SeaWorld Entertainment, Inc. Reports First Quarter 2020 Results

Earlier this morning, SeaWorld Entertainment, Inc. reported its financial results for the first quarter of 2020.


First Quarter 2020 Overview
  • Attendance decreased by 1.0 million guests, to 2.3 million guests from the first quarter of 2019.
  • Total revenue decreased by $67.0 million, to $153.6 million from the first quarter of 2019. 
  • Net loss increased by $19.5 million, to $56.5 million from the first quarter of 2019.
  • Adjusted EBITDA[[1]] decreased by $47.3 million, to a loss of $30.9 million from the first quarter of 2019.

First Two Months of 2020 Overview 
  • Attendance increased by 0.2 million guests, or 9%, to a record 1.9 million guests from the first two months of 2019.
  • Total revenue increased by $13.0 million, or 12%, to a record $120.6 million from the first two months of 2019.

Other
  • On March 10, 2020, the Company amended its credit agreement to increase its revolving credit commitments from $210.0 million to $332.5 million.
  • On March 16, 2020, the Company suspended operations at all of its parks as a result of the COVID-19 pandemic ("COVID-19").
  • On April 19, 2020, the Company amended its credit agreement to, among other things, revise its financial maintenance covenant to suspend testing of the covenant for the remainder of 2020 and modify the testing of the covenant in 2021.
  • On April 30, 2020, the Company closed on a $227.5 million private offering of 8.75% first-priority senior secured notes.
  • As of April 30, 2020, the Company has just over $400 million of cash and cash equivalents on its balance sheet and estimates its average monthly net cash outflows will be between $20 million and $25 million per month while its parks remain closed. Based on this, the Company believes it can sustain its current level of monthly cash outflows into the fourth quarter of 2021.
  • The Company's rescue teams continue to operate while the parks are closed. In the first quarter of 2020, the Company helped rescue over 350 animals and is approaching 37,000 total rescues over its history.

"While the world is experiencing an unprecedented global health crisis that has impacted nearly everyone on the planet, we are confident in the resiliency of our business, our ability to weather this crisis and that we will emerge an even stronger company," said Marc Swanson, Interim Chief Executive Officer of SeaWorld Entertainment, Inc.

"In response to COVID-19 we took the extraordinary step to close all of our parks on March 16, 2020.  Prior to the closure of our parks, we had a strong start to 2020, with record-setting results through February.  This performance was a continuation of the strong financial results we have delivered over the last two years, which we believe demonstrates the successful execution of our strategic initiatives related to marketing and communications, pricing, cost and capital efficiencies and new rides, attractions and events. 

Although we are currently closed, our animal care professionals along with other essential employees continue to provide comprehensively for the welfare of our animals and maintain our parks.  We have a dedicated team focused on finalizing plans to re-open our parks, including enhanced health and safety protocols that will meet and / or exceed government guidelines and provide the safe and clean environment our guests and ambassadors expect. While we don't have any park opening dates to announce today, we are in regular contact with local, state and federal authorities and we look forward to opening our parks and welcoming back our guests as soon as it's safe and permitted to do so." 

The Company has taken a number of proactive measures to strengthen its financial position and enhance its liquidity and flexibility while its parks remain closed. The Company significantly reduced its monthly cash expenditures including labor, operating expenses and capital spending; significantly increased its liquidity by upsizing its revolving credit commitments and issuing new senior secured notes; and significantly enhanced its financial flexibility by amending its credit agreement to, among other things, revise its financial maintenance covenant so that the covenant will not apply for the remainder of 2020 and will be modified in 2021. For pass members and other ticket holders the Company has extended expiration dates, provided upgrades and/or added additional benefits.

"I am thankful for our team's extraordinary efforts and unrelenting passion during these uncertain times. I am inspired daily by the collaborative teamwork and dedication to our mission, displayed across the entire organization – including our Ambassadors, the management team and our board. Together, we are committed to successfully navigating through this current environment, reopening our parks and welcoming back our guests as soon as safely possible.  We are confident in our business and strategy and sincerely look forward to coming out of this crisis and continuing to drive improved operating and financial results and long-term value for all stakeholders," concluded Swanson.

First Quarter 2020 Results

In the first quarter of 2020, the Company hosted approximately 2.3 million guests, generated total revenues of $153.6 million, a net loss of $56.5 million and an Adjusted EBITDA loss of $30.9 million. Prior to the COVID-19 park closures, the Company had a strong start to 2020 with record-setting attendance and revenue through the first two months of the year.  Year to date attendance for the first two months of 2020 was a record 1.9 million guests, an increase of 0.2 million guests, or 9% when compared to the first two months of 2019. Total revenue for the first two months of 2020 was a record of approximately $120.6 million, an increase of $13.0 million, or 12% when compared to the first two months of 2019.  

Total attendance for the quarter decreased by 1.0 million, or 30.6%, when compared to the prior year quarter.  The decrease was a result of a decline in attendance due to the temporary park closures resulting from the global COVID-19 pandemic, which closed all of the Company's parks beginning on March 16, 2020.  The timing of the park closures fell during historically high volume spring break weeks for most of its parks, which adversely impacted the visitation mix for the quarter.  Prior to the park closures due to COVID-19, the Company believes the attendance increase through the first two months of the year resulted from increased demand due to a combination of factors including improved marketing and communication initiatives, new pricing strategies, and the positive reception of its new rides and compelling attractions and events. 

Total revenue for the quarter decreased by $67.0 million, or 30.4%, when compared to the prior year quarter. Total revenue for the quarter was negatively impacted by the decrease in attendance and by lower in-park per capita spending (defined as food, merchandise and other revenue divided by total attendance) partially offset by improved admission per capita (defined as admissions revenue divided by total attendance). Excluding the impact of other revenue related to certain international agreements which the Company previously announced were terminated in early 2019, in-park per capita spending improved by 0.9%. The increase in admissions per capita was primarily a result of pricing strategies partially offset by the visitation mix when compared to the prior year period.  The visitation mix was impacted by the COVID-19 park closures, which occurred during key spring break weeks for most of the Company's parks.  Adjusted EBITDA was negatively impacted by the decrease in total revenue resulting from park closures, partially offset by a decrease in expenses.  The decrease in expenses results from a reduction in direct labor, other operating costs and marketing and media costs due to the park closures and the continued impact of cost savings initiatives.
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