, no, no, I'm talking about -- no, I'm talking the overall chain, no, not Wehrenberg, is you had $5. I mean, that's about the size...

Yes. We're making some progress on that, Brian. I mean, obviously, by definition, Tuesday is a value day. And so we try to, in turn, offer some value opportunities on the food and beverage side as well, in order to try to make that really a special day for our customer. And I think we've made some progress. It still has -- by that very definition, the fact that we're giving away a free small popcorn to our -- to all our loyalty members, it's going to have a lower per capita than our normal days, but we've made some progress there.

But I think there continues to be opportunity. Clearly, your question of what are the opportunities? There's opportunity there.

Yes, yes, okay. If you guys look at, I know the Greendale Southridge BistroPlex kind of just opened. What -- are you seeing any divergences or maybe a bigger food and beverage ticket or -- between the BistroPlex stand-alone versus the old Big Screen Bistro that might be an auditorium within a larger venue?

I think we're seeing pretty much what we expected in terms of average tickets and spend. That's what we expect.

Yes. And then when you guys had the Black Panther tick-up, you talked about where you reacted pretty quickly. When you do a pivot, can you change theater screens on the same day or is that really something you respond to the next day?

There are instances where we will do it on the same day. Obviously, the team is looking to not displace customers. It happens occasionally. And then it's up to us to do our best to recover from that and take care of the people who we displaced. But we really are -- but yes, we can move same day if we have to.

Yes. And then relative to the Wehrenberg, your Marcus Magical (sic) [Magical Movie] Rewards program. What's been kind of the early penetration? I think you said you had about 2.6 million participants or whatever. Is that just being rolled out? How has that been early adopter at Wehrenberg?

So Brian, we've mentioned and disclosed previously that they had about 200,000 in their loyalty program. But I will tell you, what we quickly learned is that, that wasn't necessarily 200,000 active members. So we have seen growth in there. I think that when Greg talked about being an opportunity, I think that's one of the areas of opportunity that we continue to -- we're still relatively new down there, and so we're -- I think as we're continuing to kind of build out this Marcus Wehrenberg brand, I think we -- I think that's one of our opportunities is to further grow that loyalty program down in those markets. But we have in this past year certainly increased and now have a count that's active versus maybe what was there before.

Yes. Yes. And just another one relative to what used to be kind of the first quarter post-Christmas graveyard of movies, with the Black Panther, I know the Chris Kyle movie, but are you seeing Hollywood kind of get the sense that maybe there is a moviegoer there between January and March?

Seems to be, I mean, lately.

I mean, that's, as you know, that's been something that we, as an industry, have been preaching for quite a few years now. And so, yes, it's very encouraging to see that when a picture like this does really well in February, or last year Beauty and the Beast doing really well in March, we think the studios are taking notice of that. And we hope to see more of that.

The dynamic could be that as the performance of movies condenses into shorter periods, having like a Presidents' weekend that allows you to really maximize and take advantage of it. And I think the studios are seeing that, so...

And our last question comes from the line of Herb Buchbinder from Stifel.

I got a couple of quick questions here. How much has Disney restricted your take on Black Panther? And I know they put some restrictions on you, but this movie is doing so well, I guess you really can't complain, but have you given up something here?

Oh, we can complain. There's a (inaudible)...

We pretty much complain with every studio on every movie, Herb, but...

We don't talk about individuals. It sets the scales and so another -- as the film performs, we pay more.

Okay. No, I mean, they restricted you on how many showings in a theater, whatever, but I'm sure you don't mind putting it in as many theaters as you can at this point. And this movie should have legs, hopefully, for the next 3 or 4 weeks. What do you see looking out beyond Black Panther? What are your -- I know you don't like to do this, but what are your best bets as you look out over the next 2 or 3 months?

