Q4 2021 SeaWorld Entertainment Inc Earnings Call
And is available on our Investor Relations website at Www Seaworld investors Dot Com <unk>.
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 Marc Swanson, Chief Executive Officer, and Elizabeth <unk>, Chief Financial Officer and Treasurer.
This morning, we will review, our fourth quarter and fiscal 2021 financial results and then we will open up the call to your questions.
Before we begin I'd 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 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.
We undertake no obligation to update any forward looking statements.
In addition on the call we May reference non-GAAP financial measures and other financial metrics, such as adjusted EBITDA and free cash flow more.
More information regarding our forward looking statements and reconciliations of non-GAAP measures 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 to our Chief Executive Officer, Marc Swanson Marc.
Thank you Matthew good morning, everyone and thank you for joining us.
We are pleased to report another quarter of record financial results.
And record financial results for the fiscal year.
In the fourth quarter and fiscal 2021, we delivered record revenue record net income and record adjusted EBITDA.
We are especially pleased to deliver these record results, while continuing to operate in an environment with significant and unprecedented headwinds related to COVID-19.
These results are testament to the tireless work of our incredible team.
The demonstrated resiliency of our business model.
And the continued successful implementation of our proven business plans and strategies.
Our fourth quarter and fiscal year financial performance would have been even better if not for limited international guest attendance and reduced group related attendance related to the impacts of COVID-19.
While we have made good progress on our plans as we look to the future. We continue to be highly confident that we can deliver even more operational and financial improvements that we expect will lead to meaningfully meaningful increases in shareholder value.
In particular, we believe our forward ride attraction and parked enhancement investment plans are the most robust they have ever been.
And currently reflect the cadence focus areas and strategies, we have been working towards.
We are extremely excited about the new rights, we have opened and planned to open this year and the new additions upgrades and improvements we've made to our parks.
We encourage you all to visit our parks with your family and friends very soon and often this year.
We continue to improve our commercial functionality with investments in talent and capabilities and revenue management and marketing and have opportunity to continue to improve in these areas.
We also continue to identify track and execute on additional cost reduction and efficiency opportunities that we expect to continue to help offset inflationary pressures and lead to structurally improved profitability.
With respect to our digital capabilities, including our mobile App and CRM implementations. We are encouraged by the early results and are in the very early innings of realizing the full potential of these initiatives.
I would also say that we believe we are behind our competitors in some of these areas, which gives us even greater confidence in the potential we have yet to realize.
And we continue to make progress on our inorganic growth initiatives related to hotels, new parks and international expansion and expect to have more to share later in the year.
We're also pleased to have ended 2021, and a particularly strong financial position as a result of the proactive and decisive decisions made over the last couple of years as well as our record financial performance in 2021.
Our available liquidity.
<unk> cash on our balance sheet and capacity on our revolving credit facility was over $800 million.
And our total leverage was less than 250 times.
Our strong financial position provides us significant flexibility to invest in our business.
<unk> high growth ROI initiatives.
<unk> strategic opportunities.
And or return capital to our shareholders.
In 2021, we are proud to have received numerous industry honors and recognitions, including Seaworld Orlando voted as number one for nations Best amusement park by USA today readers.
Ah Quantico, Orlando voted US number one for nations best outdoor Waterpark by USA today readers.
And Busch Gardens, Williamsburg named world's most beautiful theme park for the 30 <unk> year in a row by the National amusement Parks Historical Association.
In addition, two of our other water parks water country, USA and adventure Island Tampa were voted in the top 10 of the nations best outdoor water parks by USA today readers.
The Mako rollercoaster at Seaworld Orlando was ranked as the number one for.
We're best Rollercoaster and the Celtic fire that show at Busch Gardens, Williamsburg was voted US number one for best Amusement Park entertainment each by USA today readers.
Yeah.
We also launched new iOS and Android mobile apps for all of our parks in 2021 and completed what we believe to be the most significant transformation of our embarked venues as many were redesigned refi.
Or added across our parks in 2021.
We are very excited for 2022 as we believe we have the most exciting lineup of new rides attractions events and upgrades, we have ever had in our history with something new and meaningful and every one of our parks, including according to USA today four of <unk>.
