ORLANDO, Fla., Nov. 8, 2016 /PRNewswire/ -- SeaWorld
Entertainment, Inc. (NYSE: SEAS), a leading theme park and
entertainment company that owns and operates twelve theme parks,
today reported its financial results for the third quarter ended
September 30, 2016.
Overview
- Total revenues were $485.3
million, as compared to $496.9
million in the third quarter of 2015. Net income was
$65.7 million, or $0.77 per diluted share, as compared to net
income of $98.0 million, or
$1.14 per diluted share, in the third
quarter of 2015.
- Third quarter total attendance was relatively flat. Attendance
at the company's Florida park
locations increased 1.3% in the third quarter, reflecting a
positive impact from its capital investments in new attractions,
which more than offset a decline in attendance from Latin America, an overall softness in the
Orlando market and the impact of
Hurricane Hermine. Absent the Latin
America impact, attendance in Florida would have increased 4.0% in the third
quarter.
- Attendance trends in California and Texas continued to show improvement for the
first nine months of 2016 over the same nine-month period in
2015.
- Following a fundamental review of the company's cost structure,
the company is executing a comprehensive cost optimization program
that is expected to reduce costs by approximately $65 million, with a targeted $40 million in net savings by the end of
2018.
- 2016 Adjusted EBITDA[1] guidance range narrowed to
$310 million to $330 million.
- As previously announced, the company declared a cash dividend
of $0.10 per share to all common
stockholders of record at the close of business on September 29, 2016 and suspended future quarterly
dividends to allow greater flexibility to deploy capital to the
opportunities that offer the greatest long term returns to
shareholders.
"One year into our three-year plan to increase value for our
shareholders, we are delivering tangible results in key areas,"
said Joel Manby, President and Chief
Executive Officer of SeaWorld Entertainment, Inc. "We are creating
distinct guest experiences in our parks that reflect the
fundamental repositioning of our brand from animal entertainment to
experiences that matter. The introduction of several new exciting
rides and attractions – including Mako and Cobra's Curse – is
driving attendance and season pass sales. In particular, we are
seeing continued improvement of attendance trends in California and Texas, and third quarter attendance increased
in Florida by 1.3%. Absent the
decline in attendance from Latin
America, which appears to be abating, Florida attendance would have increased 4.0%
in the third quarter. We have also announced an extensive line-up
of new attractions, shows and events for 2017, displaying our
disciplined capital allocation strategy, focusing on high-return,
value-enhancing projects.
"Importantly, we are using our capital more efficiently,
introducing more new attractions with fewer dollars. Additionally,
during the third quarter, we began executing a comprehensive cost
optimization program that goes beyond the initiative we
communicated last year and targets $40
million in net cost savings by the end of 2018," continued
Manby. "We have also introduced new strategic marketing initiatives
which have contributed to early season pass sales that are above
the same period last year while new pricing strategies and
selective price increases are being implemented to improve total
revenue per capita. Overall, we are seeing indications of
stabilization, and we believe our results by the end of 2017 and
beyond will materially benefit from our focus on significant cost
reductions, our brand repositioning, our strategic marketing and
pricing initiatives and our continued commitment to consistent and
disciplined capital investments."
Third Quarter 2016 Results
During the third quarter of 2016, the company generated revenue
of $485.3 million, a decrease of
$11.6 million, or 2%, compared to the
third quarter of 2015. The company reported net income of
$65.7 million, or $0.77 per diluted share. In the third
quarter of 2015, the company generated net income of $98.0 million, or $1.14 per diluted share. Adjusted EBITDA
was $196.0 million, a decrease of
$21.4 million, or 10%, compared to
Adjusted EBITDA of $217.5 million in
the third quarter of 2015. Net cash provided by operating
activities was $147.1 million in the
third quarter of 2016 compared to $137.8
million in the prior year third quarter.
Attendance for the third quarter was primarily impacted by
adverse weather at the company's Northeast park locations,
including the effects of Hurricane Hermine, along with a decline in
international attendance, mainly from Latin America which decreased in attendance by
approximately 93,000 guests, or 28%, compared to the third quarter
of 2015. The impact of these factors was largely offset by
increased attendance in Texas,
which mainly benefited from the new gate at its water park, and
increased attendance in Florida in
the third quarter. The company believes the improvement in
Florida, an increase of
approximately 46,000 guests, results from new attractions which
helped drive increased domestic attendance despite a decline in
international guests, an overall decline in hotel occupancy in the
Orlando market and the effects of
Hurricane Hermine in Florida.
Texas and California attendance trends continued to
improve in the third quarter while international weakness abated in
comparison to the second quarter of 2016.
