SeaWorld Highlights and Updates So Far in 2020

SeaWorld Entertainment had interesting highlights and updates in its financial results for the third quarter and its report on the first nine months of fiscal year 2020.

“I continue to be extremely proud of our team’s resilience and performance during these extraordinary times,” said Marc Swanson, Interim Chief Executive Officer of SeaWorld Entertainment, Inc.  “The actions we have taken over the past eight months related to costs, cash flow, balance sheet and liquidity, re-opening protocols and operations have put us in a strong position to successfully navigate the current operating environment and emerge an even stronger business when conditions normalize.”




Third Quarter 2020 Highlights

  • Attendance was 1.6 million guests, a decline of 6.6 million guests from the third quarter of 2019.
  • Total revenue was $106.1 million, a decline of $367.5 million from the third quarter of 2019.
  • Net loss was $79.2 million, a decline of $177.3 million from the third quarter of 2019.
  • Adjusted EBITDA[1] was a loss of $11.2 million, a decline of $218.1 million from the third quarter of 2019.
  • Admission per capita increased 22.4% to $40.39 while in-park per capita spending increased 8.9% to $27.55.

First Nine Months 2020 Highlights

  • Attendance was 4.2 million guests, a decline of 13.8 million guests from the first nine months of 2019.
  • Total revenue was $277.7 million, a decline of $822.5 million from the first nine months of 2019.
  • Net loss was $266.8 million, a decline of $380.4 million from the first nine months of 2019.
  • Adjusted EBITDA was a loss of $95.9 million, a decline of $468.9 million from the first nine months of 2019.
  • Admission per capita increased 12.9% to $39.34 while in-park per capita spending increased 3.8% to $27.53.

Other Highlights

  • On July 29, 2020, the Company amended its credit agreement to, among other things, further revise its financial covenant to suspend testing of the financial covenant through 2021 and modify testing of the financial covenant in 2022.
  • On August 5, 2020, the Company closed on a $500 million private offering of 9.50% second-priority senior secured notes due 2025.
  • As of September 30, 2020, the Company had approximately $488 million of cash and cash equivalents on its balance sheet and approximately $311 million available on its revolving credit facility resulting in total liquidity of approximately $800 million.
  • The Company estimates that the average monthly Net Cash Burn[1] during the quarter ended September 30, 2020 was approximately $22 million per month which includes the payment of certain previously deferred payments to vendors. Excluding these deferred payments, the Company estimates that the average monthly Adjusted Net Cash Burn[1] during the quarter ended September 30, 2020, was approximately $2 million per month.
  • As of the end of September, ten of the Company’s twelve parks (including all five of its parks in Florida, its two parks in Texas, its park in Pennsylvania, one of its two parks in Virginia and one of its two parks in California) were operating with capacity limitations, modified/limited operations, reduced hours of operation and / or limited operating days.
  • In the third quarter of 2020, the Company helped rescue over 380 animals bringing total rescues over its history to nearly 37,600.

“I am also pleased with our strong admissions and in park per capita performance during the quarter, despite COVID-19 operational impacts and a higher mix of season pass visitors in the quarter when compared to prior year,” Swanson said. “Our pricing and product strategies are working and our guests appear willing to spend when they visit our parks.”

In addition to re-opening three parks during the third quarter and resuming special events, SeaWorld maintained its focus on reducing costs and managing cash flows while also strengthening its balance sheet and liquidity position.  During the quarter, SeaWorld further extended its covenants and raised additional capital through a $500 million notes offering, which leaves the company with approximately $800 million of total liquidity as of September 30, 2020.

“We continue to have high confidence in our long-term strategy and in our ability to deliver significantly improved operating and financial results that we believe will lead to meaningfully increased value for all stakeholders,” concluded Swanson.

More from the report:

The Company’s third quarter financial results were significantly impacted by the global COVID-19 pandemic.  As previously announced, from March 16, 2020 to June 5, 2020, all of the Company’s parks were closed. In June, the Company began the process of re-opening some of its parks beginning in Texas (June 6), Florida (June 11), Pennsylvania (July 24), Virginia (August 5) and California (August 28).  By the end of the third quarter, ten of its 12 parks were operating with capacity limitations, modified/limited operations, reduced operating days and/or reduced operating hours.  The Company’s SeaWorld park in California re-opened on a limited basis, following California guidance for reopening zoos.  Additionally, during the third quarter, the state of Virginia had a state mandated capacity restriction of 1,000 guests at a time which significantly restricted attendance for the Company’s Busch Gardens park in that state.  On October 29, 2020, the state of Virginia revised its theme park guidance and modified the methodology for calculating restricted capacity at theme parks.  The Company estimates that this change will allow it to increase the capacity at this park from 1,000 guests to approximately 4,000 guests at a time.    Due to the park closures, the Company’s third quarter of 2020 had a total of ten parks open with limited capacity and reduced operating hours for 562 operating days compared to a total of twelve parks open with 957 operating days in the third quarter of 2019, representing a 41% reduction in operating days.

