Q1 2020 Earnings Call

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Good morning, and welcome to the Q1 2020 earnings Conference call.

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I'll now turn the conference over to Matthew Stroud. Please go ahead.

Thank you and good morning, everyone. Welcome to see Worlds first quarter 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, She world investors Dot com.

A replay information for this call can be found in the press release and will be available on our website following the call.

Joining me. This morning are Mark Swanson interim Chief Executive Officer, and Elizabeth Glaxo, <unk>, Chief Accounting Officer, and interim Chief Financial Officer and Treasurer.

This morning, we will review our first quarter financial results and then we'll 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 risks 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 would like to turn the call over two interim Chief Executive Officer, Mark Swanson Mark.

Thank you Matthew good morning, everyone and thank you for joining us.

We are living three truly extraordinary time.

And we hope to you and your loved ones are safe.

We also want to recognize the heroic efforts of healthcare workers and first responders worldwide, who care for those affected and protect those who are vulnerable to this virus.

While the world is experiencing an unprecedented global health crisis that has impacted nearly everyone on the planet.

We are confident in the real zillions see of our business our ability to whether this crisis and that we will emerge and even stronger company.

In response to covert 19, we took the extraordinary step to close all of our parks on March 16 2020.

Prior to the closure of our parks, we had a strong start to 2020 with record setting results through February for attendance revenue and adjusted EBITDA.

This performance was a continuation of the strong financial results, we have delivered over the last two years.

Which we believe demonstrates the successful execution of our strategic initiatives related to marketing and communications.

Operating cost and capital efficiencies and new rides attractions and events.

We have taken a number of proactive measures to strengthen our financial position and enhance our liquidity and flexibility while our parks remain closed.

These actions include.

Significantly, reducing our monthly cash expenditures, including labor operating expenses and capital spending.

Significantly increasing our liquidity by upsizing, our revolving credit commitments and issuing new senior secured notes.

And significantly enhancing our financial flexibility by amending our credit agreement to among other things revise our financial maintenance covenants. So that the covenant will not apply in 2020 and will be modified in 2021.

For our loyal pass members and other ticket holders, we have extended expiration dates provided upgrades and or added additional benefits, while we have substantially reduced our capital expenditure spending in 2020 cents goes in our parks prior to the temporary part closures, we had made significant progress.

Section of our 2020 lineup of new rides and attractions.

We completed almost 90% of the construction on these new rides for 2020 in fact, two of our new rides located in Texas opened just prior to the park closures.

Depending on when we are allowed to reopen we will make a decision as to whether or not den finished projects are completed for the 2020 season or pushed into 2021.

With respect to reopening while we don't have any park opening dates to announce today.

We are in regular contact with local state and federal authorities and we sincerely look forward to opening our parks and welcoming back our guest as soon as it is safe and permitted to do so.

To that end, we have a dedicated team working with our park presidents focused on finalizing plans to reopen our parks, including enhance health and safety protocols that will meet and or exceed government guidelines.

And provides a safe and clean environment, our guest and ambassadors expect.

We will be providing more information on our enhanced health and safety protocols and the coming days. So our guests can clearly.

See the extraordinary efforts, we are making and the seriousness of our commitment to the safety and well being of everyone who visits are works in our parks.

As noted in this mornings release and as I alluded to earlier.

We recently closed on a private offering of $227.5 million of senior secured notes.

With the close of this transaction, we now have just over $400 million of cash and cash equivalents on our balance sheet as of April Thirtyth 2020.

Factoring in the proactive measures, we have already taken to reduce our cash expenditures.

We estimate our average monthly net cash outflows will be between 20 and $25 million per month, while our parks remain closed.

Based on our current available liquidity, we can sustain our current level of monthly cash burn ended the fourth quarter of 2021.

As such we are confident the actions we have taken today will allow the company to whether an extended crisis situation.

With that let me comment on our first quarter results for attendance in revenue.

Keep in mind, we were forced to close all of our parks on March 16 2020.

Severely impacted our first quarter results.

Also keep in mind that during the month of March we would normally have had nine of our 12 parks open.

And that our parks were closed and are not able to open right before the peak spring break season for most of our markets, which is a high visitation and high revenue period for our business.

Prior to the closure as I previously mentioned, we saw record setting attendance revenue and adjusted EBITDA through the month of February.

