Q2 2022 SeaWorld Entertainment Inc Earnings Call
Good day and welcome to the Seaworld Entertainment Incorporated's Q2, 2022 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation.
There will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.
Please note. This event is being recorded I would now like to turn the conference over to Matthew Stroud head of Investor Relations. Please go ahead.
Thank you Ron and good morning, everyone. Welcome to Seaworld second quarter earnings Conference call today's call is being webcast and recorded.
Our press release was issued this morning and is available on our Investor Relations website at Www Seaworld investors Dot com.
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 Shell Adams, Chief Financial Officer and Treasurer.
This morning, we will review our second quarter financial results and then we will open up the call to your questions.
Also we have posted a short slide presentation on our Investor website, along with our earnings press release that we will discuss during our prepared remarks today.
Before we begin I would like to remind everyone that our comments today will contain forward looking statements within the meaning of the federal securities laws. These.
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 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 our fifth consecutive quarter of record financial results.
While our second quarter and first half financial results were strong these.
These results still do not reflect a normalized operating environment and we still have significant scope to improve our execution and our financial results.
International and group related visitation is better than 2021, but it is not yet back to pre COVID-19 levels.
And our staffing improved over the course of the second quarter, but we are still not yet at optimize staffing levels.
Inflationary pressures, while moderating continue to impact cost across the enterprise.
Total revenue for the quarter was up more than 24% versus 2019 and up almost 15% versus a record 2021.
And our pricing power and consumer spending remains strong with total revenue per capita up significantly versus 2019.
Nicely versus a record 2021.
While we were focused on getting all of our parks open and fully operating during the summer season for the first time since 2019.
We could have had more effective cost management during the quarter.
We can and will work to do a better job going forward <unk>.
Consistent with what we have been doing for the past several years.
We have several new projects and initiatives in flight that we expect will help us work to offset the unusually high inflationary pressures.
And become an even more efficient and profitable operating business.
Further we expect certain cyclical supply chain related and or temporary cost pressures, such as energy and utilities shipping food in certain ways and employee related costs to moderate over the coming months and quarters.
We continue to benefit from a very strong financial position with leverage under two seven times.
Long term debt maturities.
Generally low cost of debt slightly over 5% and significant available liquidity and cash flow generation.
Given this strong financial position, our clear belief in our go forward prospects and what we believe is an extremely attractive value being offered by the markets.
We continue to aggressively repurchase shares during the second quarter and into the third quarter exhausting our prior share repurchase authorizations.
And today, we are announcing a new $250 million buyback authorization.
We are pleased that preliminary July revenue continued to grow versus a record July of 2021 and was up approximately 20% compared to July of 2019, and we look forward to closing out what we expect to be another solid summer.
Looking ahead to the fall we are excited about our popular Halloween events, we have scheduled at our Seaworld Busch gardens, and Sesame place parks.
We look forward to building on the strength of last year, including the return of Hello, Scream at Seaworld, Orlando and Seaworld San Diego following last year's introduction, along with the first year of the accounts Halloween spectacular at our newest park Sesame place San Diego.
As we continue to demonstrate our business model is strong and resilient.
And we have significant opportunities to improve and grow our revenue and profitability.
As a reminder, we operate in an industry and in markets with growing demand trends over the long term and we have significant available guest capacity across our product portfolio.
Our recent attendance levels are still below the total attendance levels, we achieved in 2019 and well below our historical high attendance recorded in 2008.
We have made significant investments that we expect will continue to pay off and we have specific plans. We are executing on today and for the future that gives us high confidence in our ability to deliver additional operational and financial improvements that we expect will lead to meaningful increases in shareholder value.
In response to various questions and inquiries, we have received over the past few weeks and months, we posted a short presentation on our investor website, along with our earnings press release.
That provides more detail around our cost reduction and efficiency efficiency initiatives.
The visitation of our park portfolio and how our industry and business performed during historical recessions.
On page four of the presentation, you can see a select list of cost efficiency and reduction initiatives, which aggregate to $20 million to $40 million of savings.
We've broken these initiatives down between our labor SG&A Opex and cost of goods sold line items.
This is just a select list does not necessarily reflect everything we are working on or we'll work on over the coming months and quarters.
On page five of the presentation, we show a description of the visitation of each of our markets across our <unk> portfolio and the aggregate statistic for the whole portfolio.