Total revenue per capita (total revenue divided by attendance)
declined by 2.0% to $58.18 in the
third quarter of 2016 compared to $59.36 in the prior year third quarter. Admission
per capita (admissions revenue divided by attendance) decreased by
2.9% to $35.32 in the third quarter
of 2016 from $36.39 in the prior year
third quarter. The decline primarily results from an unfavorable
park attendance mix, with more guest concentration at the company's
water parks and the new gate for Aquatica San Antonio, along with
the impact of fewer international guests compared to the third
quarter of 2015. In-park per capita spending (food,
merchandise and other revenue divided by attendance) decreased
slightly by 0.5% to $22.86 in the
third quarter of 2016, from $22.97 in
the prior year third quarter.
Operating expenses for the third quarter increased $1.8 million, or 1%, to $198.8 million as compared to $196.9 million in the third quarter of
2015. The increase primarily relates to an increase in direct
labor and benefit costs resulting from wage and merit increases,
partially offset by targeted cost savings initiatives.
Selling, general and administrative expenses for the third quarter
of 2016 increased $9.5 million, or
20%, to $57.1 million as compared to
$47.7 million in the prior year third
quarter. The increase primarily relates to an increase in
barter expense of $4.9 million,
planned increases in marketing costs and increased labor and
benefit costs, partially offset by targeted cost savings
initiatives.
Year to Date Results
During the first nine months of 2016, the company generated
revenue of $1.08 billion, a decrease
of $26.5 million, or 2%, compared to
the same period in 2015. The company generated a net loss for
the first nine months of 2016 of $0.6
million, or a loss of $0.01
per diluted share, and an Adjusted Net Income of $23.2 million, or $0.27 per diluted share. For the first nine
months of 2015, the company generated net income of $60.2 million, or $0.70 per diluted share, and an Adjusted Net
Income of $73.4 million, or
$0.85 per diluted share.
Adjusted EBITDA in the first nine months of 2016 was $273.9 million, a decrease of $39.9 million, or 13%, compared to Adjusted
EBITDA of $313.8 million in the same
period of 2015. Net cash flow provided by operating
activities was $258.9 million in the
first nine months of 2016 compared to $279.9
million in the first nine months of 2015.
Attendance declined in the first nine months of 2016 primarily
due to weakness at the company's Florida park locations, particularly in the
first half of the year, and to a lesser extent, to a decline in
attendance at its Northeast park locations in the third quarter
primarily resulting from adverse weather, including the effects of
Hurricane Hermine. The weakness in Florida, a decline of approximately 432,000
guests when compared to the first nine months of 2015, can be
attributed to the following factors: (i) a decline in international
attendance, particularly from Latin
America which decreased by approximately 328,000 guests, or
35%, when compared to the first nine months of 2015; (ii) an
overall softness in the Orlando
market and competitive pressures, as evidenced by reduced hotel
occupancy at Orlando-area hotels
and a decline in local and passholder attendance at the company's
Orlando parks in the first half of
2016; and, to a lesser extent, (iii) adverse weather impacts due to
Tropical Storm Colin in June and the effects of Hurricane Hermine
at the company's Florida park
locations. The company believes the decline in passholder
attendance for SeaWorld Orlando results from less discounting on
season pass products in early 2016 when compared to the same period
in 2015.
Total revenue per capita improved slightly to $61.10 in the first nine months of 2016 from
$61.07 in the first nine months of
2015. Admission per capita decreased by 1.2% to $37.20 from $37.64
in the prior year period. The decline results primarily from an
unfavorable park attendance mix, resulting from more guest
concentration at the company's water parks and the new gate for
Aquatica San Antonio, along with the impact of fewer international
guests when compared to the same period in the prior year.
In-park per capita spending increased to $23.90 in the first nine months of 2016, from
$23.43 in the same period of 2015,
primarily due to increased sales of the company's in-park products,
such as front of the line "Quick Queue" access. To increase season
pass sales as well as to improve admissions per capita, the company
recently introduced strategic pass promotions along with other
ticket offers.
Operating expenses for the first nine months of 2016 increased
$28.5 million, or 5%, to $570.5 million as compared to $541.9 million in the same period of 2015,
primarily due to an increase in other direct labor and benefit
costs, an increase in equity compensation expense and an increase
in asset write-offs largely related to $6.4
million associated with the Blue World Project. The
increase in other direct labor and benefit costs resulted primarily
from wage and merit increases. The additional equity
compensation expense relates to an incremental $9.8 million primarily associated with certain
performance-vesting shares, which vested on April 1, 2016. Selling, general and
administrative expenses for the first nine months of 2016 increased
$24.5 million, or 14%, to
$196.5 million as compared to
$172.1 million in the first nine
months of 2015. The increase primarily relates to an increase
of $20.0 million in equity
compensation expense primarily related to certain
performance-vesting shares which vested on April 1, 2016. In addition to the increase
in equity compensation expenses, selling, general and
administrative expenses also increased by $11.2 million related to barter expense, which
was partially offset by targeted costs savings initiatives and a
decrease in marketing and reputation costs.
