Q4 2020 SeaWorld Entertainment Inc Earnings Call
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After today's presentation there'll be an opportunity to ask questions Tastic Questionary pressed store then one on your telephone keypad to a charter your question and please press store and to please.
Please note this event is being recorded.
And now like to turn the conference over to Matthew Stroud, Vice President of Investor Relations. Please go ahead and.
Thank you in and good morning, everyone.
Welcome to Seaworld Fourthquarter, and it's just feel Twenty-twenty earnings conference call today's call is being webcast and recorded.
A press release was issued this morning and is available on our Investor Relations website at Www, Seaworld investors and Dot com.
Replay information for this call can be found and the press release and will be available on our website following the call.
Also we have posted a short slide presentation on our Investor website, along with the earnings press release that we will discuss during our prepared remarks.
Joining me this morning, and Mark Swanson interim Chief Executive Officer, and Elizabeth Glassy, Chief Accounting Officer, and interim Chief Financial Officer and Treasurer the.
This morning, and we will review our fourth quarter and fiscal 2020 financial results and then we will open up the call to your questions.
Before I begin I would like to remind everyone that our comments today will contain and forward looking statements within the meaning of the federal Securities laws. These.
And 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 and the risk factors section of our annual report on form 10-K, and quarterly reports on form 10-Q filed with the Securities and Exchange Commission.
These risk factors may be updated from time to time and will be included in our filings with the SEC that are available on our website.
And we undertake no obligation to update any forward looking statements.
And addition on the call we may referenced non-GAAP financial measures and other financial metrics, such as adjusted EBITDA free cash flow net cash bird and adjusted net cash burn, which are non-GAAP financial measures more.
More information regarding a forward looking statements and reconciliations of non-GAAP measures to the most comparable GAAP measure is included and earnings release available on our website and can also be found and or filings with the SEC and.
And now I'd like to turn the call over to our interim Chief Executive Officer, Mark Swanson Mark.
Thank you Matthew good morning, everyone and thank you for joining us.
I'm pleased to report that we saw strong improvement independent strength and strong per capita spending and the fourth quarter.
I'm also pleased to report that we generated positive adjusted EBITDA and a quarter and approached net cash flow breakeven when excluding deferred vendor payments.
I continue to be extremely proud of our teams agility resilience and performance. During these extraordinary times and I'm encouraged by our fourth quarter results, which demonstrated continued operational and financial improvement.
Our quarterly attendance on a year over year basis improved compared to the third quarter.
We also saw clear benefits of our pricing and revenue management work with strong per capita growth and the fourth quarter relative to the prior year and both admissions and and park spending.
We began the fourth quarter with 10 of our 12 parks open.
All with capacity limitations modified are limited operations reduced operating days and or reduced operating hours.
We finished the quarter with seven of our 12 parks open which is one parked less and what we are operating and at the end of 2019.
As of today, we have a parks open including Seaworld Orlando.
Seaworld San Diego.
Seaworld San Antonio.
Busch Gardens, Tampa Bay flow.
<unk> Gardens Williamsburg.
Sesame place and.
And discovery Cove, and aquatic and Orlando.
We have also implemented new operating calendars across several of our parks and 2021 based on learnings over the past 12 months.
In particular for the first time and over a decade.
We are operating year round at Seaworld San Antonio.
And for the first time ever we have begun year round operations at Busch Gardens, Williamsburg, and at Sesame place.
These parks are now open primarily on weekends and holidays during the winter season.
And advanced or their traditional operating seasons.
We now have year round operations at eight of our 12 parks.
Only our water parks and San Diego, San Antonio Tampa Bay, and Williamsburg, Virginia are not open year round.
We are planning to have all 12 of our parks oven, including aquatic is San Antonio Adventure Island, and Tampa Bay, while the country USA and Williamsburg, and aquatic is San Diego for their full 2021 operating seasons.
Subject to local state and federal guidelines related to COVID-19.
I want to recognize each of our operating teams for their outstanding efforts safely.
Safely operate our parks, while implementing various COVID-19 related to safety protocols and following established health and safety guidelines.
While this continues to be and unprecedented and challenging time for our company and industry.
It's been encouraging to see our performance improve and assuring to see our guests visiting our parks over the last few months.
As a reminder, since the beginning of the COVID-19 pandemic.
We have taken significant actions to reduce our cost carefully manage our cash flows.
<unk>, our balance sheet and liquidity position.
And operate our parks with new and enhanced operating and safety protocols to meet the realities of the current environment.
While our fourth quarter financial results benefited from any of these actions results were still significantly impacted by the COVID-19 pandemic.
Attendance and the fourth quarter was impacted by fewer operating days and hours versus the prior year.
Capacity limitations.
Temporary park closures.
And a more limited events lineup.
Despite these limitations attendants remained fairly steady throughout the quarter.
Excluding the companies, Virginia, and California, Parks, which were only partially open and operating with significantly modified and limited operations due to state and pose restrictions or temporarily closed.
