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Seaworld Entertainment, Inc. Reports Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

- Adjusted EBITDA

Increases 4%, Net Income Increases 12% -

SeaWorld Entertainment, Inc. (NYSE: SEAS), a leading theme park and entertainment company, today reported financial results for the third quarter of 2015.

Third Quarter Overview

Third quarter total revenues increased by $1.1 million to $496.9 million.

Adjusted EBITDA increased by $8.3 million to $217.5 million.

Net income increased by $10.8 million to $98.0 million.

Returned $87.6 million to shareholders through dividend declarations and share repurchases thus far in 2015, which includes $15.0 million of share repurchases in the third quarter.

Updated full year 2015 Adjusted EBITDA guidance to be in the range of $360 million to $370 million.

We continue to see early indications that our efforts to improve revenue and profitability are taking hold. In the third quarter, we are reporting growth in total revenues, Adjusted EBITDA and net income, said Joel Manby, President and Chief Executive Officer of SeaWorld Entertainment, Inc. However, due to adverse weather impacts over the last 6 weeks, which caused park closures at three of our locations over key Halloween event weekends, along with increased costs from legal matters and associated reputation initiatives, we are updating our full year 2015 Adjusted EBITDA guidance to be in the range of $360 million to $370 million. As a reminder, we ended 2014 with Adjusted EBITDA of $370.1 million, which included a $10.0 million non-cash pro forma adjustment. We have seen signs of improvement in our business fundamentals, as evidenced by our third quarter results, our largest quarter of the year, and will end the year dramatically slowing the rate of decline in reported Adjusted EBITDA versus the prior year.

Looking ahead, we have developed a comprehensive strategic plan to build on our unique strengths, to overcome our challenges and to execute a disciplined approach to cost management and use of cash. We look forward to sharing additional information during our upcoming webcast on November 9, on how we will execute to achieve our objectives and generate a sustainable increase in shareholder value.

Financial Summary

Three Months Ended

September 30,

Nine Months Ended

(In millions, except per share amounts)

Attendance

18.063

18.034

Total Revenues

1,103.1

1,113.3

Net income per share, diluted

Adjusted Net Income

Adjusted Net Income per share, diluted

This earnings release includes several metrics, including Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP). See Statement Regarding Non-GAAP Financial Measures section at the end of this earnings release for the definitions of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per Diluted Share and their reconciliation to their respective most comparable financial measures calculated in accordance with GAAP.

Third Quarter 2015 Results

During the third quarter of 2015, the Company generated revenue of $496.9 million, an increase of $1.1 million, or 0.2%, versus the third quarter of 2014. Adjusted EBITDA was $217.5 million, an increase of $8.3 million, or 4%, compared to $209.1 million in the third quarter of 2014. The Company reported net income of $98.0 million, or $1.14 per diluted share, and Adjusted Net Income of $98.3 million, or $1.14 per diluted share, in the third quarter of 2015. In the prior year quarter, the Company generated net income of $87.2 million, or $1.00 per diluted share and Adjusted Net Income of $88.6 million, or $1.01 per diluted share. Net cash provided by operating activities was $137.8 million in the third quarter of 2015 compared to $136.4 million in the prior year third quarter.

Total revenue per capita increased by 0.6% to $59.36 in the third quarter of 2015 compared to $58.99 in the third quarter of 2014. Admission per capita, defined as admissions revenue divided by total attendance, decreased slightly by 0.2% to $36.39 in the third quarter of 2015 from $36.47 in the prior year third quarter. In-park per capita spending, calculated as food, merchandise and other revenue divided by total attendance, increased by 2.0% to $22.97 in the third quarter of 2015, from $22.53 in the prior year third quarter, due to culinary price increases.

Attendance for the quarter decreased slightly by 0.4% as a result of a decline in California and Texas. The decline at these two locations was largely offset by an increase in attendance at the Companys other park locations due to an improvement in demand, related to an increase in promotional offerings, and a favorable operating schedule resulting from the later timing of Labor Day in 2015. The decline in California primarily relates to continued SeaWorld brand challenges and is being addressed through the Companys reputation campaign, which is designed to share facts and correct misinformation. The Company has seen a meaningful reduction in the rate of attendance decline in California. The decline in Texas primarily relates to a decrease in demand for the quarter resulting from a reduction in promotional offerings and passholder visitation along with a lack of significant competitive offerings at this location.

Adjusted EBITDA for the third quarter of 2015 increased by $8.3 million reflecting an increase in revenue of $1.1 million and the positive impact of the Companys cost savings initiatives announced in December 2014.

Year to Date Results

During the first nine months of 2015, the Company generated revenue of $1,103.1 million, a decrease of $10.1 million, or 1%, compared to the same period in 2014. Adjusted EBITDA was $313.8 million, a decrease of $6.4 million, or 2%, compared to Adjusted EBITDA of $320.2 million in the same period of 2014. In the first nine months of 2015, the Company generated net income of $60.2 million, or $0.70 per diluted share, and Adjusted Net Income of $73.4 million, or $0.85 per diluted share. In the first nine months of 2014, the Company generated net income of $75.4 million, or $0.86 per diluted share, and Adjusted Net Income of $77.2 million, or $0.88 per diluted share. Net cash flow provided by operating activities was $279.9 million in the first nine months of 2015 compared to $269.9 million in the first nine months of 2014.

Total revenue per capita declined by 1.1% to $61.07 in the first nine months of 2015 compared to $61.73 in the first nine months of 2014. Admission per capita decreased by 2.1% to $37.64 in the first nine months of 2015 from $38.44 in the prior year period. The decline in admission per capita primarily relates to an increase in promotional offerings and passholder visitation along with an unfavorable change in the park attendance mix compared to the prior year period. In-park per capita spending increased to $23.43 in the first nine months of 2015 from $23.30 in the same period of 2014.

When compared to the prior year period, attendance for the first nine months of 2015 increased by 0.2% and primarily benefited from an improvement in demand at all but two of the Companys park locations, due to increased promotional offerings, strong passholder visitation and additional consumer event programs, along with a favorable operating schedule due to the later timing of Labor Day in 2015. The impact of these factors was largely offset by reduced attendance in Texas and California as discussed in the previous section. Additionally, record levels of rainfall in Texas during the second quarter also impacted attendance for that location in the nine month period.

Adjusted EBITDA for the first nine months of 2015 decreased by $6.4 million reflecting a decrease in revenue along with an increase in selling, general and administrative expenses which was partially offset by a decrease in operating expenses for the first nine months of 2015. The increase in selling, general and administrative expenses was largely related to additional third party consulting costs, an increase in marketing costs associated with the...


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