As you can see from the page, we estimate that approximately 85% of our attendees drive to our parks.
Our visitation is more similar to a typical regional amusement park business.
At times people compare our business to destination theme park businesses like Disney Universal, but we believe our visitation and business dynamics are more closely comparable to a regional theme park peers as opposed to our destination theme Park peers.
On page six of the presentation.
We show an industry graph that shows the growth of the industry over the last 20 years and.
And the resiliency of the industry during the last two U S recessions.
On page seven we show our specific performance during the last two recessions.
As you can see we believe our business demonstrated resiliency in both the 2001.
Slash 2002 recession, and the 2008 slash 2010 recession.
As we've discussed before we offer a tremendous value to our customers and given our attractive value proposition and the drive to nature of our parks and how our business has performed in past recessionary periods.
We expect it will perform relatively well in future recessionary environments.
We hope this helps everyone better understand our cost reduction and efficiency efforts.
The drive to and regional theme Park nature of our total park portfolio.
And the resiliency of our industry overall and our business in particular.
Before moving to shell and her update on financial performance, Let me comment on a few more items in greater detail.
First let me comment on our balance sheet, which continues to be strong.
Our LTM June 2022, net total leverage ratio is below two seven times and we have approximately $531 million of total available liquidity, including $168 million of cash.
And we expect to generate significant additional cash as we are in the middle of our historically high cash flow generation part of the year.
This strong balance sheet gives us flexibility to continue to invest in and grow our business make opportunistic investments and to thoughtfully return capital to our shareholders.
Second we continue to make progress on our mobile app, which guests are increasingly utilized to improve their in park experience.
So far there have been approximately $2 9 million downloads of the App.
And in June almost one out of every five guests in our parks, we're using in engaging with the app.
We have seen an approximate 10% increase in average transaction value for food and beverage purchases made through the app compared to point of sale orders and we are seeing double digit percentage revenue penetration across other in park products that guests are purchasing through the app.
Third.
We continue to make progress with our plans to design and build hotels to complement our park offerings.
We have engaged multiple consultants and industry resources to evaluate a number of site and facility concepts as we further develop our strategies, we look forward to sharing more specifics in future quarters.
Finally, we repurchased approximately seven 1 million shares of common stock at a total cost of approximately $390 $1 million from April 2022 through July 2022.
Fully exhausting the March 2022, and May 2022 authorizations.
For year to date July 2022, we have repurchased eight 6 million shares at a total cost of $500 million.
Also our board today approved a share repurchase authorization for $250 million.
Overall, we are proud to report record net income on a trailing 12 month basis of 281 3 million and.
And record adjusted EBITDA on a trailing 12 month basis of over $718 million.
Which was achieved with attendance of only $21 8 million guests, which is not only below our 2019 attendance.
But well below our historical high of over $25 million gas, we achieved in 2008.
These achievements reflect the extraordinary efforts.
Of our teams to operate our parks, despite the challenging environment, we faced and continue.
To position this company for revenue growth and increased profitability.
With that I would like I would like to introduce everyone to shell Adams, our new CFO .
We're very pleased to have shell join our team here at Seaworld cheap.
She brings a lot of expertise in finance accounting and process improvement as well as expertise and experience in the hospitality and entertainment industry.
We are glad she is here and we have enjoyed working with her.
<unk> will now discuss our financial results in more detail.
Shell.
Thank you Mark and good morning, everyone. Let me start by saying how excited I am to be part of the Seaworld Entertainment.
I've been a fan of the brand.
And parks for many years.
This is an incredible company with an irreplaceable set of assets are high quality and resilient business model and our talented group of investors.
I'm proud to be part of an organization and team that is committed to the highest standard of animal care and make important contributions to conservation animal rescue research and education.
As Mark mentioned, our results of operations for the second quarter of 2022, and 2021 continued to be impacted by the global COVID-19 pandemic is shown in part by the decline in both international and group related attendance periods as compared to pre COVID-19 levels.
The second quarter of 2021 was also impacted by capacity limitations modified <unk> limited operations and decreased demand due to public concerns associated with the pandemic.
My commentary today will be focused on our financial results compared to 2021, however, due to the impacts of the pandemic had on our 2021 second quarter results. We provided a comparison of some of our key results versus 2019, and 2021 and our earnings release chart will also do so in our form 10.
Sure.
During the second quarter, we generated record total revenue of $504 8 million, an increase of $65 million or 14, 8% when compared to the second quarter of 2021.