Monthly attendance was down 40% and October day.
Around 47% and November and down 44% in December.
Further several parks operated at or near capacity limitations on multiple days during the quarter.
If the parks were not capacity constrained on these days are performance versus the prior year would have been better than what was realized.
Monthly attendance trends continued to remain steady and to the first quarter with January tenants down and 42%, excluding Virginia and California.
And down 53% on a consolidated basis relative to prior year.
While the month of February is not complete attendance trends are similar to what we saw and January.
We are particularly pleased with the performance of our Halloween and Christmas events during the quarter.
Once again, our operating teams rose to the occasion and created a safe yeah modified version of these events that guests could enjoy.
And we've also recently featured are inside look and all new mardi-gras events and several of our parks and have been pleased with our performance and driving attendance during January and February.
Looking ahead.
We have started to offer our food and music festivals across many of our theme parks and are extremely proud and excited to have live concerts back and our seaworld parked and Orlando and soon to start at Busch Gardens Tampa Bay.
These special events are valued by our loyal pass holders and guest and we're confident we are able to deliver compelling exciting and most importantly, save events with relevant and appropriate operational changes.
We are looking forward to spring break and the spring and summer season, We're we're planning to have even more events and open more of our parks, including our water parks, which you know our guest are really looking forward to visiting again.
Last quarter, we mentioned that we believe there was a several hundred basis point opportunity to grow margins and our business.
For discussion purposes.
We have posted a short presentation on our Investor website, along with our earnings press release that provides an illustration of how to think about the profitability. We believe we can achieve when we return to 2019 attendance levels.
To be clear this is not guidance, we're not projecting when we will return to 2019 attendance and we're certainly not suggested and we don't expect to grow attendance beyond our 2019 attendance levels and per caps and per capita beyond of 2020 levels over time.
This is just meant as a simple illustration to show, where we believe the earnings power of the business would be at 2019 and tenants levels.
Taste on the changes and improvements, we have identified and largely and implemented over the past year.
Importantly.
This analysis. This analysis does not reflect the impact of cost inflation or cost pressures on the business over time.
As you know starting well before COVID-19.
Before the COVID-19 pandemic.
We have spent significant time working closely alongside our board to review, our business and identify and implement cost savings opportunities and efficiencies that will strengthen our business.
We have also spent considerable time and investment and driving greater revenues from our business, including working closely with pricing consultants to develop new pricing strategies.
Creating a new centralized revenue management function.
Enhancing our and parked revenue team.
Revamping, our and park product assortment and mix.
Developing and utilizing a more analytical and data centric decision making process.
And implementing dynamic and other pricing and initiatives.
Some of the benefits of this work was reflected and Ah results prior to the onset of the COVID-19 pandemic.
Amina a meaningful portion of these benefits.
Where planned to be realized and 2020 and as you know our first quarter and 2020 was off to a record start through February of 2020.
With the onset of COVID-19.
And the force closure of all of our parks and operations.
We took advantage of the opportunity to further refine our revenue teams and strategies and look at our operations and cost structure and a way that we never could have before.
We doubled and tripled down on our already and process efforts and looked at nearly every part of the business from top to bottom across the entire enterprise.
The results of this new effort yielded demonstrable that.
And that results and 2020 on our total revenue per caps.
With our 2020 per caps up $5 and 95.
Or nine 6%.
The results of this effort also yielded identified cost savings of roughly $100 million from our 2019 cost base, assuming 2019 attendance level.
That another way.
We would expect our cost base to be lower by roughly $100 million when we achieve our 2019 attendance levels again prior.
Prior to the impact of any cost inflation or cost pressures.
We've included on slide four.
How these cost savings roughly breakdown by category.
And included some select examples of the types of cost savings, we have identified and or implemented.
But that the vast majority of these cost savings have already been implemented and we expect the vast majority of the remaining cost savings will be implemented this year.
To be clear again, we are not projecting when we will achieve our 2019 attendance levels.
That will largely depend on the evolution of the COVID-19 and impact on our lives our economy and our business.
While we are projecting is that we will have materially lower costs, and a significantly more efficient and profitable profitable business when that time comes.
As you can see on slide two of the presentation. We present, a simple illustrative analysis that shows if we were to achieve 2019 attendance levels and mix.
Or 2020 per caps.
And the roughly $100 million of cost savings that we have identified.
And largely already implemented are adjusted EBITDA would be approximately $690 million.
Again this is not guidance and we are not projecting when we will achieve our 2019 attendance levels or when we will achieve this level of adjusted EBITDA.
This analysis does not include our estimate the impact of any cost inflation or cost pressures assumed.
Assumes the attendance and park mix of 2019, and the cost reductions are predicated on 2019 attendance levels.
And is simply meant to show what level of adjusted EBITDA. We expect we would have achieved and 2019 and how.
How do we have the benefit of the revenue management improvement and cost reductions that we have identified and largely implemented and 2020.
