SeaWorld Entertainment, Inc. (NYSE: SEAS), a leading theme park and entertainment company, today reported its financial results for the fourth quarter and full year of 2017.
Highlights
Fiscal 2017 total revenues were $1.26 billion, compared to $1.34 billion in fiscal 2016. Net loss was $202.4 million, which included an after-tax, non-cash goodwill impairment charge of $215.1 million, as compared to a net loss of $12.5 million in fiscal 2016.
Fiscal 2017 Adjusted EBITDA[1] was $300.8 million, or $5.8 million higher than the top end of the Company’s most recent full year guidance range, compared to $332.0 million in fiscal 2016.
Fourth quarter total revenues were $265.5 million, compared to $267.6 million in the fourth quarter of 2016. Net loss was $20.4 million, as compared to a net loss of $11.9 million in the fourth quarter of 2016.
Fourth quarter 2017 trends showed improvement versus the first nine months of the year
Fourth quarter attendance was down 2.7% from the prior year fourth quarter compared to full year 2017 attendance which was down 5.5% from prior year.
Fourth quarter 2017 total revenue per capita was up 2.0% from the prior year fourth quarter compared to full year 2017 total revenue per capita which was down a modest 0.6% from prior year.
Fourth quarter 2017 Adjusted EBITDA was down $3.5 million compared to the fourth quarter of 2016. However, the fourth quarter 2017 Adjusted EBITDA calculation does not reflect approximately $3.8 million of adjustments due to certain limitations in the Company’s credit agreement[2].
In 2017, the Company helped rescue and rehabilitate over 2,100 animals and surpassed 31,000 total rescues over its history.
Year-to-date 2018 trends are positive when compared to the prior year period with increases in season pass sales and total attendance, led by significant increases in both metrics at SeaWorld San Diego.
Confident in 2018
On track to deliver $40 million of previously announced net cost savings by year-end 2018 and an additional $25 million of previously announced cost savings for 2018, a portion of which may be used to offset any potential cost pressures.
One of the best new product line-ups in the Company’s history with 15 new rides, attractions and events being introduced across the park portfolio.
Most comprehensive marketing and communications strategy bolstered by the largest investment in such efforts in the Company’s history.
“We are encouraged by the improvements we saw in the business in the fourth quarter,” said John Reilly, Interim Chief Executive Officer of SeaWorld Entertainment, Inc. “Our fourth quarter results were favorably impacted by the continued strong reception of our Halloween and Christmas events. We saw positive trends from our 300-mile and in guests from many of our parks and we saw an increase in overall admission per capita and in-park per capita spending. We did continue to see some weakness from our international and U.S. domestic guests which we plan to specifically address with our 2018 sales and marketing initiatives.”
“Looking ahead to 2018 we are excited to see positive trends,” continued Reilly. “Year-to-date attendance and season pass sales to date have increased year-over-year, led by our SeaWorld San Diego park which is rebounding from a difficult 2017. We have one of the most compelling line-ups of new rides, attractions or events across our parks that we have ever had. We are implementing new pricing and ticketing strategies combined with new sales and marketing initiatives that we believe will help drive attendance, revenue and Adjusted EBITDA across our parks. We also remain on track to deliver the previously announced $40 million in total net cost savings by the end of 2018 and the additional $25 million of previously announced cost savings. With our highly compelling product lineup, updated pricing strategies and aggressive marketing and advertising plans, we are confident that we are well-positioned to deliver strong financial performance in 2018.”
Management Transition Plan
With improving operating and financial performance trends along with substantial progress in enhancing the strategic positioning of the Company’s mission-driven brand, the Company’s Board of Directors and current President and Chief Executive Officer, Joel Manby, agreed that this is the right time to identify a new CEO as the Company enters its next phase of intensified focus on execution and growth.
Under the plan, current Chief Parks Operations Officer, John T. Reilly, has become interim CEO succeeding Mr. Manby, who has stepped down. Current Chairman of the Board Yoshikazu Maruyama – a 22-year veteran of the global theme park and entertainment industry – has become interim Executive Chairman until a permanent CEO is appointed by the Board, at which time Mr. Maruyama will resume his position as Chairman of the Board of Directors. These changes are effective immediately. Mr. Manby has agreed to assist the Company to ensure a smooth transition.
Donald C. Robinson, Lead Independent Director, said, “The Board agreed that this transition plan is the right approach to advance the Company’s progress and create value for all our important stakeholders. We know John will be an excellent leader in this new role and we thank Yoshi for taking on this additional interim responsibility to ensure a smooth transition. Finally, we want to express our deep appreciation to Joel for his leadership and contributions as CEO.”