Attendance in the first quarter decline, 30.6%, primarily due to the temporary park closures, resulting from the coded 19 pandemic.

Prior to the covert 19 pandemic attendance through February increased 9% to 1.9 million guest.

Total revenue in the first quarter declined 30.4%.

However, total revenue through February increased 12% to $121 million.

We're pleased with our progress through the first two months of 2020 and that our strategies, we're continuing to drive improved performance.

When we are able to reopen we continue to have confidence we will be able to drive significantly improved operating and financial performance.

Until then we are intensely focused on preparing to safely reopened our parks and welcome back our guest and ambassadors.

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.

Mark mentioned, we had strong early start to begin with record setting attendance and revenues through the first came in second quarter.

John start to our year weakness here really impacted by the temporary part closures, resulting from Nicole good 19 pandemic.

Part closures began on March 16, and resulted in the closure of all of our part.

As a result attendance for the first quarter decreased by approximately 1 million cat or 30.6%.

As Mark mentioned these closure came right before <unk> spring breaks even from most of our market, which adversely impacted the visitation next quarter as spring break visitors tend to be higher revenue per capita again.

We generated revenue of $153.6 million.

Decreased $57 million, 30.4% compared to first quarter at 2019.

The decrease in revenue results from the decline in attendance and was partially offset by an increase in total revenue per capita.

First quarter total revenue per capita was $56.25 compared to $66 enforcement in first quarter 2019, an increase of 0.3% driven primarily by an increase in admissions per cap.

Admissions per cabinet increased by 1.2% to $39.05 for the first quarter 2020, primarily due to our pricing initiatives and partially offset by the visitation mix during the quarter due to the loss of higher revenue per capita spring break attendance.

In part per capita spending decreased 5.9% to $27 than 20 cents in first quarter of 2020.

Excluding the impact of revenue related to our young Hong International agreements, which we terminated in early 2019 and was recorded and in park and other revenue.

In part per capita spending increased 5.9% due to pricing initiatives, partially offset by the unfavorable visitation next from the lack of spring break attending.

We generated a net loss of $56.5 million compared to net loss of $37 million and the first quarter 2019.

Adjusted EBITDA for the first quarter was a loss of $30.9 million, a decline of $47.3 million compared to prior year quarter.

Adjusted EBITDA was largely impacted by the decline in total revenue due to depart closures, partially offset by decreasing expenses.

The decrease in expenses reflect some of the early proactive measures that mark discussed, including a reduction in direct labor and other direct operating costs due to park closure and a decrease in marketing and media costs.

Expenses were also impacted by the realization of our previously discussed cost savings initiatives.

We continue to manage our entered why the parks are closed and are actively evaluating additional cost reduction opportunity.

Turning to our Stephen passes our season pass base was up 2% at the end of February compared to prior year.

At the ended the first quarter route however, our season pass base was down approximately 9% related to our park closure and the loss of T. spring break selling weeks across our parks.

We're highly confident in our past program and look forward to resuming marketing and selling of our pass offering which we believe provide the best value in the industry as Mark mentioned, we are actively engaging with our season pass holders to provide them with increased flexibility, including extended expiration date free upgrades to higher tier and.

Or other additional benefits.

Now turning to our balance sheet, our total deferred revenue balance related to all of our products at the ended the quarter was $123.9 million down approximately 18% from March of 2019.

Total deferred revenue related to our past products was down approximately 7%.

As described previously this decline results from the closure of our parks and a loss of key selling weeks during the spring break period.

We spent $49.2 million on Capex in the first quarter 2020 of which approximately $44.5 million was on core capex and approximately $4.7 million well then expansion ROI projects.

As Mark mentioned, we had a couple of rights, which opens before the park closures in Texas and a few of our rights in other parts where within weeks of opening before we were forced to close our parks.

90% of the construction for 2020 attraction was completed prior to the park closure.

Looking ahead, our capital expenditure outlay for the remainder of the year will depend on when we are committed to reopen apart.

During the three months ended March 31st 2020, and prior to the park closures. The company completed a share repurchase at 459785 shares for an aggregate total of approximately $12.4 million.

Leaving approximately $237.6 million available under the share repurchase program as of March 31st 2020.