Needless to say we are excited about the progress we have made and look forward to returning to a more normalised operating environment. As we believe the actions we have taken will lead to significantly improve financial results from the company.
Our teams have worked hard to better positions company for revenue growth and increased profitability.
With that I would like to turn the call over to Elizabeth to discuss our financial results and more detail and.
Elizabeth.
Thanks, Mark and good morning every line and Mark mentioned, our fourth quarter results free significantly impacted back and COVID-19 and getting.
Fewer operating and gazing hours per week first and your prior year capacity and limitation and modified are limited park operation attended quite a fourth quarter decreased by approximately 2.5 million cash or 53% when compared to get prior year quarter.
Okay, and can I forget and print trend as attendance was down 81% and a third quarter 2020 compared to the third quarter 2019.
We generated revenue of $154 million, a decrease of $144 million or 48% compared to the fourth quarter of 2019.
A decrease in revenue results from a decline and attendance and was partially offset by and increase in total revenue per capita.
Total revenue per capita athletes $69 and 40.
Compared to $63, and 42, tenths and and fourth quarter of 2019.
And increase at nine 4% driven by strong and pregnant and both ignition per capita and in parts per capita spending.
And mentioned per capita increased by nine 4% to $41 and 44 four and.
Fourth quarter of 2020.
And increased like primarily due to the realisation of higher prices and admission products, partially offset by the net impact and attended snakes when compared to the prior year period.
And part per capita spending increased by nine 5% to $27 and 96 and and fourth quarter of 2020.
The increase and a part per Capex spending results, primarily from increased cash spending higher realized price and can fee enhanced and expanded product offerings.
And and maybe a certain merchandise and food and beverage items.
Partially offset by the impact and higher package pending and compare take prior year period.
We are particularly pleased with our overall per capita performance during the quarter, especially considering our higher mix exceed and has attendance.
We generated and net loss of 45 $5 million compared to a net loss of $24 $2 million and the fourth quarter of 2019.
Net lots and the fourth quarter of 2020 includes and passionately two $8 million pretax expenses directly associated with incremental costs due to the COVID-19, pandemic and and legal settlement gain of approximately $4.4 million and.
Net loss and the fourth quarter of 2019, and clinic and legal settlement charge net of insurance recovery of approximately $32 $1 million.
And just did EBITDA was 22 $7 million for the fourth quarter of 2020, a decline of $61.2 million compared to the prior year quarter.
The positive adjusted EBITDA reflect our decisive actions and continued effort around driving revenue and managing costs.
Total operating expenses decreased by 48 $7 million or 32% when compared to the prior year quarter and.
Largely due to a reduction and labor related costs, resulting from modified are limited operating day.
Operating expenses also declined due to the impact of reduced operating schedule and.
Music more efficient staffing model and passed and say savings.
Savings and efficiency initiatives.
Total Sally and general and administrative expenses decreased by 64, 6 million or 74%, primarily day and reduction and legal marketing and third party consulting costs and cost savings and and efficiency initiatives.
Looking at our results fixed full year, which are severely impacted by the COVID-19 pandemic total revenue was 431 $8 million a.
A decrease of $966 million or 69%.
Total attendance was approximately $6 formula and get a.
Ah decrease at 72%.
Net loss for the fiscal year was $312.3 million, a decrease of 401 $8 million.
And adjusted EBITDA with a loss of $73 and $2 million, a decline and $531 million when compared to 2019.
This call and 2020 total revenue per capita was $67.75 compared to $61 and 80 and 2019 and.
Nine 6% increase driven by and increase in admissions per capita and and parked per capita spending.
And mentioned per capita increased 12.9% to $40 and 70% compared to $35 and 48 and 2019.
The improvement and admissions per capita is primarily due to the realisation of higher prices and and our admission products and.
And a favorable park next partially offset by the net impact and attendants and excellent compared to the prior year.
And park per capita spending and print by five 2% to $27 and 68 from.
And $26 and 32 and 2019.
The increase was primarily due to higher and realized prices and fees enhanced and expanded product offerings and makes it certain merchandise and food and beverage items and increased guests bending and look partially offset by the impact of attendance next when compared to the prior year period.
We reported and net loss for fiscal 2020 of 312 $3 million compared to net income of 89 $5 million and 2019.
Net loss and 2020 includes approximately $16 9 million related to the legal settlement proceed eight 8 million related to pre tax expenses associated with the incremental cost for the COVID-19, pandemic and two $8 million, a pretax expenses associated with severance and other <unk>.
Ration related costs.
Net income and 2019 includes approximately $32.1 million related and legal settlement charges net of insurance recovery for $3 million, a pre tax expenses associated associated with the previously announced equity transaction and for $2 million a pre tax expenses associated.
With severance and other separation related costs.
Now turning to our balance sheet.
Our current deferred revenue balanced related to all of our products as of the end of the year was $138 million and increase of approximately 25% from December of 2019.
We are pleased with the pace of our past sales and passed based and Taliban.