Dividends
On September 19, 2016 the
company's Board of Directors (the "Board") declared a cash dividend
of $0.10 per share to all common
stockholders of record at the close of business on September 29, 2016, which was paid on
October 7, 2016. The Board also
decided to suspend the company's quarterly dividend subsequent to
this dividend declaration to allow the company greater flexibility
to deploy capital to the opportunities that offer the greatest long
term returns to shareholders such as, but not limited to, share
repurchases, investments in new attractions or debt
repayments. The company expects to redeploy this additional
capital to shareholders by opportunistically repurchasing the
company's shares in the open market during the remainder of
2016.
Future dividends, if any, and the timing of declaration of any
such dividends, will be at the discretion of the Board and will
depend upon, among other things, the company's financial condition,
capital needs, covenants, economic conditions and other factors
that the Board may deem relevant.
Guidance
The following updated guidance is based on the company's
performance in the first nine months of 2016, recent developments
including the impact of Hurricane Matthew on the company's fourth
quarter attendance, and current management expectations regarding
attendance. 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. With only one
quarter left in the 2016 reporting year, the company is narrowing
the range of its guidance, and it now expects Adjusted EBITDA for
2016 to be in the range of $310 million to
$330 million.
The financial statement tables that accompany this press release
include a reconciliation of Adjusted EBITDA, a non-GAAP financial
measure, to the applicable most comparable U.S. GAAP financial
measure for the three and nine months ended September 30,
2016. However, the company has not reconciled the forward-looking
Adjusted EBITDA guidance range included in this press release to
the most directly comparable forward-looking GAAP measure because
this cannot be done without unreasonable effort due to the high
variability, complexity, low visibility and seasonal nature of the
company's business with respect to estimating forward-looking
amounts for impairments and disposition of assets, income taxes and
other non-cash expenses and adjusting items which are excluded from
the calculation of Adjusted EBITDA.
Conference Call
The company will hold a conference call today, Tuesday, November 8, 2016 at 9 a.m. Eastern Time to discuss its third 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 Time November 8, 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 November 8,
2016 through 11:59 p.m. Eastern
Time on November 22, 2016 by
dialing (855) 859-2056 from anywhere in the U.S. or (404) 537-3406
from international locations, and entering conference code
92050626.
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 Income, Adjusted Net Income
per Diluted Share, and Free Cash Flow. Adjusted EBITDA, Adjusted
Net Income, Adjusted Net Income 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 Income, Adjusted Net Income per
Diluted Share, Free Cash Flow and other non-GAAP financial measures
have limitations that should be considered before using these
measures to evaluate a company's financial performance or
liquidity. Adjusted EBITDA, Adjusted Net Income, Adjusted Net
Income 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. Additionally, the company
believes that the presentation of Adjusted EBITDA is appropriate as
it eliminates the effect of certain non-cash and other items not
necessarily indicative of a company's underlying operating
performance. The presentation of Adjusted EBITDA also provides
additional information to investors about the calculation of, and
compliance with, certain financial covenants in the company's
Senior Secured Credit Facilities.
The financial statement tables that accompany this press release
include a reconciliation of historical non-GAAP financial measures
to the most directly comparable U.S. GAAP financial measures.
About SeaWorld Entertainment, Inc.
SeaWorld Entertainment, Inc. (NYSE: SEAS) 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 the goal
of returning them to the wild. The SeaWorld® rescue team
has helped more than 28,000 animals in need over the last 50
years.
SeaWorld Entertainment, Inc. owns or licenses a portfolio of
recognized brands including SeaWorld, Busch Gardens® and
Sea Rescue®. Over its more than 50-year history, the
company has built a diversified portfolio of 12 destination and
regional theme parks that are grouped in key markets across
the United States, many of which
showcase its one-of-a-kind zoological collection of over 800
species of animals. The company's theme parks feature a diverse
array of rides, shows and other attractions with broad demographic
appeal which deliver memorable experiences and a strong value
proposition for its guests.
Copies of this and other news releases as well as additional
information about SeaWorld Entertainment, Inc. can be obtained
online at www.seaworldentertainment.com. Shareholders and
prospective investors can also register to automatically receive
the company's press releases, SEC filings and other notices by
e-mail by registering at that website.
Forward-Looking Statements
In addition to historical information, this press release
contains statements relating to future results (including certain
projections and business trends) that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, which are subject to the "safe harbor" created
by those sections. The company generally uses the words such as
"might," "will," "may," "should," "estimates," "expects,"
"continues," "contemplates," "anticipates," "projects," "plans,"
"potential," "predicts," "intends," "believes," "forecasts,"
"future", "guidance", "targeted" and variations of such words or
similar expressions in this press release and any attachment to
identify forward-looking statements. All statements, other than
statements of historical facts included in this press release,
including statements concerning plans, objectives, goals,
expectations, beliefs, business strategies, future events, business
conditions, results of operations, financial position, business
outlook, earnings guidance, business trends and other information
are forward-looking statements. The forward-looking statements are
not historical facts, and are based upon current expectations,
estimates and projections, and various assumptions, many of which,
by their nature, are inherently uncertain and beyond management's
control. All expectations, beliefs, estimates and projections are
expressed in good faith and the company believes there is a
reasonable basis for them. However, there can be no assurance that
management's expectations, beliefs, estimates and projections will
result or be achieved and actual results may vary materially from
what is expressed in or indicated by the forward-looking
statements.
