Q3 2019 Earnings Call
Good morning.
Welcome to the <unk> third quarter 2019 earnings conference call.
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Oh now, let's turn the conference over the Matthew Stroud, Vice President Investor Relations. Please go ahead Sir.
Thank you and good morning, everyone welcome to see World third quarter 2019 earnings Conference call today's call is being webcast and recorded.
Press release was issued this morning and is available on our Investor Relations website at Www Sea World investors Dotcom.
A replay information for this call can be found in the press release and won't be available on our website following the call.
Joining me. This morning are Mark Swanson interim Chief Executive Officer, elliptical ACSI interim Chief Financial Officer, and Chief Accounting Officer.
And surgery era recently appointed Chief Executive Officer, whose first official day will be Monday November 11.
This morning, we will review our third quarter 2019 financial results and then we will open up the call to your questions.
Before we begin I would like to remind everyone that our comments today will contain forward looking statements within the meaning of the federal securities laws.
These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward looking statements, including those identified in their risk factor section of our annual report on Form 10-K , and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
These factors may be updated from time to time and will be included in our filings with the FCC that are available on our website.
We undertake no obligation to update any forward looking statements.
In addition on the call we may reference adjusted EBITDA and free cash flow, which are non-GAAP financial measures.
More information regarding our forward looking statements and reconciliations of adjusted EBITDA and free cash flow to the most comparable GAAP measure is included in our earnings release available on our website and can also be found in our filings with the SEC.
Now I'd like to turn the call over to Mark Swanson Mark.
Thank you Matthew good morning, everyone and thank you for joining us.
I'm very excited to have the opportunity to introduce surged to everyone today.
Outlined in our press release this morning, Serge will be officially joining as CEO on Monday.
Elizabeth and I will take you through the quarter and answer your questions today, but we thought it would be good for you to briefly here from search.
I'll pass the call over to search for some brief remarks, and then Elizabeth and I will take you through the quarter.
<unk>.
Thank you Mark.
Good morning, everyone.
I'm excited to be here at Seaworld Entertainment.
The company has an exceptional business model irreplaceable set of assets and incredibly talented group of ambassadors, who are delivering extraordinary service had experiences to all our gas.
I've been out to most of our par for.
2019 earnings conference call.
All participants will be in a in listen only mode.
Did you need assistance, placing only conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you My press Star then one on your telephone keypad to withdraw your question. Please press Star then too.
Please note this event is being recorded.
Oh knowledge to turn the conference over to Matthew Stroud, Vice President of Investor Relations. Please go ahead Sir.
Thank you and good morning, everyone welcome to see World third quarter 2019 earnings Conference call today's call is being webcast and recorded.
Press release was issued this morning and is available on our Investor Relations website at Www Sea World investors Dotcom.
Replay information for this call can be found in the press release and won't be available on our website following the call.
Joining me this morning, our Mark Swanson interim Chief Executive Officer, Elizabeth Eckel, ACSI interim Chief Financial Officer, and Chief Accounting Officer.
And surge Rivera recently appointed Chief Executive Officer, whose first official day will be Monday November 11.
This morning, we will review our third quarter 2019 financial results and then we will open up the call to your questions.
Before we begin I would like to remind everyone that our comments today will contain forward looking statements within the meaning of the federal securities laws.
These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward looking statements, including those identified in the risk factor section of our annual report on Form 10-K , and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
These factors may be updated from time to time and will be included in our filings with the SEC that are available on our website.
We undertake no obligation to update any forward looking statements.
In addition on the call we may reference adjusted EBITDA and free cash flow, which are non-GAAP financial measures.
More information regarding our forward looking statements and reconciliations of adjusted EBITDA and free cash flow to the most comparable GAAP measure is included in our earnings release available on our website and can also be found in our filings with the SEC.
Now I'd like to turn the call over to Mark Swanson Mark.
Thank you Matthew good morning, everyone and thank you for joining us.
I'm very excited to have the opportunity to introduce search to everyone today.
As outlined in our press release this morning, Serge will be officially joining as CEO on Monday.
Elizabeth and I will take you through the quarter and answer your questions today, but we thought it would be good for you to briefly here from search.
Ill pass the call over to search for some brief remarks, and then Elizabeth and I will take you through the quarter.
Search.
Thank you Mark good morning, everyone.
I'm excited to be here at Seaworld Entertainment.
Company has an exceptional business model irreplaceable set of assets and incredibly talented group of ambassadors, who are delivering extraordinary service had experiences to all our gas.
I've been out to most of our parks over the past several weeks and it's been really incredible to see health specialties parks truly are.
As Mark will tell you shortly the company has made good progress as executing against its long term plan.
But we know there's a lot more to do to unlock the long term potential of this business.