Our past day grew between the third and the fourth quarter and currently are packed basis, only down 6% compared to February of 2020.
It puts us and perspective are past day is currently at approximately 70% of our peak past space and 2019.
With the peak past selling seasons of the spring and summer yet to come.
This is particularly impressive because as you know we only extended a portion of our tactics three of 2021.
The majority of our current has faith reflects new sales or current pain past members.
We are also encouraged at the impact of our pricing strategies continued to take hold with stronger realized prices on our past sales versus the prior year.
As of December 31, 2020, or cash and cash equivalents balanced with approximately $434 million.
And total liquidity, including are available with all of our capacity was approximately $745 million.
Are estimated average monthly adjusted net cash burnt during the quarter was approximately $1 million per month.
Excluding certain vendor payments, which were previously deferred three extended payment terms for payment plans and order to manage liquidity during the temporary park closures and limited reopening.
Are adjusted net cash burn demonstrates our commitment to continue to effectively manage costs and cash flow through this environment.
Including the deferred vendor payments, we estimate that the average monthly net cash for and for the fourth quarter was approximately $18 million per month.
Are deferred vendor payment balance was approximately $20 million as of the end of the fourth quarter.
And we continue to work with our vendors and business partners and these deferred payments and anticipate having these substantially paid off by April of 2021.
Looking ahead to the first quarter of 2021, which as you know is traditionally art seasonally lowest cash flow generation quarter.
And will include a $24 million interest payment on our second liens senior known along with the timing of other payment.
We anticipate our average monthly net cash burn will be and a range of $25 million to $30 million.
We spent 109 $2 million and Capex and 2020.
Of which approximately 94 $7 million was on core capex and approximately $14 $5 million with an expansion or RLI project.
And we have previously discussed we will spend opportunistically on non core expansion or I capex. When we find opportunities that needs are returned hurdles, including new parks and expansion like our sesame plant parked in California and.
Incremental revenue enhancing projects cost reducing projects or other similar opportunity.
Four 2021, depending on the pace of recovery from the COVID-19 impact we plan on spending between $100 million and $150 million on capital expenditure.
With a continuation of modified are limited operations across most of our parks, where even more focused on driving attendance and total revenue, while eliminating unnecessary costs and continuing to identify more efficient ways to operate safely.
Now, let me turn the call back over to Mark who will share and final fine Mark.
Thank you Elizabeth and.
Now before we open the call to your questions I have some closing comments.
During the quarter are rescue teams continue to operate helping and wildlife and need.
And the fourth quarter, we helped rescue over 470 animals, and we have surpassed more than 38000 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 want to thank our employee ambassadors for their continued dedication and effort to welcome back our guest.
While operating and our parks in accordance with the latest health and safety protocols.
I want to thank our loyal pass holders and guests for continuing to visit our parks and finally I want to thank.
Our financial and operating partners for their continued support and understanding understanding during these extraordinary times.
As we have previously discussed we're focused on providing a safe and fun guest experience, while continuing to offer innovative special events and creating new events for our pass holders and guests to enjoy.
While our parks.
And our parks will still.
Complying with established health and safety guidelines.
We have the right assets and team our balance sheet and liquidity are strong.
And we are successively navigating through this extraordinary environment, and we will emerge and even stronger and more profitable enterprise.
We continue to have high confidence and our long term strategy and and our ability to deliver significantly improved operating and financial results that will lead to meaningfully increased value for all shareholders.
With that let's open the line to take your questions.
And we will now begin the question and answer session task.
And questionnaires Crestar from one on your telephone keypad share.
And used and speaker phone please pick up your hand simple for personal keys.
From a charter question, please per store and too.
And in addition management and request that all individuals tour and the cue stick to one question and one follow up and.
And they're small please free too.
At this time, and we will pause momentarily and there was some more often.
And our first question comes from Steve Lewensky and stifle. Please proceed.
Hey, guys good morning.
So so first of all thanks for providing all that information and the slide that's that's very helpful.
So I guess, what I look at that you are obviously, assuming the higher per cap spending your potentially can get to that higher per cap spending and that's going to get you.
Based on the.
The higher attendance levels about 135 million and revenues near flowing that all that and.
Are you putting that all the way down to the EBITDA lines, So I guess.
The question I'm trying to understand here is that is $100 million expense savings how much.
That is variable depending on attendance versus.
Not being.
Variable, depending on where attendances that makes sense.
Yeah, Hey, Steve it's more dark and I can take that question. So when we look at the when we look at the cost savings that we've identified and implemented roughly half of that is I would consider more fixed and nature and probably about and roughly half as more variable and nature. So obviously the variable.
Peace is going to come back.
Over time as we.
Growth the attendants overtime. So we will get those efficiencies as you've noted and then the remaining fixed items, we expect to realize you know not only and the 2021, but.
A little bit just beyond that as well so it's a it's a mix of both things I can tell you that we have a tremendous amount of focus on those costs as we've talked about for some time now.
