SeaWorld Entertainment announces gains in revenue, income and per capita spending despite decrease in attendance compared to 2019

Posted Tuesday, November 9, 2021 1:12 PM | Contributed by Jeff

From the press release:

SeaWorld Entertainment, Inc. (NYSE: SEAS), a leading theme park and entertainment company, today reported its financial results for the third quarter and first nine months of fiscal year 2021.

Third Quarter 2021 Highlights

  • Attendance was 7.2 million guests, an increase of 5.7 million guests from the third quarter of 2020. Compared to the third quarter of 2019, attendance declined by 0.9 million guests or 11.0%.
  • Total revenue was $521.2 million, an increase of $415.1 million from the third quarter of 2020. Compared to the third quarter of 2019, total revenue increased by $47.5 million or 10.0%.
  • Net income was $102.1 million, the second highest third quarter net income for the Company, an increase of $181.3 million from the third quarter of 2020. Compared to the third quarter of 2019, net income increased by $4.1 million or 4.2%.
  • Adjusted EBITDA was a record $265.3 million an increase of $276.5 million from the third quarter of 2020. Compared to the third quarter of 2019, Adjusted EBITDA increased by $58.4 million or 28.2%.
  • Total revenue per capita increased 6.2% to $72.13 from the third quarter of 2020. Admission per capita increased 1.7% to $41.06 while in-park per capita spending increased 12.8% to $31.07 from the third quarter of 2020. Compared to the third quarter of 2019, total revenue per capita increased 23.7%, admission per capita increased 24.4%, and in-park per capita spending increased 22.8%.

First Nine Months 2021 Highlights

  • Attendance was 15.2 million guests, an increase of 11.1 million guests from the first nine months of 2020. Compared to the first nine months of 2019, attendance declined by 2.7 million guests or 14.9%.
  • Total revenue was $1,132.9 million, an increase of $855.2 million from the first nine months of 2020. Compared to the first nine months of 2019, total revenue increased by $32.7 million or 3.0%.
  • Net income was a record $185.0 million, an increase of $451.8 million from the first nine months of 2020. Compared to the first nine months of 2019, net income increased by $71.3 million or 62.7%.
  • Adjusted EBITDA was a record $509.3 million, an increase of $605.2 million from the first nine months of 2020. Compared to the first nine months of 2019, Adjusted EBITDA increased by $136.3 million or 36.5%.
  • Total revenue per capita increased 11.1% to $74.29 from the first nine months of 2020. Admission per capita increased 6.0% to $41.69 while in-park per capita spending increased 18.5% to $32.61 from the first nine months of 2020. Compared to the first nine months of 2019, total revenue per capita increased 21.0%, admission per capita increased 19.6%, and in-park per capita spending increased 23.0%.

Other Highlights

  • As of September 30, 2021, the Company's total available liquidity was $918.1 million, including $553.6 million of cash and cash equivalents on its balance sheet and $364.5 million available on its revolving credit facility.
  • Cash flow from operations was $168.4 million and $416.4 million for the three and nine months ended September 30, 2021, respectively. Free Cash Flow[2] was $139.7 million and $342.8 million for the three and nine months ended September 30, 2021, respectively.
  • On July 14, 2021, the Company completed a partial redemption of $50.0 million of its Second-Priority Senior Secured Notes due 2025. On August 25, 2021, the Company completed a refinancing of its debt by issuing $725.0 million aggregate principal amount of 5.250% senior notes due 2029 and $1.2 billion in term loans and, using the proceeds of these issuances, along with cash on its balance sheet, redeemed $450.0 million aggregate principal amount of its then outstanding 9.500% Second-Priority Senior Secured Notes due 2025 and the Company's then existing term loan facility. In connection with the refinancing, the Company also refinanced and increased its revolving credit facility to $385.0 million.
  • The Company's current deferred revenue balance as of September 30, 2021, was $173.4 million, an increase of approximately 51.4% when compared to September 30, 2019.
  • The Company repurchased approximately 1.53 million shares of common stock at a total cost of approximately $82.7 million during the third quarter of 2021.
  • In the third quarter of 2021, the Company helped rescue almost 400 animals bringing total rescues over its history to over 39,500.