These forward-looking statements are subject to a number of
risks, uncertainties and other important factors, many of which are
beyond management's control, that could cause actual results to
differ materially from the forward-looking statements contained in
this press release, including among others: a decline in
discretionary consumer spending or consumer confidence; various
factors beyond management's control adversely affecting attendance
and guest spending at the company's theme parks, including the
potential spread of contagious diseases, such as the Zika virus;
any risks affecting the markets in which the company operates, such
as natural disasters, severe weather and travel-related disruptions
or incidents; increased labor costs and employee health and welfare
benefits; complex federal and state regulations governing the
treatment of animals, which can change, and claims and lawsuits by
activist groups; incidents or adverse publicity concerning the
company's theme parks; any adverse judgments or settlements
resulting from legal proceedings; cyber security risks and the
failure to maintain the integrity of internal or guest data;
inability to protect the company's intellectual property or the
infringement on intellectual property rights of others; risks
associated with the company's capital allocation plans and share
repurchases; and other risks, uncertainties and factors set forth
in the section entitled "Risk Factors" in the company's most
recently available Annual Report on Form 10-K and Quarterly Report
on Form 10-Q, as such risks, uncertainties and factors may be
updated in the company's periodic filings with the Securities and
Exchange Commission ("SEC").
Although the company believes that these statements are based
upon reasonable assumptions, it cannot guarantee future results and
readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's opinions
only as of the date of this press release. There can be no
assurance that (i) the company has correctly measured or identified
all of the factors affecting its business or the extent of these
factors' likely impact, (ii) the available information with respect
to these factors on which such analysis is based is complete or
accurate, (iii) such analysis is correct or (iv) the company's
strategy, which is based in part on this analysis, will be
successful. Except as required by law, the company undertakes no
obligation to update or revise forward-looking statements to
reflect new information or events or circumstances that occur after
the date of this press release or to reflect the occurrence of
unanticipated events or otherwise. Readers are advised to review
the company's filings with the SEC (which are available from the
SEC's EDGAR database at www.sec.gov and via the company's
website at www.seaworldentertainment.com).
[1] This earnings release includes several metrics,
including Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income
per Diluted Share 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, Adjusted Net Income, Adjusted Net
Income per Diluted Share, Free Cash Flow and the reconciliation to
their respective most comparable financial measures calculated in
accordance with GAAP. Also, see "Guidance" section for the
company's reasoning for not reconciling the forward-looking
Adjusted EBITDA guidance range included in this earnings
release.
SEAWORLD
ENTERTAINMENT, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
September 30,
|
|
|
Change
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions
|
|
$
|
294,605
|
|
|
$
|
304,626
|
|
|
$
|
(10,021)
|
|
|
|
(3%)
|
|
|
$
|
655,510
|
|
|
$
|
679,917
|
|
|
$
|
(24,407)
|
|
|
|
(4%)
|
|
Food, merchandise and
other
|
|
|
190,713
|
|
|
|
192,313
|
|
|
|
(1,600)
|
|
|
|
(1%)
|
|
|
|
421,185
|
|
|
|
423,230
|
|
|
|
(2,045)
|
|
|
|
(0%)
|
|
Total
revenues
|
|
|
485,318
|
|
|
|
496,939
|
|
|
|
(11,621)
|
|
|
|
(2%)
|
|
|
|
1,076,695
|
|
|
|
1,103,147
|
|
|
|
(26,452)
|
|
|
|
(2%)