Okay, Gotcha, and thanks, Mark and and then so the bucket of of Labor, which is about 50 million and and I can see and the.
The footnotes there that basically does not include any any cost inflationary pressures, but if you look and kind of where the minimum wage rates could go is there a way to help us think about what.
Obviously, you're trying to cut 50 million and labor, but.
If you do see an increase in minimum wage what that bucket would look like or what the pressure would be on that bucket.
Yeah, what I can tell you is obviously.
There's various.
Right and various states and and some of them have minimum wage aspects to them. Some some.
Do not.
And we know there's various other things out there that could be on the horizon.
At a federal level, so having having said all that though Steve our goal with any sort of minimum wage increases to try to find ways to offset those costs through through other efficiencies automation efforts et cetera. So I don't have an exact number to give you what I would tell you is there could be inflationary and cash pressure headwind.
To that number it's certainly not going to offset or be anywhere close to us and the whole number obviously and we would work very hard to offset those increases with other efficiencies and automation efforts overtime.
Okay got Ya Thanks, guys appreciate it and.
And yet.
And our next question comes from Thaler Victoria.
Jamie and please proceed.
Hi, Good morning. This is Jonathan on per Tyler, Thanks for taking our questions personal and from me the topic of conversation out there is on the kind of demand that could come in the back half of the year I'm curious if you're seeing any early indicators there whether it be group bookings path sales survey data something like that any any color you can provide on that.
Yeah, Hey, Jonathan it's Mark and I can help you with that question. So there's a couple of things that give me.
Optimistic about how we think about the rest of the year. So.
First of all you heard Elizabeth mentioned are passed base is that 70% of our peak and 2019 and you heard her also say that.
The majority of that is tied to newer sales right and this is ahead of our peak spring and summer selling season. So we.
We sell passes year round as you know, but we solved the most of them kind of and that spring and summer season, so worthy and 70% of our peak with the with the the.
The bulk of our solely season ahead of us or the the high part of our cell and season ahead of us So that gives me.
And some optimism there around past face. We've also we look at our sales on a on a daily and weekly basis and look we've had days, where our sales are down less than our attendance. So that tells you that there are people buying the product and people.
Will eventually come and use that product is how we see it. So that's a good sign and and finally, our discovery Cove bookings are up about 40% compared to the same time last year. So those are those are things that get give me optimism and I can also just state that obviously you saw a pretty strong increase and.
Our tenants from and Q4 versus Q3, so I think when you put all this together and hopefully that helps you.
Okay, Great. That's very helpful. And then can you just provides and color on the on the current pack part mixed destination verse and local mix and pastors and single day, and and there's been any change there and football.
Well, what I will tell you as we.
As we said and the prepared remarks are.
R.
Mmm paths attendance was up again and the and the fourth quarter relative to last year. There was about the same as Q3, so not surprising to see more pass holders visiting and and we have a little bit not surprisingly more local attendance as well so those are things that.
Will like.
Likely continue for awhile and I wanted to point out because I think I've said this those things have.
And have a negative drag on your per accounts so.
That's another reason why we feel good about the per cap growth is it's coming with a higher pacification and hire local visitation as well.
And our next question comes from Mike Schwartz of true security.
Please per cent.
Hi, good morning, guys [laughter].
[laughter].
And talking about the kind of the same park attendants trends that you're seeing and trying to just get a sense of maybe how we plan that going for and I know that international visitations likely to be more of a headwind to certain of your your Florida parks and I think a lot of that visitation happens to this spring or summer Thursday anyway.
As you can give us some or parameters to how to think about that cadence over the next couple of months a couple of quarters.
Yeah, Hey, Mike, It's Mark I mean, I think what I can tell you is.
We're.
The trends, we're seeing now as I mentioned and more more more local and and passes and station light likely continues having said that.
Our local visitation when I looked across the company.
The fourth quarter was was.
Over 50% just shy of to shy of 60%. So that tells you that there's still a very meaningful and people who are coming and more than 40% who are coming from outside local areas and that kind of comes back to my point, we've made several times about the ability to.
Travel to our parks by car, which we think is an important.
And of our business model. So we are we are seeing a tennis from driving overnight markets domestic market same day markets and that's it's not.
Really terribly far off what we've seen and prior years. When you look at amount of combined basis. So we're getting more local visitation.
But we're not necessarily see and dramatic decreases and and other use visitation same day, driving overnight and domestic where we where we have virtually no attendance as international as you noted, but international for us is not.
Only about 10% of our business and and given year so realized.
We can continue to.
Hopefully drive for at least and water.
So our source of residency trends so.
Okay. That's helpful. Thank you and and just.
Regarding the the $100 million and cost savings and I heard you correctly, you executed around I think all of that.
And 2020 were there any incremental investments during the year are there any incremental investments and 2021 related to those savings.
Yeah, what day, what I can tell you is.
There is there is investments that we're going to make where it makes sense for us to.