The nine most anticipated roller coasters of 2022 opening across our parks this year.
We recently opened the ice breaker rollercoaster at Seaworld Orlando.
Quadruple launch coaster, featuring four airtime field launches, both backwards and forwards, culminating in a reverse launch up a 90 foot 93 foot vertical spike leading to the steepest beyond vertical drop in Florida.
The iron quasi roller coaster at Busch Gardens, Tampa Bay, what we believe could be the best roller coaster in the World and has certainly got quite a bit of hype already opened for past members on February 13th and will open to the general public on March 11th.
This will be the tallest hybrid coaster in North America.
And the world's fastest and steepest hybrid coaster with the world's tallest drop.
Writers were claimed more than 200 feet before plunging into a beyond vertical drop reaching speeds of 76 miles per hour and experiencing a dozen airtime moments.
In addition, the Emperor roller coaster at Seaworld San Diego.
Open to pass members on March 2nd and to the General public on March 12.
This will be the tallest fastest longest and first floor, let's dive coaster on the west coast.
After climbing more than a 150 feet riders.
Riders will dangle at a 90 degree angle before plunging into 140 foot other 43 foot vertical drop that will accelerate riders to more than 60 miles per hour.
And the pantheon roller coaster at Busch Gardens, Williamsburg, We will open the past members on March 4th and to the general public on March 25.
Pantheon will be the world's fastest multi launch coaster will accelerate riders to speed of 73 miles per hour and will include a 180 foot drop at 95 degrees.
Four launches to inversions and 15 airtime moments.
All four of these posters are among the nine most anticipated coasters of 2022, according to USA today.
Also at Seaworld San Antonio.
The title search screaming swing, the world's tallest and fastest screaming swing, we'll open Saturday to select season pass holders and on March 5th to all guests.
Later this spring we will open the big birds to Airbus at Sesame place in Philadelphia.
The reef plunge water slide at Aquatica Orlando.
The rapid racer and Wahoo remix water slides at adventure Island Tampa.
The Aqua as oil and water slide at water country USA.
And the riptide rates of water slide at Quantico, San Antonio.
Overall, we are very excited about this new lineup at our parks.
In addition to these attractions. We're also very excited that our newest park Sesame place San Diego will open March 26.
This will be the first Sesame place theme park on the West Coast and only the second in the United States. This will be the first new theme Park, we have opened since 2013.
On the technology front, we are pleased to have completed the rollout of our mobile app across our parks.
These mobile apps feature interactive maps ride wait times and e-commerce capabilities that allow for in park purchases and are now being used by guests in our parks to improve their visit.
We plan to continue to add features to the App and in it and enable in app purchases across more embarked venues over the next several quarters, which we expect to contribute to enhanced guest satisfaction incremental revenue opportunities and cost efficiencies.
Turning to our pass base.
At the end of January 2022, our pass base was up approximately 27% compared to January of 2021.
And as approximately 19% higher than January of 2020, which was the previous January record.
This is especially encouraging as the peak pass selling seasons of spring and summer are still ahead of us.
We are also seeing a higher mix of premium passes and our pass base compared to prior year as our pass holders continue to recognize the value and benefit of our higher tiered products.
Finally, like many other companies the current labor market continues to present staffing and wage challenges, which we are working to manage through including expanding our use of international workers at our parks.
Something we didn't take advantage of as much as our competitors may have in the past.
We continue to work on cost reduction and efficiency opportunities.
Including continuing to eliminate unnecessary and redundant cost.
Optimizing our staffing and spend levels and investing in and leveraging technology.
Our teams continue to make extraordinary efforts to operate our parks. Despite the challenging environment. We faced this year and better position. This company for revenue growth and increased profitability.
As we have demonstrated in the fourth quarter and throughout 2021.
We believe the strategies, we have developed and refined over the past few years.
Along with the actions we have taken since the beginning of the COVID-19 pandemic.
We will continue to lead to significantly improved financial results for the company.
With that I would like to turn the call over to Elizabeth to discuss our financial results in more detail.
Elizabeth.