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food,
merchandise and other
revenues
|
|
|
35,854
|
|
|
|
36,959
|
|
|
|
(1,105)
|
|
|
|
(3%)
|
|
|
|
81,768
|
|
|
|
83,974
|
|
|
|
(2,206)
|
|
|
|
(3%)
|
|
Operating expenses
(exclusive of depreciation and
amortization shown separately below and
includes equity compensation of $505 and $267
for the three months ended September 30, 2016
and 2015, respectively and $10,371 and $595
for
the nine months ended September 30, 2016 and
2015, respectively) (a)
|
|
|
198,754
|
|
|
|
196,931
|
|
|
|
1,823
|
|
|
|
1%
|
|
|
|
570,480
|
|
|
|
541,944
|
|
|
|
28,536
|
|
|
|
5%
|
|
Selling, general and
administrative (includes
equity compensation of $2,040 and $1,282 for
the three months ended September 30, 2016 and
2015, respectively and $24,225 and $4,205 in
the nine months ended September 30, 2016 and
2015, respectively)(b)
|
|
|
57,148
|
|
|
|
47,684
|
|
|
|
9,464
|
|
|
|
20%
|
|
|
|
196,534
|
|
|
|
172,082
|
|
|
|
24,452
|
|
|
|
14%
|
|
Restructuring and
other related costs (c)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
112
|
|
|
|
267
|
|
|
|
(155)
|
|
|
|
(58%)
|
|
Depreciation and
amortization
|
|
|
40,921
|
|
|
|
44,505
|
|
|
|
(3,584)
|
|
|
|
(8%)
|
|
|
|
156,677
|
|
|
|
138,469
|
|
|
|
18,208
|
|
|
|
13%
|
|
Total costs and
expenses
|
|
|
332,677
|
|
|
|
326,079
|
|
|
|
6,598
|
|
|
|
2%
|
|
|
|
1,005,571
|
|
|
|
936,736
|
|
|
|
68,835
|
|
|
|
7%
|
|
Operating
income
|
|
|
152,641
|
|
|
|
170,860
|
|
|
|
(18,219)
|
|
|
|
(11%)
|
|
|
|
71,124
|
|
|
|
166,411
|
|
|
|
(95,287)
|
|
|
|
(57%)
|
|
Other expense,
net
|
|
|
72
|
|
|
|
41
|
|
|
|
31
|
|
|
|
76%
|
|
|
|
48
|
|
|
|
511
|
|
|
|
(463)
|
|
|
|
(91%)
|
|
Interest
expense
|
|
|
15,137
|
|
|
|
15,019
|
|
|
|
118
|
|
|
|
1%
|
|
|
|
44,297
|
|
|
|
50,929
|
|
|
|
(6,632)
|
|
|
|
(13%)
|
|
Loss on early
extinguishment of debt and write-off
of discounts and debt issuance costs
(d)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,348
|
|
|
|
(20,348)
|
|
|
|
(100%)
|
|
Income before income
taxes
|
|
|
137,432
|
|
|
|
155,800
|
|
|
|
(18,368)
|
|
|
|
(12%)
|
|
|
|
26,779
|
|
|
|
94,623
|
|
|
|
(67,844)
|
|
|
|
(72%)
|
|
Provision for income
taxes
|
|
|
71,777
|
|
|
|
57,850
|
|
|
|
13,927
|
|
|
|
24%
|
|
|
|
27,405
|
|
|
|
34,462
|
|
|
|
(7,057)
|
|
|
|
(20%)
|
|
Net income
(loss)
|
|
$
|
65,655
|
|
|
$
|
97,950
|
|
|
$
|
(32,295)
|
|
|
|
(33%)
|
|
|
$
|
(626)
|
|
|
$
|
60,161
|
|
|
$
|
(60,787)
|
|
|
|
(101%)
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic
|
|
$
|
0.77
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.01)
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share, diluted
|
|
$
|
0.77
|
|
|
$
|
1.14
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.01)
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
85,290
|
|
|
|
86,006
|
|
|
|
|
|
|
|
|
|
|
|
84,787
|
|
|
|
86,096
|
|
|
|
|
|
|
|
|
|
Diluted
(e)
|
|
|
85,447
|
|
|
|
86,100
|
|
|
|
|
|
|
|
|
|
|
|
84,787
|
|
|
|
86,207
|
|
|
|
|
|
|
|
|
|
SEAWORLD
ENTERTAINMENT, INC. AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
Ended September 30,
|
|
|
Change
|
|
|
For the Nine
Months
Ended September 30,
|
|
|
Change
|
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
|
2016
|
|
|
2015
|
|
|
$
|
|
|
%
|
|
Net income
(loss)
|
|
$
|
65,655
|
|
|
$
|
97,950
|
|
|
$
|
(32,295)
|
|
|
|
(33%)
|
|
|
$
|
(626)
|
|
|
$
|
60,161
|
|
|
$
|
(60,787)
|
|
|
|
(101%)
|
|
Provision for income
taxes
|
|
|
71,777
|
|
|
|
57,850
|
|
|
|
13,927
|
|
|
|
24%
|
|
|
|
27,405
|
|
|
|
34,462
|
|
|
|
(7,057)
|
|
|
|
(20%)
|
|
Loss on early
extinguishment of debt and write-off
of discounts and debt issuance costs
(d)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,348
|
|
|
|
(20,348)
|
|
|
|
(100%)
|
|
Interest
expense
|
|
|
15,137
|
|
|
|
15,019
|
|
|
|
118
|
|
|
|
1%
|
|
|
|
44,297
|
|
|
|
50,929
|
|
|
|
(6,632)
|
|
|
|
(13%)
|
|
Depreciation and
amortization
|
|
|
40,921
|
|
|
|
44,505
|
|
|
|
(3,584)
|
|
|
|
(8%)
|
|
|
|
156,677
|
|
|
|
138,469
|
|
|
|
18,208