Well, so once you get past Black Panther, I mean, in March, we've mentioned a couple of movies in our press release. There's Red Sparrow with Jennifer Lawrence. Then you got A Wrinkle in Time, Disney's picture coming out on March 9. You've got a couple of other pictures coming out in mid-March, including Tomb Raider and Pacific Rim Uprising. The next big wave of pictures -- there's actually another picture that opens up at the end of March called Ready Player One, the Steven Spielberg picture that we hope that it does a little bit of business. And then the real, as is always the case every year, then this May kind of really becomes the start of the summer. It used to be June, but now -- or Memorial Day, but now it's really May. And so on May 4, you've got this Avengers: Infinity War picture, which maybe not surprisingly, watch their ads right now for this thing. They're focusing in on -- The Black Panther is a key focus of that -- of their advertising now on that. So that's the next big picture that everyone's looking at, at the beginning of May. And you've got another Deadpool. Now you got the Deadpool picture coming out in May, in mid-May. And you've got the Star Wars, kind of that Han Solo special movie coming out at -- right at Memorial Day weekend. And so as Greg noted, on paper, I mean, there is some pretty good stuff. So we'll see.

But (inaudible)...

Has the Omaha Marriott hurt the Cornhusker at all? Is that a concern? It's about, what, 15 miles away?

No. And in fact, we think probably it's ultimately, it will be better to have 2 Marriott products that we are running and can maximize performance on because it just gives us a little bit louder voice. We're out in the market more. We think it'll be good.

Have the advance bookings been pretty good for the Omaha Marriott or is it too soon to tell?

No. We're pleased.

Okay. Any change in your dividend policy versus your buyback? The fact that you had a good increase in the dividend, are you -- is there any comments you can make about this?

We really view those in -- I mean, look, they're all part of the puzzle that we're always looking at, Herb, in terms of our capital expenditures -- our uses of cash -- our capital expenditures, our buying back -- share repurchases, we certainly have pulled that lever in the past. More recently, we've been a little more focused on the dividend policy. And obviously, yesterday's announcement was the largest increase yet. And so -- but we talk about all of those options internally all the time. We talk about it with the board every quarter. And so we can -- we always have the option of pivoting from one to the other or utilizing both. But certainly more -- this past year, the focus has been on the dividend side.

So with the lower tax rate, it's not necessarily going to increase the buyback significantly?

We again, we tend to be very -- we have an existing authorization out there right now on the buybacks. We tend to be very opportunistic when it comes to that. We're not a company that just kind of puts our head down and says, my god, we said we [have to] buy back so what we're going to do now is just buy no matter what. We tend to be very opportunistic. And that's served us very well. So I'm not closing the door to saying, we're not -- we wouldn't do buybacks in the future. It's just that we -- and we don't generally telegraph which direction we tend to go either, but we tend to just be very opportunistic as it relates to our uses of cash.

How much do you have left on this existing buyback?

About 2.9 million shares.

2.9 million shares. All right. The last thing, you haven't said much about your real estate development project in suburban Milwaukee, but what's going on there? Is there any opportunities to monetize that or is it just -- is going along okay?

Herb, I think you're talking about The Corners of Brookfield, that project, if I'm not mistaken. And that project actually is really not our project anymore. It was a couple of years ago, we took on a partner which -- who became the managing member of the LLC that's developed, [but] that project has opened up Corners of Brookfield.

We continue to have a financial interest in it.

We still have a financial interest in this entity and -- but we don't talk about it in our -- and then you haven't seen much about it because it's not on our balance sheet. It's not -- so it's not something that rises the level from a materiality standpoint for our public company. But we still have a significant financial interest in it as a minority investor, so...

Is there a chance that you'd want to monetize this since it's not really in your normal business? I mean, it's obviously, not exactly on the radar.

Yes. Herb, again, it's not a Marcus corporation. It's not on our balance sheet so it's really not appropriate for me to talk about what the future plans might be for that project, so...

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

Well, thank you, everybody, for joining us today. We look forward to talking to you once again in late April, just a couple of months from now, when we release our fiscal 2018 first quarter results. Until then, thanks, and have a great day.

Ladies and gentlemen, thank you for your participation in today's conference. You may all disconnect. Have a great day.