I look forward to working with this talented team to further improve our execution and dramatically increase shareholder value.
Given that I don't officially start at at the company until Monday, I won't have much to say today, but I look forward to speaking with many of you in the coming quarters and updating everyone on our progress as we grow this company.
Let me turn the call back to Mark Mark.
They search.
I am pleased with the progress we have made this year towards optimizing our business and operations.
While we're disappointed with our financial results in the quarter. We believe these results would have been stronger and we would have grown attendance revenue and adjusted EBITDA.
Absent unusually unfavorable weather.
The negative calendar shift and the significant overspend, a certain marketing related expenses.
Our third quarter net income was $98 million, an increase of $2 million over the prior year third quarter and adjusted EBITDA was $206.9 million a decline of $5.5 million over the prior year.
Our trailing 12 month net income stands at $102.6 million and our trailing 12 month adjusted EBITDA of $437.6 million.
Attendance in the third quarter was 8.1 million guest.
Down 221000 gas from the prior year quarter.
Over the peak visitation period of July and August attendance across several of our parks, particularly in Florida was negatively impacted by more rain days when compared to the prior year.
We estimate the number of weather days impacting the quarter for Florida parks increased by almost 50% compared to the prior year quarter.
In addition over the extended Labor day weekend, one of our highest attendance weekends of the year attendance at our Florida parks with considerably impacted by Hurricane Dorian and its related impact on travel and visitation planned and park operating hours.
We estimate the attendants impact related to Hurricane Dorian was over 90000 visits.
Also this quarter was negatively impacted by calendar shift we lost one peak weekend summer day in July and gain in off peak weekday in September .
In aggregate, we estimate the combination of unusually unfavorable weather and the negative calendar shift reduced our quarterly attendance by approximately 330000 visits.
Despite the weather in calendar headwinds that negatively impacted our tenants.
We continue to grow our total revenue per capita and we continued to make good progress on our cost and efficiency initiative.
Our progress on cost reductions was masked in the quarter by significant overspend in marketing expenses of approximately $9.5 million related to less disciplined management of certain marketing related costs.
We have since made adjustments to our process to better manage these costs.
On the positive side on days, where there were no adverse weather conditions during the quarter, we performed well sometimes very well for example in the month of July .
We recorded three separate days with near all time record daily attendance.
For the third quarter, including these three days, we had a total of six separate days of top 20 daily attendance since we've been a public company.
Additionally in September we had an all time record breaking weekends in attendance at two of our larger parks.
In short we have confidence our strategy is working and asked an unfavorable weather, we're able to drive attendance revenue and adjusted EBITDA.
In the third quarter, we had many of our guest favorite events going on including our one of a kind Sesame parade at several ballparks, Our award winning electric Ocean event in each of our Seaworld parks and our popular summer nights events in our Busch Gardens parks.
In September we began our Halloween events, which continued through October and ended this past weekend.
In fact, while we are very early in the fourth quarter. We're pleased with the performance of our Halloween events across the portfolio.
Through the conclusion of these events on Sunday November Threerd, we have seen growth in both attendance and revenue quarter to date on a year over year basis.
Later this month, our popular holiday events, featuring Rudolph the Red knows Ranger well start to roll out how many of our parks given guest another reason to visit throughout the end of the year.
Despite the headwinds in the third quarter, our year to date results remain strong compared to the prior year period.
On a year to date basis net income was $113.7 million, an increase of $57.8 million over the first nine months of 2018.
Or 103.5% higher.
And adjusted EBITDA was $373 million, an increase of $36.3 million over the prior year or 10.8% higher.
While we're pleased with our year to date progress through the end of the third quarter of 2019, we know we can do better.
As we have communicated previously we strongly believe there's additional opportunity to drive significantly improved financial performance and we are intensely focused on continuing to execute throughout the fourth quarter. We're enthusiastic about the future and are increasing ability to deliver meaningful operational and financial improvement.
With that I'd like to turn the call over to Elizabeth to discuss our financial results in more detail.
Elizabeth.
Thanks, Mark and good morning, everyone.
As Mark mentioned, we face some headwinds next quarter, which we actively work to try to mitigate and although we ended the quarter softer than we expect that we were encouraged by resulting non weather impacted Kay and our year to date result, I first I'd like to remain strong.
Let me first walk you through our third quarter results, then I'll touch on some of our year to date and Barry.
Our attendance for the third quarter was 8.1 natural gas a decline of 2.6% or 221000 gas from the prior year.
We believe factors impacting attending largely related to our favorable weather and the calendar shift featured one last weekend during the quarter.
Give you some context.
On the internal estimates and analysis, we believe weather impacts and the calendar shift combined led to a shortfall at approximately 330000 gas in the quarter.
190000 of which we attribute to weather impacts and 140000 to the calendar shift.
