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SeaWorld Entertainment, Inc. Reports First Quarter 2016 Results

SEAS, -1.22% a leading theme park and entertainment company, today reported financial results for the first quarter of 2016.

Results Overview

  • Attendance of 3.30 million, compared to 3.21 million in the first quarter of 2015.
  • Total revenue of $220.2 million, compared to $214.6 million in the first quarter of 2015.
  • Adjusted EBITDA [[1]] loss of $5.9 million, compared to an Adjusted EBITDA loss of $3.8 million in the first quarter of 2015.
  • Net loss of $84.0 million compared to a net loss of $43.6 million in the first quarter of 2015.
  • Adjusted Net Loss of $46.9 million compared to an Adjusted Net Loss of $43.5 million in the first quarter of 2015.

"For the first quarter of 2016, we are reporting total revenue growth driven by higher attendance, particularly at our Virginia, Texas and California park locations," said Joel Manby, President and Chief Executive Officer of SeaWorld Entertainment, Inc. "The attendance gains at these park locations were largely offset by a decrease at our Florida locations primarily due to a decline in international attendance from Latin America, and a decline in passholder attendance at our SeaWorld Orlando park, resulting from fewer season pass sales due to less discounting on season pass products. We expect these issues will continue to impact the remainder of the year. Additionally, 2016 will be impacted by the Memorial Day calendar shift that shortens the summer operating season compared to 2015. In order to counter some of these issues, we have shifted portions of our marketing spend from Latin America to domestic markets and have introduced strategic season pass promotions for SeaWorld Orlando. We also have three highly anticipated new attractions, Mako, Cobra's Curse and Discovery Point, scheduled to open in Florida and Texas later in the second quarter."

"Our March announcement to end all orca breeding and transition our theatrical shows toward more natural orca encounters, as well as our new partnership with the Humane Society of the United States, were transformational decisions that we expect should contribute to an improvement in performance over time, as consumers begin to recognize our continued commitment to providing them experiences that matter," Manby added. "Further, the addition of one and the nomination of a second independent, theme park industry veteran to our Board, together with enhancements to our governance practices, help advance our ongoing evolution. In the near term, as we continue to work to strengthen the organization, our focus will remain on operational execution and delivering consistent and sustainable financial performance over the long-term."

First Quarter 2016 Results

During the first quarter of 2016, the company generated revenue of $220.2 million, an increase of $5.6 million, or 3%, compared to the first quarter of 2015. Adjusted EBITDA was a loss of $5.9 million, a decrease of $2.1 million, or 55%, compared to an Adjusted EBITDA loss of $3.8 million in the first quarter of 2015. The decrease in Adjusted EBITDA was primarily due to increased direct labor and benefit costs, offset by increased revenue.

The company reported a net loss of $84.0 million, or $1.00 per diluted share, and an Adjusted Net Loss of $46.9 million, or $0.56 per diluted share, in the first quarter of 2016, compared to a net loss of $43.6 million, or $0.51 per diluted share, and an Adjusted Net Loss of $43.5 million, or $0.51 per diluted share in the first quarter of 2015. The increase in net loss was primarily a result of accelerated depreciation related to the disposal of the deep-water lifting floors which were removed from each of the orca habitats in the first quarter of 2016, and incremental equity compensation expense related to the company's performance shares, as previously disclosed. Net cash provided by operating activities was $32.2 million in the first quarter of 2016 compared to $37.7 million in the prior year first quarter.

Total revenue per capita was relatively flat at $66.80 in the first quarter of 2016 compared to $66.77 in the prior year first quarter. Admission per capita decreased by 2.5% to $41.53 in the first quarter of 2016 from $42.58 in the prior year first quarter, primarily due to the impact of an unfavorable park attendance mix and fewer international guests compared to the prior year first quarter. In-park per capita spending increased by 4.5% to $25.27 in the first quarter of 2016, from $24.19 in the prior year first quarter, primarily due to increased sales of the company's in-park products, such as all day dining packages and front of the line "Quick Queue" access.