|
|
|
|
13%
|
|
Equity-based
compensation expense (f)
|
|
|
2,545
|
|
|
|
1,549
|
|
|
|
996
|
|
|
|
64%
|
|
|
|
34,596
|
|
|
|
4,800
|
|
|
|
29,796
|
|
|
|
621%
|
|
Other non-cash
expenses (g)
|
|
|
1
|
|
|
|
280
|
|
|
|
(279)
|
|
|
|
(100%)
|
|
|
|
6,645
|
|
|
|
4,310
|
|
|
|
2,335
|
|
|
|
54%
|
|
Other business
optimization costs (h)
|
|
|
103
|
|
|
|
—
|
|
|
|
103
|
|
|
ND
|
|
|
|
1,939
|
|
|
|
—
|
|
|
|
1,939
|
|
|
ND
|
|
Other adjusting items
(i)
|
|
|
(117)
|
|
|
|
—
|
|
|
|
(117)
|
|
|
ND
|
|
|
|
2,705
|
|
|
|
—
|
|
|
|
2,705
|
|
|
ND
|
|
Other items
(j)
|
|
|
—
|
|
|
|
307
|
|
|
|
(307)
|
|
|
|
(100%)
|
|
|
|
233
|
|
|
|
307
|
|
|
|
(74)
|
|
|
|
(24%)
|
|
Adjusted EBITDA
(k)
|
|
$
|
196,022
|
|
|
$
|
217,460
|
|
|
$
|
(21,438)
|
|
|
|
(10%)
|
|
|
$
|
273,871
|
|
|
$
|
313,786
|
|
|
$
|
(39,915)
|
|
|
|
(13%)
|
|
Net cash provided
by operating activities
|
|
$
|
147,134
|
|
|
$
|
137,838
|
|
|
$
|
9,296
|
|
|
|
7%
|
|
|
$
|
258,871
|
|
|
$
|
279,920
|
|
|
$
|
(21,049)
|
|
|
|
(8%)
|
|
Capital
expenditures
|
|
|
32,272
|
|
|
|
33,595
|
|
|
|
(1,323)
|
|
|
|
(4%)
|
|
|
|
135,496
|
|
|
|
117,129
|
|
|
|
18,367
|
|
|
|
16%
|
|
Free Cash Flow
(l)
|
|
$
|
114,862
|
|
|
$
|
104,243
|
|
|
$
|
10,619
|
|
|
|
10%
|
|
|
$
|
123,375
|
|
|
$
|
162,791
|
|
|
$
|
(39,416)
|
|
|
|
(24%)
|
|
Net income
(loss)
|
|
$
|
65,655
|
|
|
$
|
97,950
|
|
|
$
|
(32,295)
|
|
|
|
|
|
|
$
|
(626)
|
|
|
$
|
60,161
|
|
|
$
|
(60,787)
|
|
|
|
|
|
Restructuring and
other related costs (c)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
112
|
|
|
|
267
|
|
|
|
(155)
|
|
|
|
|
|
Loss on early
extinguishment of debt and write-off
of discounts and debt issuance costs
(d)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
20,348
|
|
|
|
(20,348)
|
|
|
|
|
|
Other items
(m)
|
|
|
—
|
|
|
|
500
|
|
|
|
(500)
|
|
|
|
|
|
|
|
67,971
|
|
|
|
500
|
|
|
|
67,471
|
|
|
|
|
|
Income taxes of
certain non-GAAP adjustments
|
|
|
—
|
|
|
|
(193)
|
|
|
|
193
|
|
|
|
|
|
|
|
(44,278)
|
|
|
|
(7,850)
|
|
|
|
(36,428)
|
|
|
|
|
|
Adjusted Net
Income (n)
|
|
$
|
65,655
|
|
|
$
|
98,257
|
|
|
$
|
(32,602)
|
|
|
|
|
|
|
$
|
23,179
|
|
|
$
|
73,426
|
|
|
$
|
(50,247)
|
|
|
|
|
|
Net income (loss)
per share, diluted
|
|
$
|
0.77
|
|
|
$
|
1.14
|
|
|
$
|
(0.37)
|
|
|
|
|
|
|
$
|
(0.01)
|
|
|
$
|
0.70
|
|
|
$
|
(0.71)
|
|
|
|
|
|
Restructuring and
other related costs (c)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
(0.00)
|
|
|
|
|
|
Loss on early
extinguishment of debt and write-off
of discounts and debt issuance costs
(d)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
0.24
|
|
|
|
(0.24)
|
|
|
|
|
|
Other items
(m)
|
|
|
—
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
|
0.80
|
|
|
|
0.00
|
|
|
|
0.80
|
|
|
|
|
|
Income taxes of
certain non-GAAP adjustments
|
|
|
—
|
|
|
|
(0.00)
|
|
|
|
0.00
|
|
|
|
|
|
|
|
(0.52)
|
|
|
|
(0.09)
|
|
|
|
(0.43)
|
|
|
|
|
|
Adjusted Net
Income per share, diluted
|
|
$
|
0.77
|
|
|
$
|
1.14
|
|
|
$
|
(0.37)
|
|
|
|
|
|
|
$
|
0.27
|
|
|
$
|
0.85
|
|
|
$
|
(0.58)
|
|
|
|
|
|
Weighted average
common shares outstanding, diluted
|
|
|
85,447
|
|
|
|
86,100
|
|
|
|
|
|
|
|
|
|
|
|
84,977
|
|
|
|
86,207
|
|
|
|
|
|
|
|
|
|
SEAWORLD
ENTERTAINMENT, INC. AND SUBSIDIARIES
|
UNAUDITED BALANCE
SHEET DATA
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
As of
September 30,
2016
|
|
|
As of December
31,
2015
|
|
Cash and cash
equivalents
|
|
$
|
55,807
|
|
|
$
|
18,971
|
|
Total assets
(o)
|
|
$
|
2,379,816
|
|
|
$
|
2,388,662
|
|
Long-term debt,
including current maturities:
|
|
|
|
|
|
|
|
|
Term B-2
Loans
|
|
$
|
1,327,850
|
|
|
$
|
1,338,387
|
|
Term B-3
Loans
|
|
|
245,800
|
|
|
|
247,900
|
|
Revolving Credit
Facility
|
|
|
—
|
|
|
|
15,000
|
|
Total long-term debt,
including current maturities
|
|
$
|
1,573,650
|
|
|
$
|
1,601,287
|
|
Total stockholders'
equity
|
|
$
|
458,543
|
|
|
$
|
504,120
|
|
SEAWORLD
ENTERTAINMENT, INC. AND SUBSIDIARIES
|
UNAUDITED OTHER
DATA
|
(In thousands,