Included in the weather Ethernet is the impact from Hurricane Dorian over Labor day weekend, which we estimate contributed to a shortfall of more than 90000 gas.
As a reminder, the calendar shift this corner results from trading a weekend gained July four week day in September when compared to the prior year.
During the quarter, we generated total revenue of $473.7 million, a decrease of $9.5 million or two per cent compared to the third quarter 2018.
This was driven by decreases in attendance, partially offset by increased total revenue per capita.
Third quarter total revenue per capita was $68.31 compared to $57 a 91 cents in the third quarter 2018.
This improvement was driven by an increase in in part per capita spending and was partially offset by decline in admissions per cap.
In park for capital spending increased 3.9%, primarily due to pricing initiatives increased sales of in park products.
Admissions per capita declined 1.6% primarily due to continued implementation of targeted promotions and pricing strategy and was partially offset by price increases taken on certain admission products.
Operating expenses were $175.6 million.
Decrease of $23.1 million or 11.6% and like primarily related to our reduction in labor costs as a result with cost efficiency and a decrease in noncash asset write off.
Selling general and administrative expenses were $64.6 million, an increase of $13.1 million or 25.4% and was largely due to an over spending marketing costs of approximately nine in half million dollars and the timing of certain expenses that shifted from the first half the year into Q3.
As Mark mentioned, the over spending marketing with did less disciplined management of certain marketing related cost during the quarter.
We have sense made adjustments to our process to better manage these costs and we do not expect this type of already spent to repeat.
Turning back to the rest of our financials.
We reported net income of $98 million, an increase of $2 million or 2.1% when compared to the third quarter of 2018.
Net income in 2019 includes approximately $1.2 million, a pre tax expenses associated with restructuring and other separation related costs, which for the third quarter of 2018 were approximately $3.9 million.
Adjusted EBITDA for the third quarter with $206.9 million, a decline of $5.5 million compared to the prior year quarter.
The adjusted EBITDA decline was primarily driven by the decrease in total revenue increased marketing expenses and was partially offset by the realization of cost savings initiatives.
We continue to make progress on the expense reduction Frac last year, we identified significant opportunities that we began to execute on to streamline our business reduce redundant expenses and operate more efficiently.
Efforts have continued into 2019 as we continue to identify additional cost reduction opportunities and efficiency.
The results of these efforts are apparent in our financial results and we anticipate finding additional cost savings and efficiencies into 2020.
Looking at our results for the first nine months of 2019 total attendance was 17.9 million guests a decrease of approximately 57000 gas or 0.3% and total revenue was $1.1 billion, an increase of $8 million or 0.7%.
Net income for the period was $113.7 million, an improvement of $57.8 million and adjusted EBITDA was $373 million, an increase of $36.3 million or 10.8%.
Net income for the first nine months of 2019 includes approximately $8.1 million at pre tax expenses associated with the previously announced equity transactions and separation related costs.
Net income for the first nine months of 2018 includes approximately $34 million at pre tax expenses associated with separation related costs and legal settlement Nicole.
Now turning to our balance sheet.
Our current deferred revenue balance as of the ended the quarter was $114.5 million, an increase of approximately 6% when compared to third quarter of 2018.
For the third quarter, we reported approximately $153 million and total capital expenditures of which approximately $137 million relates to core capex.
As we have previously disclosed we still anticipate approximately $115 million and core capital expenditures and 30 million to $35 million of non core capital expenditures in 2019.
Noncore capital expenditures are associated with expansion in ROI projects, including new properties, such as Sesame place, San Diego, and new revenue opportunities and or cost reduction opportunity.
As noted in this morning's earnings release, our net leverage ratio was 3.34 times, which is calculated by using adjusted EBITDA, including estimated cost saving for the 12 months ended September Thirtyth 2019, as defined in our amended credit agreement.
Although the third quarter presented some headwinds our year to date results remain strong as Mark mentioned, we believe we have significant opportunity for even further improvement.
To accomplish this we will continue to focus on driving additional attendance and total revenue, while reducing unnecessary costs and continuing to identify more efficient ways to operate our business.
We're making progress which gives us confidence in our ability to achieve the higher end of our goal of $475 million to $500 million of adjusted EBITDA by the end of 2020.
Now, let me turn to call back over to Mark's who will share some final thoughts mark.
Thank you Elizabeth.
Before we open the call to your question I have some closing comments.
Two weeks ago, we announced that we would build our second Sesame place Park on the site of our existing aquatic a water park located Chula Vista, California near San Diego.
We are excited about this new location for Sesame place on the West Coast.
Let me clear aquatic a San Diego remain open for its final season of operation beginning in May of 2020.
As such we look forward to welcoming guess for one more season of exciting fund at aquatic the San Diego.