The increases in that increase in revenue is due to an increase in attendance a seven 8% and an increase in total revenue per capita a six 4%.
Tenants benefited primarily from an increase in demand, resulting to a return to more normalized operations when compared to the second quarter 2021.
Which included COVID-19 related impacts, including restrictions on international travel.
<unk> and our limited operations.
Zero limitations at some of our parks.
However, as Mark said, we also continue to experience lingering effects of the pandemic with international and group related to visitation.
No not yet back to pre COVID-19 level.
In the second quarter, excluding international and group related dissipation attendance would have increased three 3% compared to 2019.
Our pricing and product strategies continue to drive higher realized pricing, resulting in record total revenue per capita in the quarter at $80 59 compared to $75.71 in the second quarter of 2021.
This increase was driven by improvements in both admissions per capita and in park per capita spending and.
Admissions per capita increased by 5% to a record $43 98.
And in Park per capita spending increased by eight 2% to a record $36 61 in the second quarter of 2022 compared to the second quarter of 2021.
The increase in admissions per capita was primarily due to the realization of higher prices and our admission products, resulting from our strategic pricing efforts, which was partially offset by the impact of the park mix when compared to the prior year quarter.
The increase in in Park per capita spending was due to a combination of factors, including pricing initiatives improved product quality and mix, new or enhanced and expanded venues and events and other in park offerings.
These factors were partially offset by the impact of a higher mix of pass attendance when compared to the prior year quarter.
Operating expenses increased $33 $2 million or 21, 1% when compared to the second quarter of 2021.
With a return to more normalized operations higher attendance and summer staffing levels. The increase in operating expenses was primarily due to the increase in labor related costs and other operating costs.
Operating expenses were also unfavorably impacted by unusually high inflationary pressures.
Factors are partially offset by structural cost savings initiatives when compared to the second quarter of 2021.
Operating expenses as a percent of revenue were 37, 7% for the second quarter of 2022 compared to 35, 8% for the second quarter of 2021.
Selling general and administrative expenses increased $13 million or 30% compared to the second quarter of 2021.
Thank you Kris was primarily due to marketing related cost, partially offset by the impact of cost savings and efficiency initiatives.
Selling general and administrative expenses as a percent of revenue was 11, 1% for the second quarter of 2022 compared to nine 8% for the second quarter of 2021.
We believe that approximately $20 million to $25 million of costs in the second quarter compared to 2019 are temporary unusual inflation driven cost that we expect to moderate in the coming months and quarters.
As Mark mentioned most of these inflationary costs relate to certain cyclical supply chain related and our temporary cost pressures, such as energy and utilities shipping food and certain wage and employee related costs.
We generated net income of $116 6 million, our second highest net income for the second quarter compared to net income of $127 $8 million in the second quarter of 2021.
We generated record adjusted EBITDA of $234 4 million.
Increase of $15 $6 million when compared to the second quarter of 2021.
The improvement in adjusted EBITDA for the second quarter of 2022 was primarily impacted by an increase in attendance and total revenue per capita when compared to the second quarter of 2021.
Looking at our results for the first half of 2022 compared to 2021 total revenue was a record $775 $5 million, an increase of $163 $8 million or 26, 8%.
Total attendance was $9 7 million guests, an increase of $1 6 million guests or 25%.
Net income for the period was a record $107 6 million.
An improvement of $24 $7 million.
And adjusted EBITDA EBITDA was a record $304 million, an improvement of $56 4 million or 23, 1%.
Now turning to our balance sheet, our current deferred revenue balance as of the end of the second quarter with $235 5 million.
A decrease of approximately one 3% when compared to June of 2021, which included impact of some COVID-19 related 19 product extensions exclude.
Excluding the extensions than the prior year quarter deferred revenue would have been up approximately 11, 1%.
Compared to June 2019, deferred revenue increased 44, 4%.
At the end of July 2022, our pass base was up approximately 20% compared to July of 2019.
Healthy indicator of consumer demand for our park and the remainder of the year. We are also seeing a higher mix of premium passes and our pass base compared to the prior year as our pass holders continue to recognize the value and benefits of our higher tier products.
As Mark mentioned, we have a very strong balance sheet position as of June 32022, our total availability of total available liquidity was $531 $1 million, including $168 million of cash and cash equivalents on our balance sheet and 300 <unk>.