Thank you Mark and good morning, everyone.
Similar to last quarter due to the traction we experienced when we temporarily closed all of our parks on March 16 2020.
I will provide commentary today around our financial results compared to 2019.
We believe this comparison provides a more meaningful impact on our performance and operating trajectory.
For those interested we provide a comparison versus 2019 and 2020 and our earnings release and will do well in our Form 10-K .
Yeah.
During the fourth quarter, we generated record total revenue of $378 million.
An increase of $72 $8 million or 24, 4% when compared to the fourth quarter of 2019.
The increase in revenue is due to an increase in total revenue per capita at 18, 1%.
And an increase in attendance at five 4% when compared to the fourth quarter of 2019.
Attendance would have been even better if not for limited international guest attendance due in part to travel restrictions and reduced group related attendance.
Excluding international guests and group related attendance attendance in the fourth quarter increased by approximately 20% when compared to the fourth quarter of 2019.
Our pricing and product strategy.
With the strong consumer demand environment continued to drive higher realized pricing and strong guest spending.
<unk> in total revenue per capita in the quarter of $74 87.
Compared to $63.42 in the fourth quarter of 2019.
This increase was driven by improvements in both admissions per capita and in park per capita spending.
This is the highest total revenue per capita we have ever reported in the fourth quarter.
Admissions per capita increased by 15, 2% to $43 65.
And in in Park per capita spending increased by 22, 3%.
$31.22 in the fourth quarter of 2021 compared to the fourth quarter of 2019.
The increase in admissions per capita primarily relates to the realization of higher prices for admission products, resulting from our strategic pricing efforts.
Partially offset by the net impact of the initial product mix when compared to the fourth quarter of 2019.
In Park per capita spending improved due to a combination of factors, including an improved product mix higher realized prices and fees and the impact of new or enhanced and expanded and park offerings compared to 2019.
We also benefited from strong consumer demand environment, which contributed to higher guest spending levels during the quarter.
We generated net income record net income of $71 5 million compared to a net loss of $24 $2 million in the fourth quarter of 2019.
And we generated record adjusted EBITDA of $152 $8 million in.
An increase of $68 8 million or 82% when compared to the fourth quarter of 2019.
The increases in net income and adjusted EBITDA for the fourth quarter 2021 were primarily impacted by an increase in total revenue when compared to the fourth quarter 2019.
Looking at our results for the full year, which were still impacted by the COVID-19 pandemic.
Total attendance was approximately $20 2 million guests.
A decrease of 10, 7% for 2019.
Excluding international guest visitation and group related attendance.
Tenders in 2021 increased by approximately 2% when compared to 2019.
Total revenue was a record one $5 billion, an increase of $105 $5 million or seven 5% when compared to 2019.
Yeah.
Fiscal 2021 total revenue per capita was $74 43.
Compared to $61 80 in 2019.
A 24% increase driven by an increase in admissions per capita and in park per capita spending.
Admissions per capita increased 18, 9% to $42 17 compared to $35 48 in 2019.
The improvement in admissions per capita is primarily due to the realization of higher prices and our admission products, resulting from our strategic pricing efforts.
Along with a net impact of the admissions product mix when compared to 2019.
In Park per capita spending improved by 22, 6% to $32.26 from $26 32 in 2019.
The increase was primarily due to a combination of factors, including an improved product mix higher realized prices and fees and the impact of new enhanced or expanded in park offerings when compared to 19.
Operating expenses decreased by $27 $2 million or four 2% when compared to 2019, primarily due to a net reduction in labor related costs and other operating costs, resulting from structural cost savings initiatives and the impact of modified <unk> limited.
<unk> due to COVID-19.
These factors were partially offset by certain nonrecurring contractual liabilities and legal costs impacted by the temporary COVID-19 park closures operating costs associated with incremental operating days and events added in 2021.
And an increase in noncash equity compensation expense.
Selling general and administrative expenses decreased by $76 $8 million or 29, 4% when compared to 2019.
Primarily due to a targeted reduction in marketing related costs.
Greece and legal costs.
<unk> related to a legal settlement charge in 2019.
A decline in third party consulting costs.
