Heard On... SeaWorld Entertainment's Q3 2018 Earnings Call

This past week SeaWorld Entertainment released their 3rd quarter, 2018 earnings and it looks like the turnaround of the company continued through the summer season.  The park put out a press release covering the news, but also held their usual investor conference call with some additional information.  Here are some notes on both:

•  During the third quarter of 2018 the company had 8.3 million visitors, up from 7.6 million in the period the year before.  Total revenues were $483 million, up 10% from last year.  Perhaps most importantly, EBITDA was up 22% for the quarter to $212 million.

•  This quarter helps cement a solid year so far.  Looking at the first 9 months of the year, attendance stands at 17.98 million, up 8.7% from last year, revenues are up 9.5% to 1.09 billion, and EBITDA is up 35% to $337 million.

•  SeaWorld believes the improved results are from a combination of "new strategic pricing initiatives, new marketing and communication initiatives and the positive reception of our new rides, attractions and events."  The EBITDA margin grew even further through continued cost reductions and more efficient operations.

© SeaWorld Parks & Entertainment

•  Special events appear to be aiding in the company turning the corner.  This summer saw Electric Ocean at SeaWorld Parks and Summer Nights at Busch Gardens parks.  Bier Fest debuted in Texas and Tampa Bay and returned again to Virginia.  The free beer promotion was also a home run at the Florida parks and is returning in 2019.

•  Season pass sales have remained strong.  The company debuted new pass structures for 2019 just a few weeks ago with the aim of giving "more value, flexibility and the most comprehensive benefits package they've ever offered."  Through 2018 revenue from season pass sales has increased at least 10%, with deferred revenue currently up 15%.

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•  Specifically regarding Infinity Falls at SeaWorld Orlando, while very late the company has seen "outstanding" guest ratings of the ride.  The lateness really seemed to make them take a look at their attraction development, to make sure that new attractions open on time in the future.

•  In-park revenue per cap also continues to grow as the parks hold special festivals that have resulted in higher product demand of both retail and culinary items.

•  When pressed about the search for a new CEO, the company didn't give much of an answer other than saying the Board is still searching.

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 •  The company sees their 2019 new attraction line-up as their biggest ever, with some new at nearly every park.  These include the Tigris roller coaster at Busch Gardens Tampa, Sesame Street at SeaWorld Orlando, Tidal Twister at SeaWorld San Diego, the new Turtle Reef area with two rides at SeaWorld San Antonio, a new thrill slide at Aquatica San Antonio, Finnegan's Flyer thrill ride at Busch Gardens Williamsburg and the Cutback Water Coaster at Water Country USA.

•  With increased results comes more cash on the books and SeaWorld was asked if they plan to start paying a dividend again, or complete stock repurchases.  The company said they're working on what the best plan is but haven't committed to anything yet.

© SeaWorld Parks & Entertainment

•  SeaWorld is still planning on changing the presentation of the Orca show in Texas and Florida as they did in California.  However, they learned that they can't close the show in between and are still planning the change it next in Texas in a year or so.

•  The company has revamped their capital expenditure budgets to make sure that each park gets new attractions more often.  The company seeing lodging as a long-term priority, but for now it is not and has actually dropped their deal to build a hotel at SeaWorld San Diego.