Tuesday, April 21, 2020

SeaWorld Entertainment Business Update Regarding Covid-19 Closures

© SeaWorld Entertainment
Today we got another business update from one of the industry players, this time from SeaWorld Entertainment.  While their parks are closed the company, like the others we've seen so far, is working to keep enough cash on hand to operate until the parks and reopen.

SeaWorld Entertainment has decided to offer private notes (private loans - Six Flags and Cedar Fair also did this in the past week) to the tune of just under $230 million, and also received relief on their loan covenants for the rest of the year.  Both give them addition freedom as they operate.

Between these measures, cash on hand and their revolver, the company says they can stay afloat until at least till the 4th quarter of 2021.  They're utilizing, on average, about $25 million a month.

Also of note, the company reported preliminary results prior to the parks closing for the first two months of 2020.  They were doing well, with record attendance and revenue through the end of February.  They had 1.9 million guests, up 9% over 2019.  Revenues were a record of $121 million, an increase of $13 million over 2019.

© SeaWorld Entertainment
They have also detailed some specific actions taken at this time to survive the parks being closed.  Most are similar to those we've seen Six Flags and Cedar Fair announce.  These include furloughing 95% of staff, reducing executive salaries by 20%, and cutting expenses such as marketing and other non-essential spending.

The company is going even harder at managing cash spend, which isn't a surprise given their tendency to please shareholders at all costs.  They also list that they are looking to take advantage of the Main Street Lending Program through the government, and also have a daily approval process for all payments being made.

As for capital expenditures, which we saw reduced at Six Flags and even more heavily so at Cedar Fair, SeaWorld is only noting that they "substantially reduced or deferred all capital expenditures starting in March 2020 (other than minimal essential capital expenditures)."

That's more vague than the other operators so it's hard to know exactly what they're holding back on.  Their 2020 attractions appeared pretty much done, I mean their new wooden coaster in Texas was already open, so those seem safe.   We'll have to wait and see if this changes plans for 2021 like we're expecting to see at the other operators parks.