And the impact of cost savings and efficiency initiatives.
These factors were partially offset by an increase in noncash equity compensation expense.
Net income for the year was a record $256 $5 million.
An increase of $167 million.
Adjusted EBITDA was a record $662 million.
An increase of $205 $1 million when compared to 2019, which held the previous record in both net income and adjusted EBITDA.
Now turning to our balance sheet.
Our current deferred revenue balance as of the ended the fourth quarter was $154 $8 million.
An increase of approximately 48, 2% when compared to December of 2019 <unk>.
<unk> in part to our strong pass sales.
As we have discussed throughout this year, we continue to be encouraged with the trends we're seeing in our packaging.
At the end of January 2022, our pass base was up approximately 27% compared to January 2021.
We are also still seeing a higher mix of premium passes and our pass base and our pass holders continue to recognize the value and benefits of our higher tiered product.
Additionally, we continue to see the impact of our pricing strategies with stronger realized prices on our pass sale.
We continue to Opportunistically repurchase shares during the quarter buying approximately $2 2 million shares of common stock at a total cost of $133 million.
As of December 31, 2021, our total available liquidity with approximately $808 million, including $443 $7 million of cash and cash equivalents on our balance sheet.
And $364 $5 million available on our revolving credit facility, which was undrawn.
Cash flow from operations was a record $86.
$6 million for the fourth quarter of 2021.
And a record $503 million for fiscal 2021.
Free cash flow was a record $31 $3 million for the fourth quarter of 2021 and.
And a record $374 2 million for fiscal 2021.
We've spent $55 $3 million on Capex in the fourth quarter of 2021 of which approximately $25 $4 million was on core capex and approximately $29 $9 million with an eye on expansion ROI projects.
For 2022, we plan on spending approximately $150 million and core capital expenditures and another 30 million to $50 million on growth of our capital expenditures.
Now, let me turn the call back over to Mark who will share some final thoughts Marc.
Thank you Elizabeth.
Before we open the call to your questions I have some closing comments.
In the fourth quarter, we helped rescue almost 370 animals and we are approaching nearly 39900 animal rescues over the company's history.
We were one of the world's leading animal rescue organizations and we are proud of our efforts to protect and save wildlife.
Lately a rescue teams have been busy and then even busier, helping to save manatees throughout Florida due to the recent cold weather as well as the overall denigration of their habitat, which is reducing their primary food source.
In fact, we are seeing such an increase in the number of managers in need of help.
At our Florida team proactively added temporary pools to allow us to rescue and rehabilitate even more manatees.
I'm really proud of the team's hard work and their continued dedication to these important rescue efforts.
I want to thank them and all our ambassadors for all they do to operate our parks in this current environment.
We are excited about 2022, we have an exciting lineup of new rides attractions and events that we believe is one of our best offerings ever.
We recognize that we have made good progress over the past year, but we continue to believe there are significant additional opportunities to improve our execution take advantage of clear growth opportunities.
Continue to drive meaningful growth in both revenue and adjusted EBITDA.
We continue to have high confidence in our long term strategy and our ability to deliver significantly improved operating and financial results.
That we believe will lead to meaningfully increase value for stakeholders now.
Let's take your questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
You're using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please go starting too please.
Please limit yourself to one question and one follow up.
Then re queue. If you have further questions at this time, we will pause momentarily to assemble our roster.
Our first question comes from Steve <unk> with Stifel. You May now go ahead.
Yeah. Thanks, guys good morning.
So Mark obviously, you guys don't give.
Annual guidance, but I guess as you look to this year and you're obviously coming off an.
All time high EBITDA year in 'twenty one.
How should we think about the opportunity to grow EBITDA from from current levels and I guess, maybe a better way of asking that is you know what are some of the gives and takes but you'd be thinking about for this year that could impact the EBITDA growth and then kind of last part of that question is no.
Did you guys witnessed any type of impact in January .
Around the Barrington, we need to be thinking about as well.
Yeah, Hi, Steve Thanks, I'll start with the last part of your question look there's on the variant look Theres a lot of a lot of factors that impact our tenants and some of them are are easier than others to tease out, but certainly we know the variant was on People's minds, we see it in our surveys.