That drive costs down so I'll give you. An example, we opened a new office building at the end of 2019. For example, so that got us out of our lease situation. We built our own building that I would argue at a very reasonable cost and we're going to we're going to realize return overtime, so where it makes sense too.
To invest and capital to drive cost efficiencies like around automation or or buying things that we used to lease for example give.
Getting out of warehouse space, and finding places to either construct our own cheaper warehouse on site something like that we will pursue those so there is some element of of that to our cost savings program.
And our next question comes from Paul Gordon of Macquarie.
Paul please per cent.
Thanks, so much so I noticed and the.
And the presentation that you had a section that talked about the international.
Potential and the and.
And the meat and the long term I guess, if you could give some more color around the international strategies, we've seen some difficulty with your peers and as far as breaking into those markets and.
As a as a follow up was.
I was wondering if you have any survey and.
So on the customer experience.
In light of the labor efficiencies and she's been implementing thanks, so much.
Yeah. Thanks, Paul so on the on the international.
Expansion opportunities like certainly we are we are quite happy with the work that's going on and Abu Dhabi and if you've.
Not.
Being able to see any of the photos of that I think they are out there we're excited about that that property.
Coming on over time here so.
Beyond and that we take.
True.
We are certainly opened and the listening to other opportunities. We do I think we've we've looked at different things I don't have anything certainly to announcer are talked about today, but I can tell you that there's Abu Dhabi, there's other markets like China and things like that that might make sense for us and we would evaluate though.
And along with our board and whatnot and see if any of those make sense.
Alright.
And then on the on.
On the customer experience any survey did on that and as far as the numb and light up and labor efficiency.
Well, what I would tell you is when we anytime we set out to do.
Ah cost cost initiatives, we have several guardrails and so certainly one of the guardrails as safety, we're not going to compromise anything that would compromise safety of our guest or animals or employees.
A couple of other guardrails, obviously is we're going to be very careful.
We don't want to implement things that impact.
Experience and we don't want to impact things that that are revenue negative. So we what we have to do then is watch those things and as as we implement.
Activities.
Monitor those things and if we've made a mistake of any kind, we go and try to correct that right. So that will continue to monitor those things and I will say certainly with Covid right now there's there's nuances to how you look at the data.
Given the just given COVID-19 protocols and things like that.
Alright, thanks, so much.
And our next question comes from Alexia Quotron of J P. Morgan. Please proceed.
Hi, Thank you very much and you can't quick questions. The first one and.
And on the capacity limit, particularly when you look at you know Orlando I I know you don't next day disclaimer numbers and I'm wondering how he'd get some color about how it's trending if you've had you know limited capacity at that has continued to and job to.
And do the corner or plans for this here at least the first half of this year I soon and that's all yeah, and and I guess any kind gifts and I'm kind of that and then just circling back to.
The parts that are open year round now with the weekend I'm curious is that something you can sustain.
Well, well post Covid and and do you think there's enough demand for that.
Yeah. He likes those smart let me start with your second question. So.
As far as the parks that are open year round now so notably.
<unk>, Texas, Seaworld, and Texas, Sesame place and Busch Gardens Williamsburg, one of the things that gave us a lot of confidence and and moving to that model is the efficiencies that we've learned.
The operating by during Covid. So we have gotten a lot more efficient and our operations, we've got and a lot more creative nimble flexible all the things I've talked about to be able to run things.
And that are compelling, but also at and efficient cost based and cost structure and we've done different things like drive throughs. We've done other like special events and our parks will continue to do these things. So to answer your question I do think they are sustainable and will I think for the foreseeable future, we would play and to do these things.
Always with and I towards being as efficient as possible.
As far as.
Your question on an Orlando, what I would remind you is look we rarely opry at a peak operating day right. So we have a.
A lot of capacity and the park and we very rarely hit that full capacity during during normal times, so right now.
I think are we feel good about where we are.
The capacity limitations are really driven by social distancing requirements. So as those change or when they change over time that'll be the driver of our ability to drive more capacity, but again, we rarely even the normal times would operate at full capacity. So we're we we feel good about our ability.
And is still generate.
Relatively good results, given given where we are and Covid and then as the capacity increases over time with social distancing hopefully decreasing at some point I don't know when that will be that would be the driver of more capacity.
Thank you.
Our next question comes from Penn Shaikan of Credit Suisse. Then please proceed.
Hey, How's it going thanks for taking my question.
A lot of great examples of what's helping pricing and I've got scharping analytical price and capabilities, enhancing and park pricing and prove promotional effectiveness.
And I was hoping you can just give some specific maybe I don't know anecdotal or actual examples of what you're doing today versus.
With some of these new procedures versus how that's different than what was done previously if there. If there are some easy ones just to rattle off.
Yeah, Hey, Paydown and smart I can take that question. So yes look I'm really proud of the work we've done in this area not only with admissions, but but and park and.
We've built out of a dedicated revenue management team here and our our corporate offices and Orlando and we have people looking at every part.