As noted in this morning's earnings release, our net leverage ratio was 3.89 times adjusted EBITDA for the 12 months ended March 31st 2020.

As Mark mentioned over the last few weeks a significant part of our focus has been on strengthening our financial position and flexibility and enhancing our liquidity ballparks remain closed.

That ends in March we entered into an amendment to increase our revolving credit coming from $210 million to $332.5 million.

We subsequently bar the remaining available amount as approximately $127.5 million, which is included in cash and cash equivalents on the balance sheet as at March 31st.

In April we then entered into another amendment to among other things and then certain provisions related to our financial covenants.

As a result of nothing I meant we will now be exam from complying with our leverage ratio covenant starting in the second quarter three to fourth quarter of 2020.

Beginning in the first quarter 2021 for covenant purposes, only our 12 month trailing adjusted EBITDA used in the calculation of our leverage ratio will ignore the second third and fourth quarter 2020, and we'll use the adjusted EBITDA for the corresponding quarter in 2019 in stack.

Additionally, we will be required to comply with a quarterly minimum liquidity test not less than $75 million through the third quarter of 2021.

These amendments along with the senior notes transaction that Mark discussed strengthens our cash position and increases our financial flexibility and liquidity.

As Mark mentioned, we have taken a number of proactive measure to appropriately manage costs and expenditures increased liquidity. During these temporary park closure.

We started the year strong with momentum from 2019 and are confident in our strategy.

We are focused on navigating to read these uncertain times and positioning ourselves to emerge in an even stronger position from the crisis ready to the welcome back our guests.

Once we can resumed normal operations, we will continue our focus on driving additional attendance and total revenue, while eliminating unnecessary costs and continuing to identify more efficient ways to operate.

Now, let me turn the call back over to Mark who will share some final fire Mark.

Thank you Elizabeth before we open the call to your questions I have some closing comments.

While our parks are closed a rescue teams continued to operate helping wildlife and need.

In the first quarter, we participated in over 350 rescues and are close to exceeding 37000 animal rescues over the company's history.

We are one of the world's leading animal rescue organizations and we're proud of our efforts to protect and save wildlife.

I also want to remind people that we own and operate some of the leading outdoor family entertainment venues in the country.

The vast majority of our parks are in warm weather locations.

And we estimate approximately 85% of our visitation comes from within driving distance of our parks.

Even in Orlando, where see rolled has been voted Orlando's best theme Park and aquatic out has been voted Orlando Skus Waterpark.

The majority of our visitation comes from within driving distance.

Which may be different for some of the other operators in the Orlando market.

Our parks also typically have significant excess capacity and have landscape and well manicured open outdoor space with room for people to safely socially distance well still enjoying the varied sites and experiences our parks offer.

In short, we believe our parks and our business are uniquely positioned to take advantage of pent up demand for out of home outdoor entertainment.

When we are able to reopen our parks, we will continue to focus.

On improving our execution.

Adjusting and enhancing our marketing and communication initiatives as well as our pricing strategies.

And introducing new compelling rides attractions events and offerings in every part every year.

We will also continue to relentlessly identify and execute on cost and capital efficiency initiatives.

We expect will contribute to meaningfully improved margins and profitability.

On a personal note I just wanted to say that I feel privileged to be leading zero at this very important time and to be working closely with such a tremendous management team and group of ambassadors.

As well as a supportive and engaged board of directors.

Together, we're all working overtime and we're fully committed to successfully navigating through this current environment.

Opening our parks and continuing to deliver exceptional experiences to our guest and meaningfully improved value to all our stakeholders.

With that let's open up the line to take your questions.

Well now begin my question answer session.

Question I Press Star then one on your question Sam.

So a chart series and speakerphone, please pick up your handset corporate synergies.

So it's all your question. Please press Star then too.

Once again analysts are question just stick with one question one follow up any additional questions your request to join the queue.

At this time, a pause momentarily with similar roster.

First question comes from that was unskilled stable.

He was asking of Stifel. Steve. Please proceed.

Yeah, Hey, guys good morning.

So mark is there any way to help us think about what attendance would have to look like as the departure reopen in order for you guys too.

Breakeven and.

I guess, what I'm getting at Irrs, obviously, you guys cut a lot of expenses all those expenses won't come back online right away or maybe forever. So just trying to think about what levels of either whether its attendance or revenues you guys when needed to be in.