We saw the travel disruptions.
Across the country, we saw people workers.
Workers, calling in sick and things like that so I'm sure it had an impact.
What I can't give you as an exact number of what that is but I'm sure. It had an impact I think the good news for for the country as we seem to be on a better path now here in February just just based on the news that we see out there regarding the various yes I think you're.
Your second question about kind of what where do we see the business going how do we think about the opportunities we have to grow to grow EBITDA and you know I think one of the things.
I immediately go towards is if you look at our.
Our attendance this year versus 2019, we're still down over $2 4 million people. So what I would quickly I'm not going to do the math for you, but you can imagine if we can get back just to get back to 2019 attendance levels pick up another $2 4 million people.
Flow through you flow that through our P&L you can do the math on that I think thats pretty meaningful obviously pretty significant.
And that we're going to continue to execute on our per caps I think we have a lot of momentum.
And but still plenty of opportunity as well, we have new venues in our parks, we've expanded menus and offerings in our parks.
We've refurbished things of our parks, we have a great lineup of new rides and attractions you heard me talk a lot about that we believe it is our best lineup.
Coasters and some of these other Reits are just going to be fantastic and then on the go forward.
The longer term plan is again, what we believe is the most robust plan we've had so.
There's a lot of.
Positive things I think are ahead of us there and then as far as the cost we continue to focus.
As we have for a number of years on achieving cost savings on identifying efficiencies.
And trying to offset as much of the inflationary pressures as we can and so we're going to continue with those strategies and we believe that's a good recipe and I think probably with that information you can probably do some of the math I think what I would also remind you is and you heard me talk about it our pass base here in January is the highest.
<unk> cost base, we've ever had for January so a lot of things I think that we're excited about for 2022.
That's great color, Thanks, Mark and then.
Second question.
I've got asked this question I think I'm not sure what you're going to say, but.
You indicated in your prepared remarks about using excess capital to consider which I think you referred to a strategic opportunities and I'm just wondering what that comment meant in the Grand scheme of things and.
What are some of those strategic opportunities you guys would look at it and obviously there was a.
Public offer for for Cedar Fair.
Maybe you could comment on what attracted you to those assets.
Yes sure Steve.
Not going to comment a whole lot on Cedar fair, but what I can tell you is obviously, we like the industry.
A lot of respect for Cedar fair their assets and their management team a lot of respect for them and we obviously believe the combination made it makes sense.
For us so.
It didn't.
They rejected the offer of did it didn't work out obviously, but.
But I like sitting here, maybe the first part of your question sitting here today.
We talked about in my prepared remarks, we like the strong financial position, we find ourselves in and I think we have some flexibility in whether it's investing in the business, which we're clearly doing with our rides and attractions are refurbishments other things like that technology with our mobile app.
Theres other ROI type things that we could pursue we're opening a new park, obviously in San Diego and new Sesame place.
Certainly could return.
There's capital returned to shareholders and then lastly.
There's the M&A.
<unk> as well, so I'm not going to speculate on what we may or may not do I think what you can rest assured as you know.
We would look to be opportunistic in and study those type of uses of cash with our board and advisors.
Again, I'm not going to speculate but beyond that we are right now really focused on getting ready for spring break.
Got a reids opening and we're excited about the year.
Okay, great. Thanks, Mike appreciate it.
Sure.
Our next question comes from Stephen Grambling with Goldman Sachs. You May now go ahead.
Hey, Thank you.
Just wanted to ask on Sesame place the opening in March and any thoughts you could give us in terms of what the contribution might look like to attendance revenue and what the profile margin profile of this park might look like relative to the company average.
Yeah, Hey, Steven it's Marc I can take that so look we're as I said in my prepared remarks, we're very excited that park will be opening here at the end of March were very excited and I think you can.
Assume that one of the things.
That gets us excited as we believe it has.
A better margin profile than the park that was there previously and the Sesame product is a great IP will be able to open this park.
More on a year round basis, because it'll have some some dry attractions that will have some water attractions as well so I'm pretty optimistic that there is a.
There is.