Pretty much every day of the week, so they're looking at what's going on our analytical capabilities are much better and wanted to give you. A specific example, and that and then I want to talk about and park as well we have learned with some of the things around a reservation system, our ability to kind of forecast and how we think a day is going to trend.
Several days out we can price certain products higher as we get closer to what we think is going to be a peak day or day, that's going to near capacity right. So where that last the last guest into the park, if you've waited to buy your ticket, you're probably going to pay a higher price. So we've seen that the only on it and admissions but that all's.
So applies over to some of our and park items. So we had for example over Halloween we do.
Where you can buy a passed down at our park and Tampa Bay, where you can buy a passive allows you to kind of get to the front of the line to see some of our Halloween may.
<unk> and things like that I can tell you that without getting two inch and into the details we were able to sell those at a pretty high rate, especially as we got day of the event where people could see the park was was.
Going to be near capacity, obviously with all the safety protocols still and they would say hey, probably may not be a bad idea to buy from the line and we're going to we're going to kind of maximize the price on that.
And what so that's just an example, some of the other things on and park as we have new some new venues and our parks. We've also looked at repricing certain products and I would also continue to say our events are driving.
I think good spend in this area. So like we just recently completed or have and process depending on the park.
Events around Mardi Gras and again this is maybe and event we didn't do and every park last year that we're doing now and we saw I think a pretty good response to people coming out and not only enjoying themselves, but buying different food and drink items.
<unk> things like that so that that's another example, and I will just add on the per cash because I think this is important.
And I don't know and in case, we don't get a chance to talk about it I Wanna mentioned it and we are doing this without the benefit of a CRM system and so I know I hear from from other competitors other people.
And other companies how impactful their CRM systems are so we recognized that's where we want to go and we are and the very very early stages of of working on a CRM. So we're doing a lot of this without the benefit of that so I'm I'm, even more excited when we can get something like AC.
RM system fully functioning I think thats only going to only going to help the per cast and other things you can do with that.
Secondly, one other thing I'd like to point out is we.
We we're also developing a new mobile app so.
And that will be ready and that should be ready. This year. So that'll be something you can use and the park to do things like mobile ordering and whatnot and the App. We have now is not very useful and a lot of those ways. So we think this is going to be a significant improvement and the app. So again, Dr. And my point per capita growing even without some.
Those things and place and that's what gives us a lot of excitement for the future as well.
And that's Super helpful. And then just one quick one if I may Sesame Park expansion and I know, there's a conversion happening.
I guess sesame place I should rather I noticed a conversion happening outside of San Diego, How do you think about the white space given of that of that I guess product given the differentiated.
[noise] dynamic associated with it are branding I guess I should say.
Yes, sorry, what was your <unk> did you say just just the appetite for Sesame Park expansion, yes, yes, yes.
Well, what I will tell you is we're we're big fans of the Sesame Street product.
A great brand and we're excited that will be opening and apart and San Diego Sesame and number two.
Here and the coming years. So we're excited about that opportunity will continue to look I don't have anything to announce today, but I think this is something that will continue to look at it as a strong brand. We also you may not know this but we have that brand and our other parts. So we have a sesame Street land here in Orlando.
And when it opened a couple of years ago was voted one of the best new attractions by USA today. So we utilize that that brand throughout a number of our parks think it's a great brand and we'll keep evaluating future opportunities with that room.
And our next question comes from Sydney, Grambling with Goldman Sachs. Please percent.
Hey, thanks for taking the questions.
Just a follow up but I think it was Steve initial question around the slides and the the EBITDA hypothetically. The day I think last quarter, you reference kind of several hundred basis points of opportunity and normalize environment and that's what changed or what did you learn as you sharpen the pencil and then how are you generally thinking about reinvestment back into the business and are there any income.
Mental discrete costs.
Visibility as a result of the pandemic, whether that's insurance costs moving higher or.
Seiki or otherwise thanks.
Yes, Hi, Hey, Stephen and smart So obviously when we talked last time, we were still formalizing and looking at these numbers and didn't have a have a full view and we still had had queue for ahead of us I think what I'd like to point out obviously is the costs work. We've been has been ongoing for.
Some time and so I would say we probably.
Felt pretty good about that even even last quarter and we've continued to refine that I think the the bigger changes we dug into the numbers is really around the per cap. So if you look and.
I think it's important to note. This if you look at the the potential for the margin expansion and a lot of it is coming from from higher pricing higher per accounts right. So it's not disappear, it's not a pure costly and so.
Per cap growth, there and as we kind of unpacked as we thought about queue for where like look.
Or the full year, you're growing and growing per counts.
Almost $6 for the full year, and we really tried to unpack that and say look there was some positive things from from Covid, mainly the mix of our parks and you'll have a more parks open and Florida. For example, but there were certainly some negative things that impacted per accounts as well around having more local and pass visitors and not being able to fully employed.