In order to create the same amount of EBITDA you did before all this virus noise happened.

Yes, Hey, Steve its Mark I can take that question. So a couple of things I'll hit on you know number one we.

As you know we operate a number of our parks on a year round basis and look as I said in our prepared remarks.

We rarely operate at that kind of full capacity, we often have a lot of excess capacity.

So we were used operating in an environment, where we do much less than than a than a peak day and obviously, we would we would not operate in those environments. If it didn't make sense for us to do that so.

To give you a little bit more of a.

Particularly for example, if you look like in Orlando, where Seaworld, Orlando, where a peak day.

Hi, B.

For 20, thousands to 30000 in attendance you know a day in January or February might be you know 5000, and so that gives you some order of magnitude there of how how low the attendance can go and we still feel good about operating.

And what I would also point out to you as you kind of alluded to we've done a lot of work.

The last couple of years on cost and we had a lot of efforts going into 2020 and you've seen the success of those efforts over the last couple of years. We've also you know if there is the only kind of good thing.

With this whole situation and this has been a really tough situation for everyone, but the only thing that has been somewhat insightful as we've we've stripped our costs down to the most essential level and so there's there's rarely if ever there you could do that and so we have I would say as good a visibility into our truly essential cost as ever and we're going.

To be very careful and methodical and what we add back overtime. So as I mentioned I think we're going to emerge a stronger and more efficient for for having done that work. So we're confident.

We can operate and much less reduce capacity, we're used to doing that and we're confident.

We can still drive above breakeven performance, there and I kind of gave you. The example, specifically about Orlando.

Okay got you. Thanks, Mark and then you know how do you think about reopening the specifically the Orlando parks and.

I'm not sure you're going to your go to one answer that's on a public call, but you know what I'm getting at is you know what you do once you get that Green light from the authorities to open do you guys try and be the first one's opened to wait till your competitors opened their doors as well I'm just trying to think about how you you guys are thinking about the beauty the Orlando parks.

Specifically.

Yeah. So.

One thing you know we we've been doing obviously is we've been in touch obviously with with the local and state authorities and federal authorities and so you know in Florida, and specifically, there's there's a local task force in and then you know the governor has rolled out.

His plan so we're going to obviously state stay close to that and see what what exactly that means for US obviously, our number one priority is opening in a safe manner and so.

So we want to do we want to open when it's safe we don't have any specific dates for Florida.

If you kind of follow because I'm sure, we'll kind of get this question, but if you kind of follow.

You know the news if you will and you kind of think across our parks.

You know I think where we're we're we're hopeful you know is in Texas, we'll see.

We we got to get through the the phases. There, obviously, but I think we have some hope that that that might be one of the first locations that that would open again don't have a timeline and and certainly things could could change and then I would say you know after after taxes you know I think we're we're next most helpful is in Florida, but again no specific timeline.

We're obviously going to follow all the regulations and we're going to make sure. We're in line.

It's a dealer nice thing you know the industry.

Tends to come together pretty well and difficult situations and so I think you know I don't want to comment on when it when anybody else is going to open or when we're going to open because none of us probably now but.

I think we're going to open when it makes sense for us and when we're given the there and assuming that's within the Greenlight period, obviously, so we're staying close and hopefully that's helpful.

Yeah. Thanks, Mark really appreciate it best of luck.

Thank you.

Our next question comes from.

It.

[laughter] of Keybanc. Please proceed.

Hey, good morning, So Mark you mentioned pent up demand in your prepared remarks, but when the parts do initially reopen how are you thinking about the consumer.

Entity to return to year theme parks I mean, there's been some survey work out there, but just curious what you've been hearing from your customers.

Sure Hey, Brad Thanks, Thanks for joining US look we've we've looked at data. We we've we've done some of our own surveys will continue to do that and we'll continue to look at data what I would what I would remind you is you know we get a lot of attendance as I said from from from our local markets.

People that can can activate.

And most easily access our parks and I think thats going to be.

To our advantage and that would include even even in the Orlando market. So we're we're staying close to those pass holders were staying close to the local communities.

Our surveys suggest that.

There's a pretty strong pent up demand for people, who who is who say they're likely are very likely to come visit apart you know when it when it opened so we're gonna stay close to that we have surveys out right now and we'll continue to look at those and other data.