A better margin profile of better attendance profile better EBITDA profile from that location I'm not going to guide you to a specific number but I think probably gave you enough information there to help you.
Got it and maybe going back to your comments on strategic investments. How do you generally think through synergies or just broader consolidation upside in what makes an asset more or less attractive.
Yes, I'm not going to comment a whole lot I mean, I think you heard me say.
We like the industry.
Certainly with Cedar we had a lot of respect for their assets and their management team. So.
Again, I think I think I'm not going to speculate every kind of thing we would evaluate is going to have.
<unk> puts and takes but I think what I would assure you is we like the position. We're in we like where we ended the year the flexibility we have to deploy cash.
Cash in a variety of ways like I said, whether it's whether it's in back into our own business, which we've been doing obviously, whether it's other ROI initiatives, whether it's returning to shareholders or whether it's some sort of M&A transaction.
Got it thanks, I'll jump back in the queue.
Our next question comes from Mike Swartz with tourists Securities.
You May now go ahead.
Hey, guys I, just wanted to dig into the into the per caps for a bit.
Obviously, you saw some strong growth there over the past year and Theres, obviously, some exogenous things going on to drive that but as well as some of the internal things.
<unk> done to optimize our yield so maybe is there a way you could give us a sense of how much. Your how you think about the growth there over the past 12 months, how much of that was things within your control.
And then how should we think about just generally speaking per caps in 'twenty two meaning do you think you can.
Keep them at these levels grow them is there any kind of puts and takes we should be thinking about.
Yes, Thanks, Mike appreciate the question.
What ill go back to is a couple of things I mean, one one you've kind of acknowledge it and we acknowledge that clearly that we're operating in a good economic environment.
So thats, obviously benefited us, but setting that aside I think of a number of things that I've.
I've been at this company, a long time and I see us doing better than we have before but we're still.
Areas to improve on them and certainly one around our revenue management team and optimizing our pricing and how we how we look at our products, how we price them. How we promote them that type of thing I think that work has.
Got it.
Has done well, but still a lot more opportunity there, especially around understanding.
Testing and optimizing what promotions are really driving people what what are the key levers that we can pull that we know will have a direct impact that type of thing on the marketing side again, I think a lot of opportunity there some things we've done better, but I think things. We can continue to do better to generate demand to stimulate people to.
Come visit we will have the we benefited some here.
In 2021, and I think certainly very early innings of our mobile App and CRM implementation. So realizing the full potential of those over the next several years I think is again, a good backdrop to to growing our per caps and then.
You layer on top of that we did we did this this growth this year without any international attendance I should say without any but very little international tenants that will eventually we believe be a tailwind at some point for us and thus folks generally tend to spend more on in in park basis, and then you layer on the thing.
We are doing in the park, the new venues, the new menus, new offerings the expanded events.
Reasons for people to come visit and then their lineup of rides and attractions Theres just a lot of things that I think we're doing in our parks to to get people excited about the investments, we're making in the product.
Those things I think give us pricing power as well so you put all that together I.
I think certainly we still have runway there with our per caps.
Thanks for that market.
And second question shifting over to the labor environment. I know you guys tend to have a larger year round full time.
Labor base, it sounds like Youre going to take advantage of.
Maybe the <unk> visa program.
How should we just frame or think about labor and wage inflation and in 22 relative to what we saw in 'twenty one.
Yeah.
That's a good question so.
What I can tell you is.
We have a tremendous focus on cost and certainly you know labor is one of our larger costs and we're going to continue.
To try to find other efficiencies other opportunities to offset as much of that inflation as we can and that that's our goal obviously.
So we're doing things like you mentioned, taking advantage of the international worker program that was a program that we have largely only utilized really in one of our parks in the past and this year, we're expanding it across our markets. So we're excited about that we liked that that provides.
A stable level of.
Workers that common experience a great time in our parks beyond that we're focused on some of the reasons that may make it attractive to work in our parks and I think maybe in the past we have not.
Played that up as much I think working in a theme park can be a lot of fun it.
It can be generally outside your own people, who are generally having fun.
