From the
Orlando Sentinel
SeaWorld posts record sales and profits for third quarter
By Jason Garcia, Orlando Sentinel
SeaWorld Entertainment Inc. reported record third-quarter sales and profit Wednesday, buoyed by higher prices and a strong performance at its marine park in Orlando.
The Orlando-based theme-park company said its quarterly profit ballooned 30 percent from the same period a year ago, from $92 million to $120 million. Total revenue rose 3 percent, to $538 million.
In an interview, SeaWorld President and Chief Executive Officer Jim Atchison said the Orlando and San Diego SeaWorld parks drove the company's growth.
"Our two flagship parks are leading the pack for our 11-park portfolio," he said.
Although he would not disclose park-specific figures, Atchison said SeaWorld Orlando is also enjoying a record year individually, due partly to the May opening of "Antarctica: Empire of the Penguin," a new land that was the largest expansion in the park's history.
"We feel very good about the attraction, what it's done and the performance it's driving for us," Atchison said during a conference call with analysts.
Chain-wide attendance fell 3.6 percent during the quarter, from 9.2 million to 8.9 million. The company also owns a SeaWorld in San Antonio, Busch Gardens theme parks in Tampa and Williamsburg, Va., and several smaller parks.
But SeaWorld said part of the drop was the result of a strategic decision to charge higher prices, scale back discounts and steer ticket sales through more profitable channels, such as company-owned online and mobile-commerce platforms.
The higher margins more than made up for the smaller crowds. SeaWorld said admission revenue per guest rose 9.1 percent during the quarter, from $35.19 to $38.38 per visitor.
Spending on food, souvenirs and in-park experiences rose 3.5 percent, from $21.61 to $22.36 per visitor. SeaWorld said its combined per-capita spending level for the quarter — $60.74 per person — was also a company record.
The company said attendance trends have improved in recent months. The sharpest decline occurred in July, when attendance dipped 5.7 percent because of poor weather. But it said attendance was down only 1.8 percent combined in August and September and was "comparable" to last year in October, the first month of the fourth quarter.
SeaWorld said poor weather — primarily heavy rain in Florida — cost it about $10 million in lost revenue during the quarter.
The company also cited bad weather as a major factor during the spring, after companywide attendance tumbled 9 percent during the second quarter. Competing theme-park operators, including Walt Disney Co. and Universal Orlando parent Comcast Corp., have not reported any similar weather impacts.
SeaWorld executives said their company is more vulnerable to weather than others for several reasons. SeaWorld's business is more heavily concentrated in Florida, where five of its 11 parks are based. Some of its parks, notably Busch Gardens Tampa Bay, rely on a higher percentage of annual-pass holders, who are more likely to change their plans in the event of rain. And SeaWorld doesn't have hotels at its theme parks as Disney and Universal do. The hotels serve to lock in visits.
SeaWorld signaled that it expects to expand — and potentially soon. Asked on the conference call if SeaWorld might announce a new theme park within the next 12 to 24 months, Atchison responded: "I don't think that's outside the realm of possibility."
"We have put quite a bit of work into a handful of development initiatives and feel very good about the progress that they're making," he said.
In the interview, Atchison said there has been "great reception and interest" in SeaWorld's various brands in overseas markets, identifying both Asia and the Middle East. He also said SeaWorld executives still believe "there are some opportunities" to add parks in the U.S., possibly with a new park brand.
SeaWorld's record-breaking third quarter marked an important rebound for the newly public company, after a second quarter in which it lost $15.9 million and disappointed Wall Street.
But while the improved performance is likely to please analysts and investors, it could complicate matters for SeaWorld in another arena: federal court, where it is battling the U.S. Occupational Safety and Health Administration. The workplace-safety agency, which investigated SeaWorld after a trainer was killed by a killer whale in February 2010, has recommended that trainers be prohibited from having close, unprotected contact with the giant marine predators.
One day before SeaWorld announced its earnings, company lawyers were in Washington, D.C., arguing before a three-judge appellate court that its business depends on displaying humans and killer whales in close contact.
Atchison declined to discuss the case in detail when asked during the conference call.
"We remain very confident in our case," he said.