Got it and then you know so with the operating changes that are.

It looks like they're going to happen in this new normal I mean, it feels to me like operating costs just on a per capita basis. It's inherently go up with all the sand sanitation and.

Monitoring and reduce throughput, but I guess my thinking about that correctly and then what are some of the offsets to that maybe new normal cost structure.

Yeah. So breadth of course as you noted you know well expect to have more costs and Thats. You know look we want to obviously have a very safe environment and that's that's our biggest priority and you'll see us issue.

Some more more about that.

Down the road here, but obviously, we're going to have enhanced sanitation, we're going to have mass for our employees. We're going to have a temperature checks are employees, we're going to have a lot of cleanliness. We're gonna have social distancing all the things that people expect and we want to make sure we provide a safe environment. So so there's certainly additional costs.

The to doing all that and again, it's the right thing to do and we're happy to do that.

What I would go back to is a little bit of what I was I mentioned in Steves question is we've done a lot of work. During this closure period to really look at our organization to look at our cost structure cost that you know maybe we used to think were essential we might look out a little bit differently now and the way we the way we structure are.

Marks our corporate functions things like that we're really again have probably more visibility than ever into those things because we've we've strip them down to the most essential level. So I'm I'm optimistic that will find other efficiencies as we reopened that that will help to offset some of these the cost of kind of additional say.

50, and and whatnot.

Thank you.

Yeah.

Our next question comes from Alexia Quadrani JP Morgan Alexia. Please proceed.

Hi, This is Dan on for Alexia. Thank you. So much for the question you know just in terms of the reopening eventually have the part you have that's maybe a more phase three opening of certain areas before any other you know in addition to different parts in different states opening up at other times and then also are there any of that the South Africa.

All performances are Sally even back you won't be able to hold just because of social difference in guidelines.

Yeah, Hey, Hey, and as Mark I can take take that question and I think by by phased open easily you know what I would tell you. There is I think certainly our parks across the country will will will most likely.

Perhaps open it at different times were not targeting to have one specific date for for all our parks you know within the actual individual parks yeah, there could be some some different ways. We operate the park, how we think about it but the idea is you know we're still going to provide a very good guest experience and.

If you take some of our shows for example, we can still have those shows and there's there's ways that we can space people every other ROE type of seeding.

So I think we can still provide a really good product and provide the appropriate safety protocols and social distancing with with a still with a really good product.

Hi, Thank you so much.

Your next question comes from Michael Swartz with Suntrust Robinson Humphrey Michael. Please proceed.

Hey, good morning, everyone and just sticking on the theme of you know what the new normal looks like once you reopened can you talk about maybe some of the technology platforms or upgrades, you may be making or need to make in the future I to limit attendance in better manage a park loads going forward.

Yeah. Thanks things like good good question. So well we are certainly a working on on exactly what you described so everything from.

Nation system too.

Things like mobile ordering and unlike the things have varying levels of time to complete, but obviously, that's a movie sooner than others, but when their when their complete will roll them out and so yes, we're definitely looking at that our I'd say, our I T group has been engaged and and looking.

Exactly some of those things I mentioned.

Okay, Great and just with regards to the new says to me a park that was expected to open. The spring of 2021, just wondering you know the timeframe of that hasn't been pushed back in the remember in the in the agreement a renewal with with setting I think you are contractually obligated to open something into.

2021 is that still the case.

Hi. This is bill is that I can take that so you add we've discussed we did temporarily paas construction on across all of our project. So that did impact on construction timing on out and Sesame place Park for San Diego, having said that though I'm, if its temporarily paused on where where we're close to it.

When we can resume that again, we're currently evaluating our plan on on on whether or not that's going to impact the opening day, but at this time, we don't really have anything else. We can we cannot report on that yeah, Mike. The only thing I would add is where were we remain obviously very big fans of the Sesame Street product, that's a great product.

And and we work closely with with the folks that Sesame workshop, we're big fans of the product so.

Well well you know as Elizabeth mentioned, but we're still very high on the product.

Thank you.

Our next question comes from Jason Bazinet City, Jason. Please proceed.

Well. Thanks, I just had one quick question and I apologize. If you did this at the beginning of the call I am at the dialing a little late but the 20 to 25 million of operating expense.