You can learn a lot you can get some good leadership skills get some good management skills whatever wherever you go in life that you can use and so we got to do a better job of kind of showcasing that and some other things. It's not always waves that drives people to your company or retain them and I think that there are some things. We can do that are non wage related to.
Hopefully drive.
People to come to us wages, certainly a factor, but but there's certainly other things that we're working on as well.
Our next question comes from Ben Chaiken with Credit Suisse. You May now go ahead.
Hey, How's it going I guess kind of similar to the previous questions.
You've talked a lot about offsetting cost inflation is there any way to.
Quantify how much of the recent inflation you either have already or expect to offset maybe relative to what was in your expectation when you set the original.
<unk> hundred 90 goal I'm, just kind of get some brackets of either what the headwind is or how much you expect to offset any color there. Thanks.
Yeah, Hey, Ben Thanks. Thanks.
Look I think the 690, you're referring to was was an illustration.
It wasn't meant to be guidance or anything but that was an illustration, obviously and I think.
One of the things we are focused on is kind.
Kind of already said it but.
Finding offsets to inflationary pressures and we know that inflation, especially in labor and some supply chain and things like that has been higher.
The normal obviously and so we're trying to find other ways other efficiencies to try to offset as much of that as possible and we have as I mentioned we have.
Things that we.
It's a continuous culture here to identify and execute on things in and so as we discover opportunities we weave them.
Let them in research them and understand them and then if it makes sense for US we tried to execute on them. So that's our goal is to try to offset as much of the.
Inflationary pressures as we can.
Gotcha Thats helpful.
And I guess, just maybe thinking out over the next 12 months or so given there have been.
A lot of changes in the variables of your original Sarnath goal, but correct 690 illustration.
I'm kind of referring to inflation, which we've talked a lot about on the call. But then also positive things like per caps and attendants like is there how do you feel about at some point over the next year updating that.
<unk>.
Yeah, Thanks, Ben look.
I'm not going to comment specifically on when when we may or may not update something but I think as I noted I think when Steve asked a question.
Thank you can do some math and I think we.
We won't do it for you, but I think you can assume we're in.
Not even back to 2019 attendance levels, we're still like I said over 2 million people side of that in 2021.
A big portion of that is obviously international attendance and so you can flow that through at whatever you think is appropriate but pretty high flow through generally win when new people come and visit our parks I've talked quite a bit already about per caps and why we believe we have opportunity there.
Some tailwind there we've got a great lineup of new attractions. So certainly our goal is to not just get back to 2019 attendance levels, it's to exceed that and I think with our lineup not only for this year, but in the future years.
It's a great lineup, it's a great. We're investing in these parks, we're adding new rides and attractions. We're refurbishing things. So there is I think a lot of reasons to.
To believe that we can continue to grow as I mentioned the past space again is that one of its highest is at the highest it's been in.
January so a lot of optimism around our ability to continue to grow.
Our next question comes from James Hardiman with Citigroup you May now go ahead.
Hi.
The attendance up 5% again, sorry. This is Sean Wagner on for James Hardiman attendance up 5% ahead of 2019 in the quarter is that a good baseline for us to think about 2022 or should we be thinking somewhere closer to the.
Between that and the 20% number that <unk> talked about excluding group and international I.
I guess, what's the opportunity for you if you could get that those two cohorts back to kind of pre pandemic levels.
Yeah. Thanks, Sean I. Appreciate the question I mean, I don't know that I can guide you to anything specific but look I mean, I think we laid out.
The potential tailwind, obviously, one one being international and and two being a group of tenants.
When windows return.
I'm not sure when that will happen obviously.
We look out over the back half of the year, we see some some.
Some things that are a little bit more optimistic than like right. Now international is still still a headwind, obviously, but hopefully those improve in the back half of the year.
Beyond that.
I mean generally we.
We're investing in the business.
Generally when you do that.
And have a high pass base generally those are those are good things for the business and I think we're giving people reasons to come out and visit with our our lineup of attractions are events are new things in our parks. So.
I don't have a specific.
Specific number to guide you to anything but I think.
We're optimistic that a lot of things we're doing that we can.
Grow tenants over time here.
Okay, That's fair and I guess, just a follow up.