"I am pleased to report another quarter of strong financial results while continuing to operate in a highly challenging and COVID-19 impacted environment," said Marc Swanson, Chief Executive Officer of SeaWorld Entertainment, Inc. "In the third quarter, we generated among our highest revenue and net income ever reported and another quarter of record Adjusted EBITDA. Our pricing and product strategies, along with the strong consumer demand environment, continued to drive higher realized pricing and strong guest spending in the quarter. Our third quarter financial performance would have been even better if not for limited international guest and group-related attendance, an unfavorable calendar shift and a record number of weather impacted days for our parks during the third quarter. Our record-breaking financial performance through the first nine months of the year is a testament to the resiliency of our business and the relentless efforts and dedication of our ambassadors. While we have made good progress, we continue to believe there are significant additional opportunities to improve our execution and continue to drive meaningful growth in both revenue and Adjusted EBITDA."

"During the quarter, we took advantage of our improved financial performance and favorable market conditions to refinance our debt which allowed us to reduce our overall debt, meaningfully reduce our go forward interest expense, push out maturities and increase our access to liquidity from revolving commitments. We also resumed our share repurchase activities and opportunistically repurchased 1.53 million shares during the quarter."

"Last week we concluded another successful Halloween season at our parks featuring our award-winning Halloween events, which contributed to meaningfully positive attendance and revenue growth in October compared to October 2019. Later this week we will begin our popular Christmas events at our SeaWorld, Busch Gardens and Sesame parks. Our Christmas events feature exciting entertainment, unique food and beverage offerings and seasonal merchandise for guests young, old and everyone in between. Looking ahead to 2022, we have announced what we believe is our most significant and exciting line-up of new rides, attractions, events and upgrades, including, something new and meaningful in every one of our parks. This includes the Ice Breaker rollercoaster at SeaWorld Orlando, the Iron Gwazi rollercoaster at Busch Gardens Tampa Bay, the Pantheon rollercoaster at Busch Gardens Williamsburg, the Emperor rollercoaster at SeaWorld San Diego, the Big Bird's Tour Bus ride at Sesame Place Philadelphia, the Tidal Surge screaming swing at SeaWorld San Antonio, the Reef Plunge waterslide at Aquatica Orlando, the Rapids Racer and Wahoo Remix waterslides at Adventure Island Tampa, the Aquazoid Amped waterslide at Water Country USA, and the Riptide Race waterslide at Aquatica Texas. In addition, we are particularly excited to open our newest park – Sesame Place San Diego in March 2022. We look forward to bringing the education, fun and enchantment of Sesame Street to our guests in Southern California," concluded Swanson.

The Company's third quarter 2021 financial results continued to be impacted by the COVID-19 pandemic. While all 12 parks were open and operating without COVID-19 related-capacity limitations in the third quarter (compared to 10 of its 12 parks open at the end of the third quarter of 2020, all operating with capacity limitations), international travel restrictions for guests outside of the United States and limited group-related attendance adversely affected attendance and revenue for the quarter.

Given the disruption the Company experienced last year when it temporarily closed all its parks on March 16, 2020, the Company has provided a comparison of its financial results for the three and nine months ended September 30, 2021 to the three and nine months ended September 30, 2019.

Third Quarter 2021 Results Versus Third Quarter 2019 Results

In the third quarter of 2021, the Company hosted approximately 7.2 million guests, generated total revenues of $521.2 million, net income of $102.1 million and Adjusted EBITDA of $265.3 million. Attendance declined 0.9 million guests when compared to the third quarter of 2019 primarily due to reduced international visitation and group-related attendance. Attendance was also impacted by an unfavorable calendar shift and weather during the quarter. The increase in total revenue of $47.5 million compared to the third quarter of 2019 was primarily a result of increases in admission per capita (defined as admissions revenue divided by total attendance) and in-park per capita spending (defined as food, merchandise and other revenue divided by total attendance) partially offset by the decline in attendance. Admission per capita increased primarily due to the realization of higher prices in the Company's admission products resulting from its strategic pricing efforts, along with the net impact of the admissions product mix when compared to the third quarter of 2019. In-park per capita spending improved primarily due to increased guest spending, an improved product mix, higher realized prices and fees, new or enhanced and expanded in-park offerings and a strong consumer demand environment during the quarter compared to 2019.

Net income and Adjusted EBITDA were positively impacted by an increase in total revenue and a decrease in selling, general and administrative expenses partially offset by an increase in operating expenses (including certain non-recurring operating expenses). The decrease in selling, general and administrative expenses primarily relate to a targeted reduction in marketing related costs and the impact of cost savings and efficiency initiatives partially offset by an increase in non-cash equity compensation. Operating expenses for the third quarter of 2021 includes approximately $9.2 million of nonrecurring contractual liabilities and legal costs resulting from the temporary COVID-19 park closures. Operating expenses also increased due to incremental operating days and events, an increase in non-cash equity compensation expense and the timing of certain maintenance projects, partially offset by a net reduction in labor-related costs and other operating costs primarily resulting from structural cost savings initiatives.