You are going to incurred but the parks are closed.

Does that does that just opex or does that include capex in interest cost.

Yeah, Hey, Jason I can take that this is mark so that includes.

Our all our cash cost.

For a month and so that would include debt service Oh labor the Karen.

You know taking care of our animals feeding them.

Working with them, obviously, and then and then the associated cost of of being a public company.

Other things like utilities in taxes and insurance. So it's all that cost that we would expect to incur and there would be.

Paused as Elizabeth mentioned Weve pause all the Oh, all the Capex. The the Capex, we would spend would be anything essential. So if if there was something that needed to repair to broken related doing like an animal habitat or something we would obviously do that but that that's how we think about those that that 20 to 25 million okay.

That's super helpful and can I just last one follow up this 85% number that you cited the super interesting. So I remember back at the IPO.

Then I think maybe it was using 2012 numbers, but if I if I remember correctly was something like 55 ish percent instate residence, 15% international tourists and something like 30 percentish of out of state.

Has that has the mix shifted that much in the context of all your marketing initiatives and season pass to target local residents.

Or do you think the definition of drivable to the park is sort of different than maybe those metrics you shared many years ago. Yeah. I would you know again not not having specifically right in front of me what from the IPO days, but but what we tried to lay out here is what we feel.

You know within a driving distance of our parks. So this is this is primarily people. If you wanted to use Orlando for an example, you other than the vast majority would be people that are our local or same day. So if you're drove over from Tampa for example, or or were here in Orlando and then you'd have some people maybe that come from Jacksonville, even up into Georgia.

South Carolina, you know those are very drivable distances and as you know we have we have people that drive here from from the Midwest or other places on the east coast that are that are little bit further out, but still drive it's not not that on common. So we're you know and then kind of tier maybe two to one of your points, we've had a lot of focus.

You know on our past programming and so that's that's an important component of of our performance over the last couple of years. Obviously, so we'll continue to continue to focus on that.

Thank you very much.

[music].

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Next question comes from Eric Wold B. Riley Eric. Please proceed.

Thank you and good morning, you also took two questions. One I guess when you talk about extending the season pass period and the benefits.

Your class or how should we think about the additional months.

Kind of being offered beyond those that would be lost during the shutdown period, you extend beyond kind of that make good months in and what would be kind of the potential impact into next year in terms of.

Admissions or per capita spending from some of this will benefit Johnson from these changes kind of on an apples to apples based anyway to think about that.

Hey, this wasn't as I can take that so yeah. We did on extend some of the expiration dates on some of our products and then we also added on what we're doing far past vendor or just for a number of nonsense, our parks and close we're gonna be adding on this month to their path ahead. So when we looked at does our single day tickets and.

Some of our reservation base ticket. We we are looking at what the impact would be forget your versus next year and and the impact really we still think we're gonna be able to capture much of that attendance for this year given the fact that our parts are your rounds that keep in mind that I didn't want number of our parks or your ramp parts that we feel.

Well be able to get most of that attended still this year, we're offering incentives to our past memory T to have them come in this year by upgrading their tiers through the end of 2020. So we're hoping that helped drive kind of Canada into this year as well in in our deferred revenue number that I thought I provided there is a portion that every week long term that's about.

3.6 million, so that puts it in perspective for yet it's not a big number that we're pushing out into the following year, yet Erik I would just that you know we'd have a lot of.

You know a lot of confidence in our past program. We think it provides a tremendous value. It's it's a great product and so we're we're optimistic about the program and as Elizabeth mentioned, we've provided some additional incentives for for those who currently have a pass and we're excited to welcome them back when we have.

Perfect and then any early thoughts on how you'll handle on pricing. Upon reopening you know for both for kind of single Dave are you going to what you were pretty easy thing into this year than price increases for passengers going to heading into next year.

Yeah, what I would tell you the smart what I would tell you is we've.

We've spent a lot of time over the last couple of years, you've heard us talk about pricing strategies and the work we've done there so.

We always always focus towards driving total revenue, obviously, but we've I think we've had good success in India and various pricing initiatives and strategies. We've had I think that work is only going to continue to pay off so well will will roll out the appropriate pricing initiatives and strategies that we think.

Going to work in this environment and like I said the good news is I think we have learnings from the last couple of years that are going to help us.