Attendance in the first quarter increased by approximately 83,000 guests, or 2.6%, and included approximately 33,000 in attendance related to the separate gate for Aquatica San Antonio, which opened in March 2016. Excluding the impact of this separate gate, attendance improved primarily due to the impact of an earlier Easter holiday along with additional operating days for the company's Virginia park, but was largely offset by an overall decline in attendance at the company's Florida park locations. The decrease in attendance in Florida was a result of a decline in international attendance, particularly a reduction in guests traveling from Latin America, adverse weather impacts due to uncharacteristically wet weather in January and a decline in passholder attendance at its SeaWorld Orlando park resulting from less discounting on season pass products when compared to the first quarter of 2015.

Dividends

On January 5, 2016, the company's Board of Directors declared a cash dividend of $0.21 per share, which was paid on January 22, 2016, to all common stockholders of record at the close of business on January 15, 2016.

On February 22, 2016, the company's Board of Directors declared a cash dividend of $0.21 per share, which was paid on April 1, 2016 to all common stockholders of record at the close of business on March 14, 2016. Based on this dividend payment, certain performance-vesting restricted shares held by some of the company's equity plan participants vested on April 1, 2016. The company recognized $27.5 million of equity compensation expense and recorded $3.4 million of accumulated dividends related to these performance-vesting restricted shares during the first quarter of 2016.

Guidance

The following guidance is based on current management expectations. All financial guidance amounts are estimates subject to change, including as a result of matters discussed under the "Forward-Looking Statements" caption below and the company undertakes no obligation to update its guidance. For the full year of 2016, the company expects Adjusted EBITDA in the range of $335 million to $365 million.

Conference Call

The company will hold a conference call today, Thursday, May 5 at 9 a.m. Eastern Time to discuss its first quarter 2016 financial results. The conference call will be broadcast live on the Internet and the release and conference call can be accessed via the company's website at www.seaworldentertainment.com by clicking on the "Investor Relations" link located on the upper right corner of that page. For those unable to participate in the live call, a replay of the webcast will be available after 12 p.m. Eastern TimeMay 5, 2016 via the "Investor Relations" section of www.seaworldentertainment.com. A replay of the call can also be accessed telephonically from 12 p.m. Eastern Time on May 5, 2016 through 11:59 p.m. Eastern Time on May 19, 2016 by dialing 855-859-2056 from anywhere in the U.S. or 1-404-537-3406 from international locations, conference code 83811631.

Statement Regarding Non-GAAP Financial Measures

This earnings release and accompanying financial statement tables include several supplemental non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Loss, Adjusted Net Loss per Diluted Share and Free Cash Flow. Adjusted EBITDA, Adjusted Net Loss, Adjusted Net Loss per Diluted Share and Free Cash Flow are not recognized terms under GAAP, should not be considered in isolation or as a substitute for a measure of financial performance or liquidity prepared in accordance with GAAP and are not indicative of net income or loss as determined under GAAP. Adjusted EBITDA, Adjusted Net Loss, Adjusted Net Loss per Diluted Share, Free Cash Flow and other non-GAAP financial measures have limitations that should be considered before using these measures to evaluate the company's financial performance or liquidity. Adjusted EBITDA, Adjusted Net Loss, Adjusted Net Loss per Diluted Share and Free Cash Flow, as presented, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.

The financial statement tables that accompany this press release include a reconciliation of non-GAAP financial measures to the applicable most comparable U.S. GAAP financial measures.

About SeaWorld Entertainment, Inc.

SeaWorld Entertainment, Inc. SEAS, -1.22% is a leading theme park and entertainment company providing experiences that matter, and inspiring guests to protect animals and the wild wonders of our world. The company is one of the world's foremost zoological organizations and a global leader in animal welfare, training, husbandry and veterinary care. The company collectively cares for what it believes is one of the largest zoological collections in the world and has helped lead advances in the care of animals. The company also rescues and rehabilitates marine and terrestrial animals that are ill, injured, orphaned or abandoned, with...


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