First Nine Months 2021 Results Versus First Nine Months 2019

In the first nine months of 2021, the Company hosted approximately 15.2 million guests and generated total revenues of $1,132.9 million, record net income of $185.0 million and record Adjusted EBITDA of $509.3 million. Attendance declined 2.7 million guests when compared to the first nine months of 2019 primarily due to COVID-19 related impacts including capacity limitations and/or modified/limited operations at the Company's parks for most of the first nine months of 2021. The increase in total revenue of $32.7 million compared to the first nine months of 2019 was primarily a result of increases in admission per capita and in-park per capita spending partially offset by the decline in attendance. Admission per capita increased primarily due to the realization of higher prices in the Company's admission products resulting from its strategic pricing efforts, along with the net impact of the admissions product mix when compared to the first nine months of 2019. In-park per capita spending improved primarily due to increased guest spending, an improved product mix, higher realized prices and fees, new, enhanced or expanded in-park offerings and a strong consumer demand environment when compared to the first nine months of 2019.

Net income and Adjusted EBITDA were positively impacted by an increase in total revenue along with a decrease in operating expenses and selling, general and administrative expenses. The decrease in operating expenses is primarily due to a net reduction in labor-related costs and other operating costs primarily resulting from structural cost savings initiatives and the impact of modified/limited operations due to COVID-19, partially offset by certain nonrecurring contractual liabilities and legal costs impacted by the temporary COVID-19 park closures, operating costs associated with incremental operating days and events added in 2021 and an increase in non-cash equity compensation expense. The decrease in selling, general and administrative expenses is primarily due to a targeted reduction in marketing related costs and the impact of cost savings and efficiency initiatives, partially offset by an increase in non-cash equity compensation expense.

Share Repurchases

During the third quarter of 2021, the Company repurchased approximately 1.53 million shares of common stock at a total cost of approximately $82.7 million. As of September 30, 2021, the Company had approximately $154.9 million available for future repurchases under a previously authorized repurchase program.

Other

On July 14, 2021, the Company completed a partial redemption of $50.0 million of its Second-Priority Senior Secured Notes due 2025. On August 25, 2021, the Company completed a refinancing of its debt by issuing $725.0 million aggregate principal amount of 5.250% senior notes due 2029 and $1.2 billion in term loans and, using the proceeds of these issuances, along with cash on its balance sheet, redeemed $450.0 million aggregate principal amount of its then outstanding 9.500% Second-Priority Senior Secured Notes due 2025 and the Company's then existing term loan facility. In connection with the refinancing, the Company also refinanced and increased its revolving credit facility to $385.0 million.

As of September 30, 2021, the Company's total liquidity including available capacity under the Company's revolving credit facility was $918.1 million.

The Company generated record cash flow from operations of $416.4 million in the nine months ended September 30, 2021 compared to $313.7 million in the same period of 2019, an increase of $102.8 million. The Company generated record Free Cash Flow of $342.8 million in the nine months ended September 30, 2021 compared to $160.8 million in the same period of 2019, an increase of $182.0 million.

As of September 30, 2021, the Company's current deferred revenue balance was $173.4 million, an increase of approximately 51.4% when compared to September 30, 2019.

Read the entire press release on PR Newswire.

Tuesday, November 9, 2021 1:19 PM
Jeff's avatar

I find this nugget to be gold:

Total revenue per capita increased 6.2% to $72.13 from the third quarter of 2020. Admission per capita increased 1.7% to $41.06 while in-park per capita spending increased 12.8% to $31.07 from the third quarter of 2020. Compared to the third quarter of 2019, total revenue per capita increased 23.7%, admission per capita increased 24.4%, and in-park per capita spending increased 22.8%.

I don't recall them calling out average admission before, but if it includes the water parks, that's pretty outstanding. That the gate is up 24.4% compares to 2019 validates what I've been saying with regard to Six Flags and Cedar Fair, that the pent up demand meant the average gate should go up, significantly.