Do that process and so we'll have more to come on that obviously as we understand when when reopenings would occur that type of thing.

Perfect. Thank you guys and good luck.

Yeah.

Your next question comes from Paul Goring of Macri, Paul. Please go ahead.

Hi, Thanks for taking my question I was wondering if I could.

Just follow on to the question around a the tech platforms to enable social listening to what extent can you talk about whether these are prerequisites to opening and whats the timeframe is on that and as a follow on to that.

There is anything you can say around the lead time required to reopen some of these parks a in relation to what we hear about steep reopening because that you're having conversations in the background and so it could be concurrent even though there's lead time or do you need an extra a you know amount of time after.

Here are the orders or what's the thanks.

Yeah, Hey, Hey, Paul.

This is mark so look on your first question about technology I mean look like as I mentioned, we're we're working on those things.

And look I don't think they're a 100% prerequisite for for reopening I mean, there's ways I mean, if you've been out we're here we're talking to you today from from Orlando, where we've begun to open restaurants and things like that and in my observations are you know there's a lot of signage, there's a lot of markers and we'll do the same thing so we can.

Still social distance people with the signage and markers and and ambassadors you know directing people. So you know the technology will help but certainly not not a requirement.

As as we look at it and then as far as the lead time I think you know most of the.

You know as we look at some of the the phases that that some of the states have rolled out you know in our view a lot appear to have several weeks in between the different phases and so will you know we think if we get the Green light you know we think it's you know a couple of weeks before.

Two to three weeks somewhere in there too to get a park reopen so I think will you know I think that lines up pretty closely with what's kind of the notice.

We expect to to get and you know so we'll oh I think we feel pretty good about our ability to to get open.

Great. Thanks, so much.

Our last question comes from Tim Condor Wells Fargo Securities Tim. Please proceed.

Thank you.

And Elizabeth first of all two clarifications one for each of you.

It wasn't that you mentioned on the deferred revenue was down 7% I believe and that was related to season pass products. So when we see the Q, though would that deferred revenue will be a a different number because there's some other things in there.

Just wanted to make sure that that what's your statement was just related to the pass products.

Yeah. So so let me clarify that for you tenant and good morning on deferred revenue as you now have products makes up the majority of it I thought I certainly make up the majority of it. However, we do have advanced purchase single day ticket multi day ticket Alright Reservation day discovery can for instance would be in that number is well in that.

Consistent with what we've typically seen I'm, sorry to how we typically record that today, that's no different headquartered in today's any other corner. So in total on I think what I said in my prepared remarks is Arctic for revenue went down when you look at total deferred revenue for any product. It went down by 18% when you're looking at season pass only that went down by setting.

And what I'd say, there you know and obviously as you know we sell these fees even half if either annual product and that's again, our annual product for us we sell them throughout the year, because we do have you ramped park and aren't making high volume selling periods happened to be spring and again in this summer so having last March and then again April goes there aren't.

Tactful for I switched it didn't kind of surprise for us to have our deferred revenue down for season passes and where where were oxidant decking and Wifi I had a lot of confidence in our product. We now when we are able to start marketing opening parks again, we think we can get back again [noise].

Okay, Okay, and then for Mark and again clarification questions in my real question.

Mark or the in the new Orlando examples helpful and again, all the color you won't given its been helpful. From so thank you, but for the for the organization as a whole.

Comments from a couple of your read from the regional competitors.

Yeah, there's the theoretical Max and then there's sort of the normal.

What was your normal say capacity as a percent of theoretical Max and then what would you anticipate that being up on reopened.

Or and then I guess do your and then just any any additional color stood at breakeven it would be substantially below that as you as you gave the example, Orlando.

Yeah. So what I can tell you is you know I gave you I can't I gave you. The example of.

You know <unk> kind of more of a peak day in Orlando versus you know more of Oh traditional weekday or or you know shoulder season type of day.

Yeah in Orlando you look we're you know you would obviously pulls up the peak down somewhat and you'd probably take the the trough up a little bit. So you know I don't know if they kind of gets you there and I I don't know that we're going to guide to a specific number I mean I think the the key point is we can do.

Due substantially less than than than even a more normalized attendance day instill in still breakeven. So I just gave the PV peak as an example of kind of the order of magnitude, but even you could do much less than than a kind of a more average summer day, if you will.