except per capita amounts)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
Ended September 30,
|
|
Change
|
|
For the Nine
Months
Ended September 30,
|
|
Change
|
|
|
2016
|
|
|
2015
|
|
#
|
|
|
%
|
|
2016
|
|
|
2015
|
|
#
|
|
|
%
|
Attendance
|
|
|
8,341
|
|
|
|
8,371
|
|
|
(30)
|
|
|
|
(0.4%)
|
|
|
17,622
|
|
|
|
18,063
|
|
|
(441)
|
|
|
|
(2.4%)
|
Total revenue per
capita (p)
|
|
$
|
58.18
|
|
|
$
|
59.36
|
|
$
|
(1.18)
|
|
|
|
(2.0%)
|
|
$
|
61.10
|
|
|
$
|
61.07
|
|
$
|
0.03
|
|
|
|
0.0%
|
ND-Not Determinable
(a) Includes non-cash equity compensation expense,
which for the nine months ended September 30, 2016, includes
approximately $9.0 million in equity
compensation expense recorded in operating expenses associated with
certain performance-vesting restricted shares which vested on
April 1, 2016.
(b) Includes non-cash equity compensation expense,
which for the nine months ended September 30, 2016, includes
approximately $18.5 million in equity
compensation expense recorded in selling, general and
administrative expenses associated with certain performance-vesting
restricted shares which vested on April 1,
2016.
(c) Reflects restructuring and other related costs
for the nine months ended September 30, 2016 primarily related
to severance and other employment expenses for positions eliminated
in the first quarter of 2016. For the nine months ended
September 30, 2015, reflects salaries and severance for
individuals with continuing service obligations which were impacted
by the restructuring program announced in December 2014.
(d) Reflects a $14.3
million premium paid for the early redemption in
April 2015 of $260.0 million of the company's then-existing
Senior Notes, along with a write-off of approximately $6.0 million in related discounts and debt
issuance costs in the nine months ended September 30,
2015.
(e) During the three months ended September 30,
2016 and 2015, there were approximately 4,374,000 and 2,463,000,
respectively, anti-dilutive shares of common stock excluded from
the calculation of diluted earnings per share. During the
nine months ended September 30, 2016, there were approximately
4,811,000 potentially dilutive shares excluded from the computation
of diluted loss per share as their effect would have been
anti-dilutive due to the company's net loss during the period.
During the nine months ended September 30, 2015 there were
approximately 1,599,000 anti-dilutive shares of common stock
excluded from the computation of diluted earnings per
share.
(f) Reflects non-cash equity compensation expenses
associated with the grants of equity compensation and includes
$27.5 million in the nine months
ended September 30, 2016 associated with certain
performance-vesting restricted shares which vested on April 1, 2016.
(g) Reflects non-cash expenses related to
miscellaneous asset write-offs, including $6.4 million in the nine months ended
September 30, 2016 associated with the Blue World Project, and
non-cash losses on derivatives.
(h) Reflects business optimization and other
strategic initiative costs primarily composed of $0.1 million and $1.6
million of third party consulting costs incurred in the
three and nine months ended September 30, 2016, respectively,
and $0.4 million of restructuring and
related costs associated with severance and other employment
expenses for certain positions eliminated in the first quarter of
2016 as a result of cost savings initiatives. The Adjusted
EBITDA calculations presented in the table above do not reflect
certain 2015 other business optimization costs incurred due to
limitations as described in footnote (k) below.
(i) Reflects an adjustment of $0.1 million and costs incurred of $2.6 million related to product and intellectual
property development costs for the three and nine months ended
September 30, 2016, respectively, and approximately
$0.1 million of state franchise taxes
paid in the nine months ended September 30, 2016. State
franchise taxes were not included in the prior year quarter.