$8 $3 million available on our revolving credit facility, which has not yet been drawn.
Cash flow from operations was a record $228 $8 million for the second quarter of 2022 free cash flow was $162 9 million for the second quarter of 2022.
We repurchased approximately $7 1 million shares of common stock at a total cost of approximately 391 three.
Not so much announced just showed you some new initiatives and new projects that we've been working on we have a continuous mindset set of improving and I think theres. Some things around those initiatives that we can do to kind of get ahead of this this outsized inflation and try to offset as much of that as we can but in reality.
Still very pleased but again, we hold ourselves to a high standard and I think could've done a better job there as far as staffing. Your second question staffing has gotten.
Better and as we move through Q2, and I think we're pleased to see that what I meant by kind of optimizing the staffing levels is really more around what is the right mix of our employees. What is the right scheduling what is the split between full time and part time so.
This is really the first full summer.
Everything is operating.
<unk> comparable to 2019, if you will and so we're kind of experiencing some of the modeling some of the things that we did during COVID-19 and prior and were seeing all of that kind of play out this year and we will make some adjustments to get to kind of that that optimized level.
Okay got you thanks for that Mark and then the second question.
But it would be around your July trends and I'm not sure how much you'll you'll really go into those but.
Clearly there I think there's some concern out there in the marketplace that attendance is.
Slowing whether that's possibly be caused by a number of different factors and why you said July was up year over year. Just wondering if you could maybe help us think about what what kind of drove the July upswing was it more was it more foot traffic was at the higher ticket prices was at in park spending just wondering if you could help us kind of think about what.
Drove the upswing in July .
Sure.
I can help you with that so yes. We are we are pleased with our.
July revenue performance as I mentioned.
What I can I think I can share with you is July attendance was was was positive in.
Better than what we saw in June so we did some things in.
Two I think.
Drive more attendance, but.
But not necessarily.
Obviously give it away or anything like that and some of our per caps remained healthy in the month of July , especially the in park per caps is really where we are.
I have seen some good growth as I've said, we're always going to focus on total revenue as we've said in the past and so we're going to do some things to drive continue to drive the tenants, we're coming into our historically.
Popular Halloween events here starting.
Next month, and then we'll move into Christmas and so we like the position, we're in and where it will end up as we move into the fall I would also say.
In the month of July we accomplish what I just laid out in the face of some some.
Whether in a few places specifically in our park Busch Gardens Williamsburg, It was the.
Leased.
<unk> good weather days that we've had.
Back to what we have data for which is back to 1995 and then obviously if anyone on this phone is has been the Texas lately. The heat there has been.
Even for Texas standards.
Hi, and I think Thats had an impact obviously on our Seaworld park in that area. So, but nonetheless, we wanted to call out July .
It did improve over June and growing the revenue off of a record July of 2021.
Okay, Great really appreciate the color thanks Mark.
Our next question comes from Phil Cusick with Jpmorgan.
Hi, guys. Thank you I Wonder if you can talk and expand on the <unk>.
Internationally <unk> group attendance, what sort of trends you see in July and reservations looking forward and then second on the <unk>.
Nothing side, what opportunities are there for additional revenue if you were fully staffed thanks very much.
Hey, Phil it's Marc I can take that question. So what I would tell you and I'll speak to Q2 is.
International attendance.
It Hasnt.
<unk> continues to improve its not.
It's not back to the levels that we saw in 2019, it's still down.
In that 50% range.
And we kind of then.
Settled in there a little bit.
I think when we look out on a on a forward looking basis.
No.
The park that has the most probably international visitation for US is discovery Cove.
And we're pleased with the bookings, we're seeing there, but when when international comes back.
I don't know when exactly that will be that that depends on a lot of different factors, obviously, but.
Still down 50% group attendance.
Is down down less than that it's down probably in the teens somewhere in that range and that ebbs and flows a little bit.
Quarter to quarter for the most part.
What we're I think on the back half of the year, we see some some corporate events that are that we feel we feel good about I think the key thing will be what are schools and groups like church groups and things like that do and to the extent schools go back in session somewhere back in session already are coming back here in the next couple of weeks.
Hopefully schools will get the green light to travel again, and do field trips and that can be more of a spring phenomenon, but.
We'll see where we can pick up in the fall.
And your second question on staffing I mean look the.
We.