Some of our events and some of the spending around that so when we kind of field and young and back and really looked at that we said look.
Pluses and minuses kind of cancel each other out I mean, it's an estimation process, but so that gave us confidence that we think these these numbers can hold going going forward and and on top of that putting putting the the things we're doing with the revenue management team the and park pricing team.
And all the new things were doing and then as I mentioned before if you throw CRM and mobile app on top of that down the road.
That's what gives us quite a bit of confidence. So I think that's one of the the big changes there was really around the per cast and and really us diving and and those numbers and see and how confident we felt with that.
I think your other and then I'm on the second half Yep your other questions.
It was about cost I mean, I think will will like like like with any costs and we're going to continue to monitor those and where there is where there's significant increases we would look for ways to try to offset there's obviously we have we have.
Cost.
Doing things, maybe a little bit differently, now with Covid and whatnot, but.
I don't know what the exact future is going to look like we're going to do our best as always to try to offset those as much as possible. We noted that our number doesn't include 80 inflation and our cost pressures, we don't know where those are going to come from exactly as wages or other things like that but what I would tell you that we just have a lot of focus on costs and we would look for what.
To offset those as much as possible.
And our last question comes from James Harmon Wedbush Securities James Please per cent.
Good morning. Thank.
Hit me and so just just to sort of close the book on that last point.
Obviously $235 million of incremental EBITDA, that's and gross numbers amount and that number is there a way to think about typical.
Cost inflation over a long period of time, so we could sort of generally think about maybe offset.
Some of those games, obviously, you said a number of times that you would hope to.
I'll sit any incremental and place and that you see but it is there sort of a low single digit sort of a typical inflation that you would see annually.
Yeah, So hey, James and smart so I mean, what I think I would tell you is.
We then and gaijin anything because you remember this is kind of stepping back to us. If we were in 2019 and operating with what we know now so it's hard to project and inflation number when you're kind of go backwards, but I think I do.
And want a gaijin anything I think you can.
Monitor the any sort of wage impacts or other inflationary impacts, but yeah, and it's probably again with our guiding the specifically I don't think it's probably far off what you're saying is it inflationary yes, it's probably in that range are there are some things that might be higher at times.
No.
Labor.
Lumber costs are up and things like that but.
Are there going to be one time items that spike here and there yeah, there could be hopefully things revert to a too close to Ah Ah more normalised number, but what I would just assure you is we're going to try to offset as much of those as we can and to.
The extent, we can't offset everything we would think that the the the increases would be more inflationary level, depending on the specific items.
Got it and then my second question sort of circle back too and the international or fly and business versus.
The drive in <unk>.
Business, obviously, one big question is when you might actually get back to 2019 level of and I'm not going to ask you that question, but what I am going to ask is.
Do you think getting back to 2019.
Pendant on.
Air travel and international travel going back to normal.
Be asleep on the one hand, you have significant whether it's 10% or whatever it happens to be international and and drive and that.
That that is going to be a drag until that goes back to normal I am sorry international or or sort of further out flow.
Flying but on the other hand, and presumably people and I think you've talked about this are willing to drive further and the current environment, where people aren't taking point I'm trying to figure out if those two things can offset one another and I.
I dunno immediate post pandemic phase, where where people are comfortable going to parks, but maybe not comfortable getting on an airplane.
Okay.
Yes, I think I got to James So, let me shift and that can help you with that one.
And what are the things.
First of all we've talked about a couple of things over and over the last several quarters, one as I mentioned earlier.
Traditionally international attendants was about about 10% of our total attendance across the entire company and.
And most of that being in Florida, a little bit and San Diego.
What we've also said is the vast majority of our tenants comes from people, who can drive to our parks. So.
I don't know the exact answer can we can we offset international with with other guest we would share hope. So we know international guess tend to spend generally more and more than that others, they're coming here generally.
Less often so it's a bigger deal for them, but we would look to grow much like we're trying to do now we've had more local attendance and we've also been able to largely hold fairly steady on our same day driving overnight and domestic markets on a combined basis and and we'll we'll continue to do that.
And I mentioned.
One of the things that that also helps is obviously the per cap growth.
Might allow you to.
<unk> and more on revenue from from per account and now we're not going to just.
Focus exclusively on per accounts and we're always here to drive total revenue. So we're going to try to attract.
Guess and we believe we will ultimately drive the most total revenue. So hopefully that gives you some some backdrop.
As how we're kind of thinking about it.
This concludes our question and answer session and all that kind of conference talk over to Mark's Swanson from your closing remarks.
Hey, Thanks, and appreciate it and be.
Have a elizabeth and the rest of the management team here at Seaworld Entertainment I want to thank you for joining us this morning.
As you've heard today, we're confident and our business and strategy.
And look forward to coming out of this crisis and continuing to drive improved operating and financial results and long term value for all stakeholders.
Well, thank you and we look forward to speaking with the next quarter.
The conference concluded and thank you for attending today's presentation and you may now disconnect.
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