The Adjusted EBITDA calculations presented in the table above do
not reflect certain 2015 other adjusting items incurred due to
limitations as described in footnote (k) below.
(j) Reflects the impact of certain items which the
company is permitted to exclude under the credit agreement
governing the company's Senior Secured Credit Facilities due to the
unusual nature of the items. The credit agreement allows these
items to be excluded on an after-tax basis only, and accordingly,
these items are presented net of related taxes of approximately
$0.1 million in the nine months ended
September 30, 2016 and $0.2
million in the three and nine months ended
September 30, 2015.
(k) Adjusted EBITDA is defined as net income (loss)
before income tax expense, interest expense, depreciation and
amortization, as further adjusted to exclude certain non-cash, and
other items permitted in calculating covenant compliance under the
credit agreement governing the company's Senior Secured Credit
Facilities. Management believes the presentation of Adjusted EBITDA
is appropriate as it eliminates the effect of certain non-cash and
other items not necessarily indicative of a company's underlying
operating performance. Management uses Adjusted EBITDA in
connection with certain components of its executive compensation
program. In addition, investors, lenders, financial analysts and
rating agencies have historically used EBITDA-related measures in
the company's industry, along with other measures to estimate the
value of a company, to make informed investment decisions and to
evaluate a company's ability to meet its debt service requirement.
The presentation of Adjusted EBITDA also provides additional
information to investors about the calculation of, and compliance
with, certain financial covenants in the company's Senior Secured
Credit Facilities. Adjusted EBITDA is a material component of these
covenants.
For covenant calculation purposes under the company's credit
agreement, the amount which the company is able to add back to
Adjusted EBITDA for other business optimization costs and certain
other adjusting items, including restructuring costs and product
and intellectual property development costs, is limited to
$10.0 million for any four
consecutive quarters (with certain unused amounts carried over from
the prior fiscal year). Due to these limitations, the
Adjusted EBITDA calculations presented in the table above do not
reflect $0.3 million related to
restructuring and other related costs in the nine months ended
September 30, 2015 as well as $1.3
million and $2.5 million of
product and intellectual property development costs incurred in the
three and nine months ended September 30, 2015,
respectively.
(l) Free Cash Flow is defined as net cash provided by
(used in) operating activities less capital expenditures.
Management believes that Free Cash Flow is useful to investors,
equity analysts and rating agencies as a liquidity measure. The
company uses Free Cash Flow to evaluate its ability to generate
cash flow from business operations. Free Cash Flow does not
represent the residual cash flow available for discretionary
expenditures, as it excludes certain expenditures such as mandatory
debt service requirements, which are significant. Free Cash Flow is
not defined by GAAP and should not be considered in isolation or as
an alternative to net cash provided by (used in) operating,
investing and financing activities or other financial data prepared
in accordance with GAAP. Free Cash Flow as defined above may differ
from similarly titled measures presented by other companies. Prior
to the second quarter of 2016, the company's definition of Free
Cash Flow differed from the above. The company changed the
definition of Free Cash Flow to provide a more meaningful metric to
investors. Prior year amounts have been calculated using the
above definition in all periods presented.
(m) Reflects the impact of certain items during
the nine months ended September 30, 2016 which the company
does not consider indicative of ongoing operating performance, as
previously disclosed, and primarily includes (i) $33.7 million in accelerated depreciation related
to the disposal of deep-water lifting floors from the orca habitats
of each of the three SeaWorld-branded parks; (ii) $27.5 million of equity compensation expense
related to certain performance-vesting restricted shares which
became probable of vesting in the first quarter of 2016; and (iii)
$6.4 million in asset write-offs
associated with the company's Blue World Project.
(n) Adjusted Net Income is defined as net income
before the after-tax impact of the restructuring and other related
costs, loss on early extinguishment of debt and write-off of
discounts and debt issuance costs as well as other items the
company considers unusual, if any, during the periods presented.
Adjusted Net Income per Diluted Share is calculated by dividing
Adjusted Net Income for the period by the diluted shares
outstanding. Management presents Adjusted Net Income and Adjusted
Net Income per Diluted Share to eliminate the impact of items, net
of tax, that management does not consider indicative of ongoing
operating performance due to their inherent unusual nature or
because they result from an event of a similar nature. Income
taxes related to these non-GAAP adjustments are presented
separately in the table above and reflect the current and deferred
income tax impact for the periods presented.
(o) Certain prior year amounts have been reclassified
to conform to the 2016 presentation, in particular, $2.5 million of noncurrent deferred tax
liabilities, net, previously included in total assets has been
reclassified to total liabilities. The reclassification is as a
result of the adoption of Accounting Standards Update ("ASU")
2015-17, Balance Sheet Classification of Deferred Taxes
during the first quarter of 2016.
(p) Calculated as total revenues divided by
attendance.
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SOURCE SeaWorld Entertainment, Inc.