Talking about this in Q1 I think we left some money on the table, obviously in Q1 by not having everything open and staffed like we'd like to we did a better job of that in Q2, having better staffing and more things open and I think that certainly helps helps the park experience and helps us capture more of that revenue.
Okay.
We're still not optimized as I talked about so I don't want to put a number to to what the opportunity is but we just want to continue to optimize our levels. So that we can finish out the summer and then the rest of the year strong.
Sure.
Our next question comes from James Hardie in line with Citigroup.
Hey, good morning, Thanks for taking.
My question. My first question, just as I think about.
Versus 19 attendance I think it was up 2% in the first quarter.
L. Three.
In the second quarter, and I guess more specifically, we expect core business that went from <unk>.
<unk> 16.
<unk> III.
Maybe thoughts on sort of a detail versus 2019.
Just within the quarter or is it sort of a straight line between those two things or anything worth calling out there.
Hey, James.
What I would focus on really is when I step back and look at look at everything I look at the total revenue growth and if you look at the total revenue growth in Q2 versus Q1, we did a little bit better in Q2 versus Q1 with with lots of tenants as you noted and look we know in some of our markets.
2019, we were comping against probably some more aggressive ticket offers in 2019 than we had this year.
Nonetheless, we wanted to do better and there are things we can continue to do better in marketing and communications et cetera, but look overall were very pleased with.
That revenue growth the per cap growth.
What we're driving there like I said even.
Relative to Q1 to do better with with attendance a little bit more down than it was in Q1, we're very pleased with that that total revenue growth.
Got it and then I guess along those same lines. So July grew 20% versus 2019.
Second quarter was up 24%. So it does seem like there was some deceleration versus 19 in July .
A little bit of confusion it sounds like attendants got better year over year, but I'm, just trying to figure out versus that 2019 level.
What decelerated, what the per caps or attendance or am I thinking about this the wrong way.
What I would say James is.
Im really pleased with 20% revenue growth in July I realize it's not 24, but that is still really strong growth versus 2019, obviously, there's going to be.
Some moderation I'm sure over time, but that is still very strong.
Revenue growth I mentioned some of the weather impacts we saw in Busch Gardens Williamsburg in Seaworld San Antonio So look July like I said was better than June the revenue growth remains very strong the per caps are up in July .
So we're pleased with that I think we feel good about that.
Okay.
The next question comes from Ben Chaiken with Credit Suisse.
The share of new people coming to markets obviously.
Okay Fair enough and then a.
A follow up question is on.
Staffing I think you talked last quarter about bringing in some of the J one visa workers to the parks in Florida did that.
Transpired kind of.
Where are you versus what you had hoped to do at this time last quarter.
Yeah. Good question I think.
Pretty pleased with.
The international.
Programs that we rolled out as I mentioned, we had really only use those in the past.
In one location and that was primarily in Virginia, and so we expanded it to our other markets. So I think for the first year. We were generally pleased and I think it's something that we'll continue to utilize on a go forward basis.
The next question comes from Michael Swartz with Suntrust Robinson Humphrey.
Hey, Mark just wanted to touch on some of your.
Comments earlier in the call and I think you had made the comment that attendance is still pretty far removed from all time highs back in 2008, most of us weren't around back then and I think.
You aren't publicly traded back and maybe you can give us a sense for some context of what what's that mean are we added 10% gap, 20% gap versus than any color would be helpful. Thanks.
Yes, sure sure Michael I'm happy to happy to provide that I mean, what I can tell you is our tenants in 2008 was over 25 million people.
On a on a.
On our most recent LTM basis as I noted, we're under $22 million. So there's a $3 million plus gap there. Even if you look back to 2019, which we're not even back to that was $22 6 million and I. Just told you 2008 was over $25 million and that was.
With one less park.
So that was worth 11 parks not 12 so.
That's one of the things that gets us Super excited about the prospects for this business. If we can capture another two to 3 million people and Thats just to get back to 2008, if you think about a lot of others in the industry.
Growing since 2008.
So not only if we can get back to where we once were but then grow from there.
You can do the math on an if you add two to 3 million people are more and how that flows through that's one of the things that really excites us about the prospects of this business on a go forward basis.
Okay. Thanks for that.
Just a follow up question was on some of the inflationary costs Youre experiencing I think you called out 2000 $25 million just point of clarification there.
Was that in the quarter or is that kind of.
A run rate.
Basis.
Are you seeing most of that in park park cost versus SG&A.