And still breakeven.

Okay. Okay. Okay now my two real questions.

One yeah, I think historically run about 11% year guest international What's your survey work, telling you about again predominantly it's been UK, Brazil, Canada.

At this point again lot of moving parts and other competitors in Orlando, especially dependent on international guess, maybe even more so but what's your survey work telling you about the propensity of those guess to return and then and the second question is back to the reopening timeline.

No in the furloughs. It seems like a you know there have been wide ranges I guess of degrees of Ah whether health care has been provided or not to two or two to folks that have been furloughed across the industry, having how do you feel your position to attract.

The person who would represent the brand and experienced that you want relative to other options for any other than the folks that have been furlough.

Yeah. So let me give you a couple of comments on that so you're right. We you know across the whole company, we do about 11% of our tenants comes comes internationally. So I don't have any specifics breakdown of the survey specifically to international.

Yes I.

I think will you know that but that is primarily.

In Orlando market phenomenon, you know, we do get some international I guess in Tampa and in San Diego, but but much less than than what we get in Orlando, having said that as I mentioned to.

Jason in Orlando.

Still gets a.

A good portion of its attendances you know more than half of its attendance is coming from local same day and driving overnight people. So people that can readily access its parks.

And then as far as you know the the type of employee or attraction attracting employees.

No I think look one thing I like about our company as we have a lot of people who are pretty passionate about about working here and.

Theres a lot of lot of good things of this company does with conservation and animal rescues and things like that that.

Attract pretty passionate people. So I'm confident we can we can get employees you know when we when we did for low the employees. We obviously made it knowing that that we would when when the time was right and when we'd be open we'd start to call. Some of them back. So we're you know we're confident our ability to still still.

Tracked employees and.

Look forward to doing that.

When when we can reopen.

Okay again, thank you all for you for your color and stay safe.

Thanks, Tim.

Oh I question comes from Bryan Goldberg of Bank of America morale, Brian. Please go ahead.

Thank you very much I buy them a little late I apologize if you address.

But.

I guess remark I mean, given your.

Your tenure at the company.

You probably get your perspective, both on the company industry last downturn and Oh, you know nine.

<unk>.

I want.

Why is your with promotional activity in your.

And your strategy to bring gas back into the park I want the economy started to recover and then I guess.

You know, what's what are some of the options are possibilities from a promotional standpoint.

Yeah, the bring gas backend this go around obviously safe ours.

Certainly appreciate the pent up demand commentary.

But I'm just curious how you're thinking about promotional activity.

And for the.

Yep New phase.

Yeah, I can I can take that brand. So you know I mentioned in the prepared remarks, the resiliency of the business and what I would tell you is is I think you mentioned the recession years of kind of 2008 2009 in that range.

We believe we look back on those years as we did better than than the industry. You know it was it was tough for everybody, but but I think we did we did better.

Then the industry did as a whole so we're confident and the resiliency of the business I think in general the industry is pretty resilient. We also know our parks provide a unique value proposition that I think is important in is going to is going to aid in that.

You mentioned kind of how we think about.

Offers and ways to bring people back look there's a lot of work we've done as I mentioned over the last two years on pricing strategies and initiatives. So I think we have a pretty good understanding of the type of things that will.

Motivate people to visit as you mentioned getting getting all the safety and cleanliness protocols correct. That's the most important thing, but I think beyond that I feel confident with the work we've done over the last couple of years as you look back over the last two years our tenants over the last years, you know has gone up substantially so.

So we're I think we're confident our ability to drive the attendance and we'll use that knowledge to.

You know tailor the right. The right message is right offers to the reopening construct that will will be a hopefully coming into later you know later in here.

Thank you very much.

Hello.

This concludes our question answer session I'll now turn the conference back of remark Swanson, Chief Executive Officer for any closing remarks.

Thank you and.

On behalf of Elizabeth and the rest of the management team at Seaworld Entertainment want to thank you for joining US. This morning, you know as you heard today, we're confident in the business and the strategy and and sincerely look forward to coming out of this crisis and continuing to drive.

Improved operating and financial results in long term value for all stakeholders. So just wanted to thank you again, and we look forward to talking with all of you next quarter.

[noise] Conference has now concluded. Thank you for attending today's presentation you may now disconnect.