“Over the past three years, Joel has worked tirelessly to strengthen SeaWorld’s position as a company that combines entertainment, education, and its important mission to protect marine life and the oceans. Our improving fourth quarter and positive year-to-date trends give us confidence that the steps we have taken position us well for 2018,” Mr. Maruyama said.
“John Reilly is a highly experienced operator with decades of theme park experience and a demonstrated ability to improve performance and drive growth through disciplined execution. In addition to serving as Chief Parks Operations Officer, John has served as Park President of SeaWorld San Diego and Busch Gardens Williamsburg, among other roles and has been with the Company for over 32 years. He knows SeaWorld well and understands our opportunities. With one of our most compelling lineups of new rides and attractions, new pricing plans, and comprehensive new sales, marketing and communications initiatives, we are confident we will maintain and accelerate our current momentum under John’s experienced direction. The Board and I believe my industry experience complements John’s, and so I will be available to him as a resource in this interim period,” Mr. Maruyama continued.
“I am so proud of this Company and all we have accomplished to position SeaWorld for continued success by providing fun and truly meaningful experiences that connect our guests to the natural world,” said Mr. Manby. “John is an ideal choice to lead the Company, and I feel confident that I leave SeaWorld in incredibly capable hands. I look forward to continuing to work with Yoshi, John, and the entire Board during the transition.”
The Board of Directors has engaged a leading executive search firm to assist in the search for Mr. Manby’s successor.
Additional Background on John Reilly
John T. Reilly was appointed as the Chief Parks Operations Officer of the Company in April 2016. His role has operational oversight over all of the Company’s theme parks. Prior to that, Mr. Reilly served as Park President of SeaWorld San Diego from 2010 until April 2016 and Park President of Busch Gardens Williamsburg from 2008 to 2010. Mr. Reilly has held other positions of increasing responsibility with the Company since 1985. Mr. Reilly serves on the board of trustees of the Hubbs-SeaWorld Research Institute and holds a Bachelor of Arts degree from The College of William & Mary.
Fourth Quarter and Year End Results
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[1] This earnings release includes several metrics, including Adjusted EBITDA and Free Cash Flow that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”). See “Statement Regarding Non-GAAP Financial Measures” section and the financial statement tables for the definitions of Adjusted EBITDA and Free Cash Flow and the reconciliation to their respective most comparable financial measures calculated in accordance with GAAP. |
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[2] Adjusted EBITDA is consistent with the Company’s Adjusted EBITDA as defined in the Company’s credit agreement. Due to limitations under the Company’s credit agreement, the amount which the Company is able to add back to Adjusted EBITDA for certain adjusting items is limited to $15.0 million in any fiscal year. Due to these credit agreement limitations, the Adjusted EBITDA calculation presented does not reflect $2.5 million of certain costs incurred in the fourth quarter of 2017. Additionally, under the terms of the Company’s credit agreement, the Company is permitted to add back certain expenses on an after-tax basis only, and accordingly, the Adjusted EBITDA calculation for the fourth quarter of 2017 does not reflect approximately $1.3 million related to these items. |
Fourth Quarter 2017 Results
In the fourth quarter of 2017, the Company hosted approximately 4.26 million guests, generated total revenues of $265.5 million, incurred a net loss of $20.4 million and generated Adjusted EBITDA of $54.7 million. Attendance in the fourth quarter was impacted by weakness in international and U.S. domestic market attendance (defined as guests outside of a 300-mile radius from the Company’s parks), partially offset by an increase from 300-mile and in guests in certain markets due in part to the continued popularity of the Company’s Halloween and Christmas events. Revenue was impacted by a modest decline in attendance largely offset by increased 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). Adjusted EBITDA was primarily impacted by the decline in revenue.