We anticipate opening Sesame place San Diego in the spring of 2021.
We are looking forward to opening this part and continuing our work on future potential sesame place parks across the United States.
In addition to our Sesame place San Diego announcement, we have recently announced some of our slate of 2020 attractions across our parks.
We're particularly excited to introduce will we believe is the strongest lineup of new rides and attractions in our history, including many whatever kind world class rights.
Almost every park will get a new ride or slide, including thrilling new coasters at all Seaworld and Busch Gardens parks.
The first time, we've ever done this.
The new rides, we have announced so far include the following.
Let's see world Orlando will introduce ice breaker acquired launch family coaster with four airtime filled launches both backwards and forwards.
Formulating a reverse launch into the steepest beyond vertical drop in Florida.
93 foot, Paul Spike with 100 degree angle.
Let's see rose San Diego, we will introduce the policy fastest and longest dive coaster in southern California.
At Seaworld, San Antonio will introduce Texas thing Ray.
Hi, Threed wooden coaster, the tallest fastest and longest wooden coaster in Texas, where riders will reach speeds of 55 miles per hour.
At Busch Gardens, Tampa Bay, we will introduce iron Guazi, the tallest fastest hybrid coaster in Florida that will plus riders from a 206 foot tall peek into a 91 degree drop and reach top speeds of 76 miles per hour.
At Busch Gardens, Williamsburg, we will introduce pantheon.
The fastest multi launched coaster in the world.
We are riders will experience three launches and speed of 73 miles per hour.
And had adventure island, we will introduce solar vortex America's first dual tailspin waterslide.
Stay tuned for more announcements as we have many new rides and attractions for 2020, which we believe is the strongest lineup of new rides and attractions in our history.
I want to thank our outstanding team of ambassadors for their efforts this summer and fall.
They continue to remain focused on providing exceptional service and safe and meaningful experiences to our guests.
I believe we have some of the best most passionate employees in the theme park industry and I'm really proud to be working with them.
On the rescue side, we recently announced that we have surpassed 36000 animal rescue over the last 55 years.
We are one of the world's leading animal rescue organizations and we are proud of our efforts to protect and save wildlife.
We know of no company that does more to protect marine mammals, and advanced Cetacean research rescue and conservation, let's see world.
In fact during the third quarter, we came to the eight of over 490 animals into while that were in need of care.
It is our mission hope and expectation that our actions also inspired us to consider and protect the animals their habitats and the wild wonders of our world.
As we've said before we have an exceptional business model, we're focused on improving our execution and continuing our efforts to adjust and enhance our marketing and communications initiatives.
As well as their pricing strategies, along with our goal of introducing new compelling rides attractions and events in every park every year.
We will continue to identify and execute on cost and capital efficiency initiatives that we expect will contribute to meaningfully improved margins and profitability.
Through these efforts, we're confident we will deliver attendance revenue and adjusted EBITDA growth that will result in meaningful increased shareholder value.
Even with this company for nearly 20 years.
Sided about the direction we're heading.
I see significant opportunities to improve and grow our business, which will help us deliver the improved financial performance. This company is capable of achieving.
With that let's open up the line to take your questions.
Thank you we will now begin in the question and answer session.
To ask a question you remember stores doing wrong on that touched on telephone.
We are using the speaker phone when I see a place for copper handset for pressing the keys.
The majority your question Please press star isn't too.
We also asked me please limit yourself to one question was a single <unk> single follow up if you're doing no further questions you may recall Q.
At this time, we will pause momentarily to assemble a roster.
Today's first question comes from Steve Rosinsky, Oh Stifel. Please go ahead.
Hey, good morning, guys.
So so mark I wanted to dig a little bit more to that to the nine enough million marketing spend that you said once nine this quote unquote on disciplined.
Can we give more color around I guess, what that means and I guess, where was that money spent or what it was spent on meeting.
With that more Orlando beans to wasn't San Diego base was it across the board I'm just trying to figure out.
This was kind of a telenor measure against whether that's star wars in Orlando or or just competition in general.
Yeah, Hey, Steve its Mark I can take that question look it's like we laid out in the in the release and then in the prepared remarks, we have to make a mental.
Marketing spend we didn't do a I'm a very good job of managing or optimizing are adjusting that spend and and ultimately we don't think we we got a very meaningful return out of that spend and we probably should have done it.
The good news is we've put a process and procedure in place weve enhances processes and procedures to make sure something like this doesn't happen again.
Specifically, how it was spent I think it was a combination of of media and creative and.
Again, we have about our process, we don't expect that that type of thing to repeat again.
And I guess to follow up there in terms of Oh My God My last part of that question was.