Last edited by Jeff, Tuesday, November 9, 2021 1:19 PM

Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

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Tuesday, November 9, 2021 6:05 PM

I don't have the benefit of an accounting department looking over my shoulder or outside auditors ticking and tying for me. But when I look at the Cedar Fair 10-Qs for 3rd quarter 2021, 2020 and 2019, that paragraph would be written:

Total revenue per capita increased 4.5% to $69.96 from the third quarter of 2020. Admission per capita increased 38.6% to $35.45 while in-park per capita spending increased 35.9% to $62.26 from the third quarter 2020. Compared to 2019, total revenue per capita increased 30.8%, admission per capital increased 20.1% and in-park per capita spending increased 27.8%.

SeaWorld doesn't appear to include admissions in in-park revenues (Admissions per cap are more than in-park per cap spend). If you back out the admissions per cap from the CF in-park per cap, you get $28.80 for third quarter 2021 which is 37.7% higher than 2019 and 32.7% higher than 2020.

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Wednesday, November 10, 2021 11:40 AM

Jeff said:

I find this nugget to be gold:

Total revenue per capita increased 6.2% to $72.13 from the third quarter of 2020. Admission per capita increased 1.7% to $41.06 while in-park per capita spending increased 12.8% to $31.07 from the third quarter of 2020. Compared to the third quarter of 2019, total revenue per capita increased 23.7%, admission per capita increased 24.4%, and in-park per capita spending increased 22.8%.

I don't recall them calling out average admission before, but if it includes the water parks, that's pretty outstanding. That the gate is up 24.4% compares to 2019 validates what I've been saying with regard to Six Flags and Cedar Fair, that the pent up demand meant the average gate should go up, significantly.

Cedar Fair's admission per capita in Q3 is up "double digits" compared to Q3 of 2019. The Q3 earnings release says it right in the 3rd bullet.

Plus the calculation above.

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Saturday, November 13, 2021 8:39 AM

We'll never know, but I'd love to know the admissions per cap at Cedar Point specifically over the last couple of years. The attendance numbers broken out by park would be amazing too because Cedar Point was PACKED this year. Yes their season was a bit shorter with the days closed in May/June so the end number might be flat or even down, but on an average daily basis, there's no way in hell their attendance was 82% of 2019. It's hard to draw conclusions about CP from company wide results. I'm also having trouble seeing CP's admissions per cap up double digits in 2021 over 2019. Most of the chain continued with the same strategy that they had been using and there was only a significant strategy change at CP with the cheap Gold Pass. Others have stated they realize revenue based on 5 visits on a pass. If the average gold pass is used 5 times, that's $20 admission per cap - a far cry from what they're reporting. A platinum pass used 5 times is $40 in admission per cap. That's pretty cheap for what the place offers.

Another thing to remember about the supposedly amazing admissions per cap numbers these companies are reporting is that there was literally no group sales business in 2021. Group sales are probably a drag on admissions per caps, but they're recouped with catered meals, drink add ons, etc and they do boost attendance as they capture people that might not be fans/passholders and get them to the park. So maybe these high admissions per cap numbers parks are reporting are more a result of the group sales channel being decimated for 2021. At least in the case of Cedar Fair, there didn't seem to be any significant price increases or cuts in discounting (pretty sure a daily admission at CP online is only $45) that would explain it.

Last edited by MDOmnis, Saturday, November 13, 2021 8:42 AM

-Matt

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Saturday, November 13, 2021 10:29 AM

Busch Gardens Tampa essentially is priced as an Orlando park. I'd argue Cedar Point, Kings Island, Carowinds and Knotts all offer an equal (or better) experience if you take the animals out of the equation. There is no reason the top tier Cedar Fair parks shouldn't be priced closer to Orlando pricing rather than pricing on the level of a mediocre Six Flags or other average at best park.

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Monday, November 15, 2021 4:17 AM
99er's avatar

I think those parks are legit afraid that they won't attract anyone in their key markets if they truly were to charge what they should be.


-Chris

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Monday, November 15, 2021 8:20 AM

It seems to me Cedar Fair could conduct some experiments to see what pricing changes would do. Kings Dominion and Carowinds are reasonably similar parks in somewhat similar geographies - they could try raising prices or eliminating discounts at one and then compare the results. Or likewise with Valleyfair and Worlds of Fun, say. And then apply the results more generally. The season passes would complicate that a bit, I suppose, unless they came up with a way to partition off certain parks.

In the end, I too am surprised they don't price admission more differently based on size and geography. The biggest difference I can see is that Knotts and Cedar Point have separate waterpark gates - which is not a small difference, but may not matter to large portions of their customers.