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Three Months Ended December 31, |
Variance |
||||||||
|
2017 |
2016 |
% |
|||||||
|
(Unaudited, in millions, except per share and per capita |
|||||||||
|
Total revenues |
$ |
265.5 |
$ |
267.6 |
(0.8%) |
||||
|
Net loss |
$ |
(20.4) |
$ |
(11.9) |
(71.7%) |
||||
|
Net loss per share, diluted |
$ |
(0.24) |
$ |
(0.14) |
(70.2%) |
||||
|
Adjusted EBITDA |
$ |
54.7 |
$ |
58.1 |
(6.0%) |
||||
|
Net cash provided by operating activities |
$ |
4.7 |
$ |
21.5 |
(78.3%) |
||||
|
Attendance |
4.26 |
4.38 |
(2.7%) |
||||||
|
Total revenue per capita |
$ |
62.32 |
$ |
61.12 |
2.0% |
||||
|
Admission per capita |
$ |
37.57 |
$ |
37.07 |
1.3% |
||||
|
In-Park per capita spending |
$ |
24.75 |
$ |
24.06 |
2.9% |
||||
Fiscal 2017 Results
In fiscal 2017, the Company hosted 20.8 million guests, generated total revenues of $1.26 billion, incurred a net loss of $202.4 million, which included an after-tax, non-cash goodwill impairment charge of $215.1 million and generated Adjusted EBITDA of $300.8 million. Attendance for the year was negatively impacted by a decline in U.S. domestic and international attendance partially offset by an increase in attendance from guests within 300 miles of our parks in certain markets. Revenue was primarily impacted by a decline in attendance, partially offset by an increase in in-park per capita spending. Adjusted EBITDA was negatively impacted by a decline in revenue, partially offset by a decline in expenses.
|
Fiscal Year Ended December 31, |
Variance |
||||||||
|
2017 |
2016 |
% |
|||||||
|
(Unaudited, in millions, except per share and per capita |
|||||||||
|
Total revenues |
$ |
1,263.3 |
$ |
1,344.3 |
(6.0%) |
||||
|
Net loss |
$ |
(202.4) |
$ |
(12.5) |
NM |
||||
|
Net loss per share, diluted |
$ |
(2.36) |
$ |
(0.15) |
NM |
||||
|
Adjusted EBITDA |
$ |
300.8 |
$ |
332.0 |
(9.4%) |
||||
|
Net cash provided by operating activities |
$ |
192.5 |
$ |
280.4 |
(31.4%) |
||||
|
Attendance |
20.80 |
22.00 |
(5.5%) |
||||||
|
Total revenue per capita |
$ |
60.74 |
$ |
61.10 |
(0.6%) |
||||
|
Admission per capita |
$ |
36.79 |
$ |
37.17 |
(1.0%) |
||||
|
In-Park per capita spending |
$ |
23.96 |
$ |
23.93 |
0.1% |
||||
Strong 2018 New Rides, Attraction and Event Line Up
- SeaWorld Orlando: Infinity Falls (pictured at top) a river rapids raft ride with the highest vertical drop for a ride of its type in the U.S. and Inside Look,an event taking guests behind the scenes to provide a better understanding of the Company’s veterinary care and animal rescue operations.
- SeaWorld San Diego: Electric Eel a triple-launch steel coaster that will be the tallest and fastest coaster in San Diego with speeds of more than 60 miles per hour; Sesame Parade, the first Sesame parade on the West Coast; and Inside Look.
- SeaWorld San Antonio: Electric Ocean a high-energy electrifying light and music celebration; Sesame Parade, the first Sesame parade in Texas; and Inside Look.
- Busch Gardens Williamsburg: Battle for Eire a first of its kind virtual reality attraction that is a marriage of a motion-based theater simulator with a state-of-the-art 360-degree virtual reality technology.
- Busch Gardens Tampa: BierFest, a one-of-a-kind Oktoberfest celebration featuring a selection of international and local craft brews, traditional German cuisine and festive music; an enhanced Summer Nights featuring themed party zones and sensational summer cuisine.
- Sesame Place: Oscar’s Wacky Taxi children’s rollercoaster, a first of its kind wooden-steel hybrid roller coaster for kids that is one of the largest new attractions in the park’s history.
- Aquatica Orlando: Ray Rush water slide, a first of its kind in the state of Florida raft ride that offers a fully-loaded water adventure with three ways to slide, splash and soar.
- Aquatica San Antonio: Taumata Racer water slide, a high-speed competitive waterslide with six side-by-side lanes and over 375 feet of track.
- Adventure Island: Vanish Point water slide; a 70-foot drop slide, the highest and longest drop slide in the Tampa Bay area, with 425 feet of spiraling tubes.
Debt and Liquidity
Net debt as calculated under the credit agreement governing the Company’s Senior Secured Credit Facilities as of December 31, 2017 was $1.53 billion, which translates to a net leverage ratio of 5.08x Fiscal 2017 Adjusted EBITDA.
Marc Swanson, Chief Financial Officer of SeaWorld Entertainment, Inc. said, “We are pleased with our better than expected 2017 Adjusted EBITDA performance and the early trends we are seeing so far in the first quarter of 2018. In addition, with our significant annual operating cash flow we continue to feel confident about our financial flexibility heading into 2018.”