I'm just going to ask it in terms of no from a star Wars perspective in Orlando I mean can you give any kind of commentary as to how has that been impactful or the not been impactful as it's been kind of what you guys would expect it.
Look I think absent the the weather impacts we've seen in Orlando that we called out we saw we called out the.
Almost 50% increase in weather impacted days now we're pleased with our performance in Orlando you know the and when you look at kind of the the tourist mix coming into our parks I think in general overall were fairly pleased with that so we've been competitors here for for a long time since the seventies.
We know a lot of parks have opened since since that time, there's been a lot of world class attractions coming into the area, but we feel good about our opportunity to compete with our product our differentiated attractions and product mix our value proposition, how we do things in our parks. So we welcome the competition, we welcome more people to Orlando and I guess.
Set absent the weather impacts we feel we feel pretty good about our results in Orlando and in Florida.
Thank you. Our next question today comes from James Hardiman, Our Wedbush Securities. Please go ahead.
Hi, good morning, Thanks for taking my call. So I I really appreciate some of the data in terms of the <unk>.
The various factors that impacted the quarter the calendar the weather I wanted to Peel back on that a little bit.
So that 330000 visit number.
140000 of that sounds like was the calendar shift I guess first question is that is the year to date calendar now even or should we expect.
Yeah, I guess and should we expect any sort of calendar shifts in the fourth quarter.
And then the remaining 109 BK of whether is that an absolute number of weather impacted visits or is that 190000 visits that you feel like you lost over and above 2018.
Yeah, Hey, James as Mark if I can I can take that question.
Look the the you know in the calendar you know I think there's a small there's probably a small benefits still to come in Q4 with just the timing of some school breaks as best we can estimate, but I don't it's not it's not.
You know has significant obviously is to shift that we saw in Q3, So I think kind of on a on a on a full year basis. These things tend to normalize out but in Q3, obviously, there was a pretty negative.
Negative shift and but I think by the time, we get to the full year. These things tend to tend to even out over overall.
We did have as we mentioned before a little bit of a favorable calendar shift back in Q2, and then on the specifically on the weather I mean, this would be hundredninety thousand visits that we lost versus last year. So I think what we what we wanted to make sure was clear to people who is our attendance was down 221000.
And.
For the quarter and you know the calendar shift into whether it was 330000. So just by that math alone you can you can.
Figure out that our tenants, we believe would've been up for the quarter based on our estimates without those factors.
Perfect and that and that sort of lead me to my follow up so if I were to add let's assume that on a year to date basis. The calendar is has generally evened out and so if I add that 190000 back to the year to date number I basically get to a year to date attendance growth of just under 1% I guess is that a good bad or how do I.
I put that number in context are you satisfied with that number is a generally what you're looking for do you think that could have been better worse, how do I put that in context.
Yeah, It's a good question.
Like I said, we always want to always want to do better on the tenants, but if you. If you go back and look at our goal that we laid out for Oh by the end of 2020, hitting 475 to 500 million in adjusted EBITDA as we said that that required some recovery of the attendance we lost over time and then.
And then some some modest attendance growth on a go forward basis. So if we weren't able to grow our attendance you know low single digits I think we'd be pleased we always want to do better but I think in this industry a growing at a low single digit and in getting associated per cap growth and expense reductions you know that's a that's a pretty good recipe for.
For a strong EBITDA growth adjusted EBITDA growth.
And our next question today comes from Tim Conder of Wells Fargo Securities. Please go ahead.
Thank you and thank you again for the a good color on the on the on the whether the attendance and everything much appreciated.
Yeah, I want to or maybe hit the the cost side here or mark or whoever we want to take this.
The cost in the quarter the cost savings as part of the plan how should we think what appeared in the piano in the quarter and then what have you already identified that we should anticipate flowing through the piano here in Q4, and then and then in 2020 so again.
Identified not fully yet implemented but to be realized over that period. So a question number one there and then.
On the season passes any color you can give us here on an early basis, how a units or pricing is trending for poor season passes across the network or if you want by by regional color also is that if he could thank you.
Sure to Mark I can I can take that question. So look on the on the cost.
Our revenue is down.
About nine and a half million for the quarter adjusted EBITDA was down five and a half so we flowed through a $4 million of EBITDA savings, obviously, we called out the nine nine and a half million in marketing overspend. So.
That master good portion of otherwise strong cost savings in the quarter those cost savings continue to come.
Primarily in the Opex area, but also.
In other areas as well and we've identified a view in the in a press release, we've estimated our estimated cost savings go forward is 14.9 million.
That we've identified and will have begun to execute on having said that you know we don't we don't put absolutely everything into that bucket. There's other things that we identified and we'll we'll start to execute on and to the extent they stick they get into that bucket, but we're we're doing a lot of work around cost and we're confident we'll find more than.
