SeaWorld Entertainment (SEAS 25.83, -0.46, -1.73%) is trading lower today after
reporting Q3 results. SeaWorld is a theme park and entertainment company that
owns or licenses a portfolio of brands that includes SeaWorld, Busch Gardens,
Aquatica, Sesame Place, and Sea Rescue. It operates 12 destination and regional
theme parks throughout the U.S., including in Florida, Texas, and California,
featuring a diverse array of thrill rides, water slides, shows, and other
attractions, including educational presentations, dining, parades, and animal
SEAS cares for what it believes is one of the largest zoological collections in the world and has helped lead advances in the care and enrichment of animals. The company rescues and rehabilitates marine and terrestrial animals that are ill, injured, orphaned, or abandoned with the goal of returning them to the wild. The SeaWorld rescue team has helped more than 33,000 animals in need, from hurricane-displaced sea lions to oil spill endangered penguin chicks, over the course of the last 50 years. Many of SEAS’ locations, including members of the SeaWorld and Busch Gardens families, offer guests the chance to observe, learn about, and even interact with marine and land animals.
Examining the company’s Q3 results, it's a little difficult
to get a clean EPS number. SEAS reported GAAP EPS of $1.10, but that was
negatively impacted by separation-related costs. SEAS did not provide a
per-share impact. However, revenue rose 10.4% year/year to $483.2 mln, which
was better than expected. Attendance is always a key metric for SEAS, as you
can imagine. Attendance in Q3 increased 9.7% year/year to 8.3 mln guests,
although this had been pre-reported on October 1, so it was not new
One item that SEAS has been focusing on of late is promotion of its season passes, and efforts to that end seem to be working, as SEAS posted a double-digit increase in season pass sales revenue in Q3. While season passes lower the average ticket price per person, they contribute to benefits such as increases in repeat visitors during the season and in in-park per capita spending on food and merchandise.
Furthermore, SEAS has also been attracting customers by offering new rides, attractions, and events. For example, SEAS just completed another successful season of Halloween events and will soon revive its annual slate of Christmas events across its theme parks, featuring Rudolph the Red-Nosed Reindeer, Christmas markets, skating shows, and other activities suited to wintery wonderlands. SEAS has also been rolling out other in-park offerings, including its front-of-the-line “Quick Queue” pass.
Briefing.com has written a number of reports on a peer theme park operator to the company, Six Flags Entertainment (SIX), the world's largest regional theme park and the largest operator of waterparks in North America. We are noticing some positive similarities. Six Flags emerged from bankruptcy in 2010, and a big part of their turnaround involved a wholesale change in pricing strategies.
SIX has been aggressively upselling guests to multi-visit monthly subscriptions (Active Pass base) and away from one-day sales with the goal of boosting its recurring revenue stream and incentivizing repeat visits. They have also been pushing front-of-the-line VIP passes, just like SEAS. SIX realized that the goal is to boost attendance. Though these changes may result in less money at the gate, but guests’ in-park spending on food, merchandise, and more tend to make up for it.
It seems that SEAS is following in the footsteps of what SIX did, and that's probably the right move. The stock initially traded higher at today’s open but later pulled back; perhaps some comments made during the conference call, which started at 9am ET, are being seen as negative. Despite today's weakness, the stock has been a nice comeback in 2018 as it seems new pricing strategies are making headway. Also, SEAS has been making progress in terms of positioning parks as year-round attractions in order to reduce seasonality.