On the international.
Market.
Particularly for the kind of maybe broader Orlando tourism industry versus maybe historical levels.
I guess, how do you view the.
Maybe in 2022 domestic visitors, having more international options and maybe.
The return of some international visitors.
The United States or I guess.
Kind of how do those balance out in your mind and I don't know if you can remind us of like.
The historical breakdown of Av homes.
Different groups.
Yes, no problem Shawn So just as a reminder, we are in the Orlando market.
But international attendance is only about <unk>.
Across our company about 10% of our attendants. So that's a consolidated number across the company, 10%, 10% of our tenants is international so we have 90% of the people that come to our parks roughly are not are not international. So that's an opportunity and I think that is clearly we're having new things in the parks is as to our.
Vantage and having a high pass base is to our advantage and as the international comes back I don't know exactly when it will come back in and.
We don't have a ton of forward data, but a little bit we have would suggest it starts to get better in the second half of the year, but we'll see what happens, but I think that'll be.
Something we hopefully pick up over time.
Well again, if you have a question. Please press Star then one.
Our next question comes from Paul Golding with Macquarie.
You May now go ahead.
Great. Thanks, so much for the question.
I wanted to ask about sort of your thoughts on your outlook on the capital plan in general Youre doing four new coasters and continuing to invest in attractions.
Also talking about the potential to return to keep returning value to our.
To shareholders. So just trying to understand if if these levels of capex that you've.
Got it to for 2022, if that's sort of a run rate that you see or if theres an opportunity to.
Find more more leverage in the investments you've made in terms of new attractions.
Yeah. Thanks, Paul so.
What I would say is certainly we're very excited about the forward plan, we have for our rides our attractions just general Apart Park investment. So I think I think you've heard hurt us a 100 150 in core Capex, and then 30% to $50 million of noncore. So I think that's a good base for 2020.
And.
Again, not to guide you beyond that but probably a reasonably a reasonable starting point for the go forward. So we look to drive.
We built an attraction we.
We're looking to build something that we believe will be compelling to our guests in and maybe at the same time, we we can add something new to the part or in some cases.
Taken area that maybe was a little bit older and refresh it with something new so theres multiple ways. We look at it so beyond kind of the attraction mix in makeup and things like that then you have heard us talk about how we work with our board on on uses of cash so beyond kind of investing in the business there would be other.
As well as you've heard me talk about.
The one thing I haven't mentioned, yet is like hotels and things like that so I think theres other considerations that we work with.
With the board on and we try to find what we believe is the highest and best use of use of the cash in and tried to spend out efficiently as possible.
Thanks, Mark and then just a quick follow up on the mix.
Mix of attendance, we talked about you already talked about international.
Any color you could give on how you view the group component is that just given what I expect is likelihood of a dilutive impact on <unk>.
On per caps is that just a piece that maybe.
You're thinking of of substituting with more single day, non group or substituting with a different category. How should we think about the emphasis on certain slices of mix.
Going forward. Thanks.
<unk>.
Yes.
Good question Paul So.
The group business is not not maybe quite as big as international but not too far behind and I think a lot of that is going to be dependent on not surprisingly is as people get back to whether it's field trips or church outings or convention business as those things start to come back I think.
We feel more optimistic about our ability to share in that and Thats really the group business in the meantime.
We're not going to sit around and just.
Wait.
So for international a group, we have to find opportunities to fill that with other things and I think what I would point you to as you heard us in our prepared remarks, our tenants would have been up 20% and the 20% range in Q4.
Controlling for international and group, we were up in the quarter.
With without really having a significant contribution from either one of those areas. So we are filling it with other things, whether it's local or people, who drive into our parks, having that higher pass space as I mentioned I think certainly as is one thing that's an advantage to us as well.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Marc Swanson for any closing remarks.
Thank you Anthony.
On behalf of Elizabeth and the rest of the management team at Seaworld Entertainment.
We want to thank you for joining us this morning as.
As you've heard today, we are confident in our long term strategy, which we believe will drive improved operating and financial results and long term value for stakeholders.
Thank you and we look forward to speaking with you next quarter.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.