Then the 14.9 million that that you've seen that number. So we've made you may pretty good progress obviously towards that goal of 50 million. I think you can kind of go back and look at our revenue and EBITDA growth since the beginning of of 2019, our 2018 I should say, our our adjusted EBITDA.
Gross is is outpacing our revenue growth quick.
Fair amount, so thats cost savings were taking and into the same time with the associated attendance and revenue increases we've had since.
At the beginning to 2018, we've we've also offset a good portion of the variable cost associated with that attendance. So we're pretty far along we believe towards achieving that goal of 50 million and we're not going to stop there and as you see we have more cost identified and we're going to continue to fine. We believe find more cost down the road on.
On your second question on the on the season pass sales.
So you heard Elizabeth.
Talking about the deferred revenue up 6% at the end of September .
I see our biggest part of deferred revenue is the season pass sales.
We really began.
Our sales kinda for next year.
In October and just as a reminder.
We have we as kind of two types of of past products. We have the fun card, which you've heard us talk about which is kind of the the entry level pass. If you will it's really just gets you into the park. It doesn't have any benefits and it doesn't also allow you to use the easy pay which is the the monthly payment program and then we.
Have our premium passes which are a series of pass products like Ron Silver gold et cetera, and those as you move up the tier those have associated benefits like free parking.
Discounts on NIM park different different things like that and so our goal is really to try to move people from fund hard to premium.
That's ultimately what we'd like to do we know there is a place for fun card, but our goal is to obviously move as many people's we can from fun card to premium so what I can tell you is yeah.
Sitting here today.
We have more more people today hold a on a premium path at this time than last year, and I think that that kind of ties into.
Directionally some of the deferred revenue et cetera, and then fun card is where we've just started selling probably since mid to late September early October we started selling the fun card for for next year.
And so far the 2020 fun card that we've sold right now we've sold more those and we sold last year at this time of the 2019 fun card. So when you when you put it all together kind of more people today right now have some sort of past product in their hand than they did last year at this time.
Yeah.
Yeah, I don't know I I don't know if I'll give you a specific number but you know it's not a its not an insignificant increase and so we're we're pleased with that but we've got a long way to go obviously were very early.
In the process and we still passes year round, which is perhaps a little bit different than some of our competitors, but we're optimistic that we're going to keep working hard we've got some pockets, where we need to do better obviously, but were up we're excited that more people oh that product today than than last year at this time.
Thank you. Our next question today comes from Alexia Quadrani All JP Morgan. Please go ahead.
Hi, This is Anna on for a lot yeah. Thank you. So much for the question could you talk a little bit about how it doesn't mean street and shocking in Orlando given that you're expanding within deemed area in San Diego.
Yeah, Hey, as Mark I can take that question look.
I think we're really pleased with that without a that area I know a number of folks have been down to see if it's really a neat area has a really authentic feel.
It's almost like you're right there right there on Sesame Street, and so I think we've been really pleased with the result, you know one of the as I mentioned, we've had a lot of weather in the Florida market in the third quarter. So you strip that out obviously.
That's been a factor, but but absent that we're pleased with our performance here and specifically, we're pleased with our performance out of the the new Sesame area that we open.
Great. Thank you.
Sure.
And our next question today comes from Brazil Andrews of Keybanc capital markets. Please go ahead.
Hey, good morning, So I'm still kind of scratching my head on this this marketing spend when when did that occur during the quarter was it was it earlier.
Or later and then also what benefit did that level.
Marketing spend have on attendance in the quarter.
Yeah, Hey, Brett Smart that I can help you with that.
No I mean, it you know I'd say.
Probably happened earlier in the quarter or kind of more in the in the peak peak time to the quarter, which would be more more likely July and August .
And one of things I'll say as you know were.
We're always when we said this last call you know, we're we're testing different things, we're we're making a lot of changes to the business and we know sometimes we're not we're not getting things right.
And we have changes in personnel and we've had we've had some vacancies here and there. So you know those things certainly don't help but you know having said that we recognize we did not manage the process, while we didn't optimize within adjust very well and so we don't we don't believe we got a meaningful return and we sense, but some procedures in place that that we don't expect.
This type of you overspend to occur in the future, we have a better process to to Manocept going forward.
Understood and you also gave us some details on trends in the fourth quarter to date I guess can you elaborate a little more on that what level of growth are you seeing and is that simply better weather conditions here.
Are you leaning more into promotions just any color on the drivers in the fourth quarter here so far.
Yeah. So look you know the fourth the fourth quarter, you know with obviously the.
Our Halloween events and so we ran those in most cases through this past Sunday November 3rd and you know were please.
We're pleased with the the performance of those the as we said in my prepared remarks that the revenue in attendance is up and so we're pleased with that we're not going to go into specific number but I can tell you. It is up and both of them are up you know I you know, whether we don't have the exact break down at this.
