SeaWorld Entertainment expects revenue for second quarter to be just $18 million, down from $406 million last year

Posted | Contributed by Jeff

From the press release (edited):

SeaWorld Entertainment, Inc. (NYSE: SEAS), (the "Company"), a leading theme park and entertainment company, today announced its preliminary second quarter financial results and provided certain updates regarding Company operations.

Phased Park Reopenings

In response to the global COVID-19 pandemic, and in compliance with government restrictions, the Company temporarily closed all of its theme parks, effective March 16, 2020. Beginning in June 2020, the Company began the phased reopening of some of its parks with reduced operating days and capacity limitations. In particular, on June 6, the Company's Aquatica park in Texas reopened; on June 11, all five of the Company's Florida parks reopened; on June 19, its SeaWorld park in Texas reopened and on July 24, its Sesame Place park in Pennsylvania reopened. The Company expects its Busch Gardens theme park in Virginia to commence a phased reopening in early August 2020 and continues to monitor guidance from federal, state and local authorities to determine when it can reopen in California.

In connection with the park reopenings, the Company has implemented enhanced health and safety protocols including increased cleaning and sanitizing, capacity limitations, physical distancing practices, face covering requirements and temperature screenings for both employees and guests. In addition, the Company has introduced an online reservation system to help manage capacity and is managing the number of operating days by park to optimize cash flow.

Attendance since the parks reopened in June has been impacted by self-imposed capacity limitations, fewer operating days per week versus the prior year, limited marketing spend and a limited events line-up.

Despite the limitations outlined above, for the parks which have reopened, total attendance trends have improved since reopening. Total park attendance at reopened parks has increased 14% on a same park basis from the week ended June 28 (the first full week these parks were open) to the most recent week ended July 26.

Attendance versus the prior year period has ranged from approximately 10% to 15% on the low end and up to approximately 50% on the high end, depending on the park and day. The Company believes without self-imposed capacity limitations, attendance versus the prior year would likely have exceeded 50% in some parks on certain days.

The Company's Discovery Cove park, which accepts reservations up to 18 months in advance, is showing strong 2021 bookings and significantly outpacing prior year to date. In particular, 2021 forward bookings for Discovery Cove as of July 19, 2020 are 169% higher than 2020 bookings as of the same time one year ago.

The Company believes attendance levels will strengthen as it begins to re-introduce special events, interactive experiences and other in-park offerings which were temporarily suspended. Additionally, the Company has significantly curtailed marketing spend during the initial reopening phase and expects a measured ramp-up in marketing spend will also support further attendance growth.

Second Quarter 2020 Preliminary Results

The Company's financial statements for the three and six months ended June 30, 2020 are not yet complete. Accordingly, the Company is presenting the following preliminary estimates. Given the timing of these estimates, the Company has not completed its customary financial closing and review procedures, and as a result its estimates are subject to change.

  • Cash and cash equivalents balance of approximately $376 million as of June 30, 2020.
  • Attendance was 0.3 million guests, a decline of 6.2 million guests from the second quarter of 2019. The attendance decline in the quarter was largely due to the fact that all of the Company's parks were closed for the vast majority of the quarter.
  • Total revenue is expected to be approximately $18 million compared to $406 million in the second quarter of 2019. The decrease in total revenue is a result of the decline in attendance, due to all of its parks being closed for the vast majority of the quarter, slightly offset by increased in-park per capita spending (defined as food, merchandise and other revenue divided by total attendance) and improved admission per capita (defined as admissions revenue divided by total attendance).
  • Admission per capita is expected to increase by approximately 2% to $35.94 compared to $35.25 in the second quarter of 2019. Admission per capita increased primarily due to the realization of higher prices across admission products, partially offset by the net impact of attendance mix related to higher pass attendance when compared to the prior year period.
  • In-park per capita spending is expected to increase by approximately 10% to $30.33 compared to $27.57 in the second quarter of 2019 primarily due to increased sales of certain in-park products and higher realized prices and fees, partially offset by reduced in-park offerings during the quarter.
  • The Company's annual pass base for open parks, has increased 13% since the end of May (the month prior to the parks reopening) and, across all parks, has increased 8% over the same time period.
  • Net loss is expected to be approximately $105 million.
  • Adjusted EBITDA loss is expected to be approximately $54 million.

COVID-19 Response

Since the global COVID-19 pandemic has begun, the Company has taken proactive measures for the safety of its guests, employees and animals, to appropriately manage costs and expenditures, and to provide liquidity in response to the temporary park closures related to COVID-19. Some of these measures included, but are not limited to the following:

  • increased its revolving credit commitments on March 10th and subsequently borrowed the remaining available amount;
  • issued $227.5 million of first-priority senior secured notes to obtain additional liquidity;
  • amended its existing senior secured credit facilities to amend its financial covenants;
  • initially furloughed approximately 95% of its employees upon closing all of its parks;
  • obtained payroll tax credits and deferred social security payroll taxes under the CARES act;
  • reduced executive officers' base salary by 20% until the theme parks substantially resume normal operations;
  • eliminated and/or deferred all non-essential operating expenses at all of its parks and corporate headquarters while the parks were closed;
  • eliminated substantially all advertising and marketing spend while the parks were closed;
  • substantially reduced or deferred all capital expenditures starting in March 2020 (other than minimal essential capital expenditures);
  • postponed to 2021 the opening of rides that were still under construction and originally scheduled to open in 2020;
  • worked with its vendors and other business partners to manage, defer, and/or abate certain costs and payables during the disruptions caused by the COVID-19 pandemic; and
  • implemented a rigorous and strict formal review and approval process for payments and cash disbursements.

Liquidity Update

As of June 30, 2020, the Company's cash and cash equivalents balance was approximately $376 million, compared to a balance of approximately $400 million as of April 30, 2020, which calculates to an average monthly burn of approximately $12 million per month.

Adjusted for the notes offering announced by the Company on July 29, 2020 and related transactions, as of June 30, 2020, the Company would have had approximately $465 million of cash and cash equivalents on the balance sheet and $311 million available on its revolving credit facility resulting in total liquidity of $776 million.

Read the entire press release from SeaWorld Entertainment.

Not sure how much of this is just wanting to use it for marketing next year when things are, in theory, better. Or if it comes down to the fact that they need to finish paying for it ,

I know it has cycled with the RMC guys already on board and was extremely close to being ready to open before everything closed in March. Sad that it'll just sit there for an undetermined amount of time.

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