Attendance in the third quarter was impacted by fewer operating days and hours versus the prior year, capacity limitations, temporary park closures, limited marketing spend and a more limited events line-up.  Despite these limitations, attendance on a consolidated basis improved throughout the quarter with total consolidated monthly attendance down 89% in July, down 80% in August and down 61% in September versus the comparable prior year month.  Excluding the Company’s Virginia and California parks which were only partially open and operating with significantly modified and limited operations due to state imposed restrictions, monthly attendance was down 81% in July[2], down 68% in August and down 48% in September. Monthly attendance trends continued to improve into the fourth quarter with October attendance down 50% on a total consolidated basis and down 40% excluding Virginia and California, relative to prior year.  Further, multiple parks hit capacity limitations on several days throughout the quarter and into October – meaning demand for these parks exceeded the Company’s available capacity on these days and if the park was not capacity constrained on these days, its performance versus the prior year would have been better than what was realized.

Third Quarter 2020 Results

In the third quarter of 2020, the Company hosted approximately 1.6 million guests, generated total revenues of $106.1 million, net loss of $79.2 million and an Adjusted EBITDA loss of $11.2 million.  Net loss includes approximately $2.0 million of pre-tax expenses directly associated with incremental costs incurred due to the global COVID-19 pandemic and $2.6 million of pre-tax expenses associated with severance and other separation-related costs.  Net income in 2019 includes approximately $1.2 million of pre-tax expenses associated with severance and other separation-related costs.

The decrease in attendance in the third quarter was due to the COVID-19 related impacts discussed above.  The decline in total revenue was primarily a result of a decrease in attendance partially offset by an increase in admission per capita (defined as admissions revenue divided by total attendance) and improved in-park per capita spending (defined as food, merchandise and other revenue divided by total attendance). Admission per capita increased primarily due to the realization of higher prices across admission products and the impact of out of commitment pass revenue partially offset by the impact of higher season pass attendance mix when compared to the prior year period.  In-park per capita spending improved primarily due to higher realized prices and mix of certain in-park offerings particularly for merchandise, culinary and other in-park services, partially offset by the impact of visitation mix and limited in-park offerings during the quarter.  Adjusted EBITDA was negatively impacted by a decrease in total revenue partially offset by a decrease in operating expenses and selling, general and administrative expenses and the realization of cost savings initiatives. The decrease in operating expenses largely results from a reduction in labor-related costs due to limited operating days and hours, furloughs and workforce reductions, a decrease in other operating costs resulting from limited operating schedules, the use of more efficient staffing models and other cost savings and efficiency initiatives.  Selling, general and administrative expenses decreased primarily due to a reduction in marketing related costs, a decline in third-party consulting costs, a decline in labor-related costs and other cost savings and efficiency initiatives.

First Nine Months 2020 Results

In the first nine months of 2020, the Company hosted approximately 4.2 million guests and generated total revenues of $277.7 million, net loss of $266.8 million and an Adjusted EBITDA loss of $95.9 million. Net loss in the first nine months of 2020 includes approximately $12.5 million of insurance proceeds related to a legal settlement gain as previously disclosed, $6.0 million of pre-tax expenses directly associated with incremental costs incurred related to park re-opening costs due to the global COVID-19 pandemic and $2.7 million of pre-tax expenses associated with severance and other separation-related costs.  Net income in the first nine months of 2019 includes approximately $4.3 million of pre-tax expenses associated with an equity transaction and $3.8 million of pre-tax expenses associated with severance and other separation-related costs.

The decrease in attendance was largely due to the temporary park closures, beginning on March 16, resulting from the global COVID-19 pandemic.  Attendance declined due to other COVID-19 related impacts including temporary park closures, fewer operating days and hours versus the prior period, capacity limitations, modified/limited operations, limited marketing spend and a limited events line-up.  The decline in total revenue was primarily a result of the decrease in attendance partially offset by an increase in admission per capita and in-park per capita spending.  Admission per capita increased primarily due to the realization of higher prices across admission products and the impact of out of commitment pass revenue, partially offset by the impact of attendance mix related to higher pass attendance when compared to the prior year period.  In-park per capita spending improved primarily due to higher realized prices and fees and the mix of certain in-park offerings, partially offset by the impact of visitation mix when compared to the prior year period.  Adjusted EBITDA was negatively impacted by a decrease in total revenue partially offset by a decrease in operating expenses and selling, general and administrative expenses. The decrease in operating expenses largely results from a reduction in labor-related costs due primarily to the COVID-19 temporary park closures and limited reopenings, a reduction in other operating costs resulting from limited operating schedules and cost savings initiatives, a reduction in non-cash equity compensation expense and the impact of other cost savings and efficiency initiatives. Selling, general and administrative expenses primarily decreased due to a reduction in marketing related costs, a decrease in legal costs, a decline in third-party consulting costs, a decrease in non-cash equity compensation expense and the impact of cost savings and efficiency initiatives.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.