Point in time, but you know we had some weather impacted weekends, even in September but you know I think when weather was good we saw some really really good results I mentioned that in September you know, which would in our how long would have started in September as well, we had some really strong weekends as I talked about in my prepared.
His remarks, so one whether it's good we're doing really well and when a win.
With the Halloween events, the equity behind does the popularity of those.
We're pleased with with our results obviously to this past Sunday for the for the fourth quarter.
And ladies and gentlemen, as a reminder, if he would like to ask a question. Please press Star then one at this time. It's a nice next question comes from Chris Protocol of Goldman Sachs. Please go ahead.
Good morning, guys. Thanks, Thanks, so much for taking my question.
I just wanted to touch on your comment around still being confident in hitting the top end of the 2020 EBITDA target.
Could you maybe give some color in terms of how you how you're thinking about the revenue assumption a necessary to hit that target or maybe the composition of that revenue between pricing and attendance for next year I know, it's early but are you comfortable with what you're seeing year to date and in the fourth quarter.
And that you know obviously to still be comfortable with the topline in its into 2020.
Yeah, Hey, Chris its Mark I can I can take that question. Let me just give you kind of the full picture and then I can comment specifically on revenue, but really we laid out that goal for 75 to 500 back in August of 2018. So now we've kinda then through to two summers and so I think we have more visibility more.
Or more understanding of the business and we feel feel really good as you said as we said in her remarks.
Hitting the the high end of that high end of that range and if you look you know today a year to date through September Thirtyth, our adjusted EBITDA is up over 10%.
We have those identified cost savings already sitting out there that you know if you if you take those into the account our LTM would be a in the range of about 452 million with as a estimated cost savings and so from there. We know this this quarter was was impacted by weather you know we think.
Going forward hopefully whether normalizes.
And then we know we have what we believe is the best lineup of attractions.
In our history as a company we got a lot of really good attractions coasters is specifically probably never see Rotem Busch Gardens parks and then other attractions that most of our other part so a good lineup of attractions hopefully some weather normalization and then the continued execution on the cost.
When you kind of laid out all together, we feel we feel good about you know it's in our opinion.
A bridge that we can we can get to from where we are today to the high end of that range specific thing on revenue. We do still have confidence that we can grow our admissions in total revenue impact revenue over the long term you know our impart continues to be strong we grew again this quarter.
And we're seeing continued momentum in that area on our admissions per cap you know, we continue to testing and do different things in that area that sometimes is going to be at odds with the per cap on the efforts to drive total revenue that can get a little complicated when you have a quarter with a lot of weather, obviously, but over the long term, we do believe we can draw.
Growth in that admissions per cap and Thats ultimately our goal you know I can tell you that we do take price increases and.
I don't Wanna get too far out ahead of ourselves, but I think we're we're optimistic about the pricing we can get on a go forward basis. So I think you'll see combinations as we look out getting that goal I think you'll see hopefully a combination of attendance and per cap growth and continued execution on the cost savings, which all those together give us a lot of confidence we can hit the high end of that.
Range.
Great and I have a follow up which is one maybe point of clarification on the cost savings the 14.9 million identified in the release.
That does not include the 9.5 million of marketing spend correct.
No. It does not does not okay, we don't expect anime and a half to obviously.
We don't expect to make that type of you know have that type of issue on a go forward basis, but it is not in that number.
Got it and then maybe on I know, it's early but on Sesame place San Diego.
You know how are you thinking about the expected revenue and EBITDA contribution from that property the capex associated with it when that Capex will start and then.
House in year, one look versus that park closer to maturity. Thank you.
Sure I'll try to unpack that question a little bit free so look we're we're really excited.
To be working with the Sesame workshop on I'm, putting another Sesame Park only the second Standalone Sesame parking United States.
And we'll be putting this in California, obviously, so we're really excited they are great partners. We are we know this is a really strong IP assess me Sesame Street IP is very strong so the San Diego market provides a lot of.
Good weather, which will allow us to run. This park you know combination of what rights in dry rights.
And then we also know its IC got good tourism demographics, and then having to see road. There is another plus you know as far as I'm kind of the cadence of the Capex I mean to see a little bit this year and then obviously it ramps up in 2020 in 2021, I think when you win what I would probably the easiest thing to do is when we file our Q.
Which will be available no later than tomorrow morning, you can go in dive into the footnotes there the commitments footnote and you'll see a little bit more color on on a kind of the expected cost of and how that plays out enough window.
Well as far as you kind of your other question about the returns obviously look the aquatic a brand is a really good brand we have those parks and other locations, but I think it tells you the fact that where I'm going to put a Sesame park. There. We obviously believe sesame product will get get an even better return.