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Monday, November 15, 2021 8:35 AM
kpjb's avatar

BrettV said:

Busch Gardens Tampa essentially is priced as an Orlando park. I'd argue Cedar Point, Kings Island, Carowinds and Knotts all offer an equal (or better) experience if you take the animals out of the equation.

That's a pretty big qualification, though. I mean, the Pittsburgh Zoo is better than Kings Island if you take out all of the rides.


Hi

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Monday, November 15, 2021 12:11 PM

99er said:

I think those parks are legit afraid that they won't attract anyone in their key markets if they truly were to charge what they should be.

There is a price point in which that would happen but their underpriced gate is nowhere near that point right now.

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Monday, November 15, 2021 12:49 PM

How do you know that? And how do you define "nowhere near that point?" They could double gate price and still not be there? Increase by 50%? 25% Something else?

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Monday, November 15, 2021 1:00 PM

I see - I was looking at it from the season pass perspective and not the individual ticket perspective.

I can't comment on the sensitivity of the ticket pricing.

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Monday, November 15, 2021 2:04 PM

Ok. Same questions as to season passes. And are we talking chain wide passes or park specific?

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Monday, November 15, 2021 3:09 PM

Individual parks. I thought that was what BrettV was going for.

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Monday, November 15, 2021 6:29 PM
Jeff's avatar

The size of the addressable market, and its willingness to visit a regional park, is not very dynamic. I've learned that first hand and by watching Cedar Point (and I believe that John H. mentioned it in his book). With that in mind, you don't have a lot of levers to grow revenue, but I'm confident that moving average gate down is not going to get you what you want. They're getting closer to trying to apply a dotcom freemium model to theme parks.


Jeff - Editor - CoasterBuzz.com - My Blog - Silly Nonsense

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Tuesday, November 16, 2021 9:00 AM

“I’m confident moving average gate down is not going to get you what you want”

Admissions per cap is up double digits over 2019 at Cedar Fair.

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Tuesday, November 16, 2021 10:06 AM
Fun's avatar

Yeah, I don't get that either. Everyone keeps talking about a gold pass promotional offer from one park as evidence that CF is lowering gate pricing on the whole when the earnings releases don't support that.

Last edited by Fun, Tuesday, November 16, 2021 10:07 AM
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Tuesday, November 16, 2021 10:23 AM

Chicago07 said:

Admissions per cap is up double digits over 2019 at Cedar Fair.

I don't think we know that. Cedar Fair, if I understand their earnings announcement, reports the per cap gate + concessions, etc., as a single number. So the total may be up, because more people are buying soda pop and Fast Lane passes (which: is that properly admissions or not?) but the average admission price may be down.*

And there's this:

[N]et revenues for the third quarter totaled $753 million, representing an increase of $39 million compared with the third quarter in 2019. ... Operating costs and expenses in the current quarter increased to $424 million, up $55 million from the third quarter of 2019. ... Of the $46 million increase in operating expenses, roughly half was attributable to higher seasonal labor costs resulting from rising wage rates offset in part by a reduction in seasonal labor hours ....

So they increased revenues by $39MM, but gave more than half of that back in increased operating costs, even though people were working fewer hours. And that combination of things arguably resulted in a worse experience for customers, which arguably leads to fewer customers / more discounting / etc. down the line.

There's two "arguably"s there, I'm not saying I know everything by any means, but it's definitely the opposite direction that Disney is going. Maybe that's the right approach; they're different products. But again, what I don't understand is why CF doesn't seem to recognize they have different products within their own chain.

*I think there was an attempt to reverse engineer the average gate price on one of these threads, which all seem to resolve to Cedar Fair for some reason (including this one, including this comment; guilty as charged). But I can't find it.

Last edited by hambone, Tuesday, November 16, 2021 10:24 AM
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Tuesday, November 16, 2021 10:31 AM

Cedar Fair breaks down net revenues by (1) Admissions, (2) Food, merchandise and games and (3) Accommodations, extra-charge products and other in their financial statements filed with their 10-Q. The also separately break out In-park revenues and Out-of-park revenues.

Six Flags appears to exclude admissions from its in-park revenues. Noted that in second post in this thread (in which I also posted the per cap changes compared to 2020 and 2019 for Cedar Fair).

Last edited by GoBucks89, Tuesday, November 16, 2021 10:46 AM
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Tuesday, November 16, 2021 11:05 AM

It does seem odd that per-capita admission for 2021 is so much higher than 2019, despite the gold pass thing. I wonder if we are vastly over-estimating the median/average number of admissions for the CF gold pass cohort.


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