The aquatic a brand we don't have any specific numbers to give you, but but obviously I think it says a lot that were.
We want to put this park there we think thats going to have a good return yeah, we're going to try to do we're going to try to do good obviously right out of the gate, but obviously, you know well I'm sure get better over time, and but our ideas to to try to open this thing with with as much as we can right out of the gate and then you know well make improvements over time.
And our next question today comes from Paul building of Macquarie Capital. Please go ahead.
Thanks for taking my question.
Just a question around how whether in calendar impacted attendance mix of member pass versus single day, and then just a follow on to that or anything any color you can give around how that impacted per caps.
Yeah, Hey, Paul its Mark I can take that question.
I think the simplest way to answer it is really around you know when we look at kind of the the demographics. The source of residency you know so.
Not at not a huge surprise that you know whether it's going to impact your your local and kinda same day visitors. The most have the most optionality.
To change their dates and so you know that that's exactly what we saw and kind of tied to that then would be or your most of your locals. Your locals are more likely to have a pass and so I think that provide you. Some color there you know.
As far as you know on on per caps, you'll look theres as we've said, we're always focused on driving total revenue, but we're going to do obviously some things at times that there might be at odds with the per cap and there's some element of of promotions and pricing strategies in the quarter and sometimes some of those are going to be in response to other some of those are going to be in research.
The other thing so the there probably was some impact obviously on the per cap I think over the long term, we feel good about our ability to grow to grow the per cap over the longer term.
Thanks for calling sure.
And so they just final question comes from Michael source of Suntrust. Please go ahead.
Hi, good morning, guys.
Wanted to ask a question with regards to maybe the commentary around George 2020 guidance and.
Your your comfort level with the high end of that.
Is there any read through ended that kind of change in tone with regards to cost savings in other words or are you now thinking cost savings above 50 million when when you talk about that or what anything above 50 be above and beyond kind of that range, just trying to understand that a little better.
Yeah, Hey, Michael its Mark I can take that question I think the the simplest way.
As we've said, we're not we're not going to stop at 50 million and I think we feel feel pretty good that that we're going to new.
You know exceed that amount we gave a we gave.
You know that illustrate of example of how to get their back in August of 18. So we said look we might over or underperforming certain of these areas attendance per cap in cost, but I think we have a lot of a lot of momentum around cost like I said, if you just kind of look at our adjusted EBITDA growth since the beginning of 18 and you look at our revenue growth.
Obviously, we're outperforming revenue and a lot of that as to cost savings and then we're covering all the variable costs associated with with you know meaningful increases in attendance since the beginning of 18, so any kind of put those two together.
You get yeah, I think it you can kind of get to a number that's pretty close to.
Getting close to 50 million and then we've got these additional.
15, or so million 14.9 million in the estimated cost savings a bucket that's in our release.
Okay, Great. Thank you and then second question just Mark as you had laid out some of the the the new attractions in capital plans for 2020.
One thing that was noticeably absent was any mention of advanced festivals limited time events that you guys have had success doing the past few years. So is that something that you have any color on today or something that will be hearing about kind of a in in the future. It's not only most of what you're talking about here has been more coasters thrill rides, but any any color you can burn or provide ob would be helpful.
Thank you.
Yeah, No I can I can take that question look we're always we talked about the more more more the coasters and the attractions because because obviously, we're very excited about those but yes, I don't want to certainly at all downplay our events a lot of the events. We've we've been holding will continue to execute on we haven't completely finalize the calendar.
So you know there might be some pluses and minuses to those numbers, but I think in general you know will continue obviously to have Halloween and Christmas in our food and wine different festivals like that we've had some success with beer Fest beer festivals and a few places are inside look events. So there's a lot of things of that.
I think you're gonna see us.
Continue to do and we are.
Really excited about those as well and so yeah, you'll continue to see is focused on events.
Thank you. This concludes your question answer session I like consumer conference back over to more Swanson for any closing remarks.
Thanks Rocco.
Thanks, everybody and on behalf of search Elizabeth and the rest of the management team here at Seaworld Entertainment want to thank you for joining us this morning.
I want again, thank our employees capacitors for their efforts everyday to to further our mission to protect animals.
You know as you heard this morning, we have a lot of confidence in our ability to achieve the higher end of our 2020 adjusted EBITDA goal of 475 million to $500 million.
We believe our our slate of 20, twentys rides attractions and events.
Among the best if not the best in our history.
We have a lot of confidence that will deliver attendance revenue and adjusted EBITDA growth that will result in meaningful increase shareholder value. So again, we want to thank you for joining US today, we look forward to speaking with you next quarter.
Thank you today's conference has now concluded and we thank you all for attending today's presentation. You may now disconnect your lines I haven't wonderful day.