Yes, no. Good question I think I think you were talking about the remarks that show is making so.
Looking in general.
As she noted it was in the second quarter.
That 20% to $25 million.
So it's spread across a number of things obviously you have some some things that I'm sure. We're all not surprised about shipping food.
Various supply chain initiatives, maybe some of the others that maybe don't come to mind at times or some of the water water quality chemicals.
If any of you have a pool.
A experienced higher cost to treat your pool.
It is no different.
Our parks are water parks.
Things like that so there's a there's a host of cost in there that obviously are our higher that show was alluding to.
The next question comes from Barton Crockett with Rosenblatt.
Thanks Kurt.
<unk>.
I wonder about your share repurchase so.
If you could just why are the <unk> the gas this quarter.
And versus other periods when the business has been strong, but you haven't done this level of share repurchase.
And also talk about the re up in.
Sure.
How you would describe the environment here as we go into the third quarter compared to the second quarter. When you did all that share repurchase.
Has anything really changed environment or is it still kind of the same as it was.
Yeah, Hey, Barton.
Broke up slightly at the beginning of your question, but I think you were just you were asking kind of how we how do we think about the share repurchase.
Sure.
I made a comment.
In the third.
Third remarks that.
That was approved today I meant to say that that's being announced today. So we're announcing that debt today.
Today, obviously and look as you've heard me say.
In the past I mean, we work closely.
With our board on use of cash and certainly we look at.
What are the best ways to deploy that for for shareholders.
You can look back to this year than prior years and typically.
Share buybacks have been one use of that cash.
Obviously also invest in our business with Capex and we've certainly done that we've driven a lot of capex into our parks over the last several years.
Hi, higher growth initiatives.
Consider other strategic opportunities and return capital to shareholders. So we'll continue.
To work with our board on how to how we deploy cash that's in the best interest of shareholders.
I can tell you that's something that the board is very clear on.
Making sure we do what's in the best interest of shareholders.
Okay, and then for the.
Good question.
I haven't heard a lot from you guys about this.
Please go launch I was wondering if you could describe how that's performed relative to your expectations and maybe a little bit of color about how that looks relative to the one that you have in Pennsylvania.
And a little color there would be helpful. Thank you.
Yes, Thanks Barton yes.
We opened that park really right towards the end of Q1 in San Diego I mentioned.
I was out there for the opening.
Gone out there, it's a really beautiful park.
Beautiful setting we like the location of southern California.
The attractive demographics.
Demographic with families. So I think we're we're still learning.
And operating that park and we're looking forward to.
What lies ahead I am excited as I mentioned, a couple of times, we will start the Halloween event. There this fall called counts Halloween spectacular.
The Waterpark that was there before a product that did not have that it was it was basically a very seasonal waterpark. So what I'm excited about is transitioning to a more year round operation in that location with the sesame product and being able to do events like Halloween and Christmas and other other events.
The next question comes from Paul Golding with Macquarie.
Thanks, so much and congrats on the role and looking forward to working together.
Mark I wanted to ask about your commentary in terms of rig.
Regaining the record.
Record attendance levels or that sort of a.
An aspirational level I guess given the labor.
Constraints or costs and just the general inflationary environment.
I guess help us think about whether that's really maybe your true goal or whether theres, a sweeter spot somewhere in between where you can balance the inflationary environment and the tweaks you are making into the cost base with how much you're yielding on a per visit basis.
And in a similar vein.
Maybe some color around the extent to which the app.
Your presentation on cost savings contemplates savings.
May get from the App.
Seeing higher penetration thanks, so much.
Sure sure. Thanks, Paul.
Yes, it's a good question about how do we how do we think about the attendance and balance that with.
With pricing and things like that what I would just remind everybody is we have a couple of things one we have a lot of capacity in our parks.
We don't.
Very few days out of the year do we have to.
Cut down a park, so theres a lot of capacity and I think one of the things we can do to get back to those prior attendance levels. In 2008 as is find ways to continue to fill where we have capacity, which is most most everyday for the most part so we're not going to.
The other thing I would say it's.
We're focused on driving total revenue so the end of the day that's what.
What matters as much as anything so we will balance the right mix of attendance versus total revenue. If we can if we can drive really high total revenue with lower tenants. Yes, you would obviously do that that would that would come with lower cost and probably a better experience in your parks and things like that but I think there is a spot.
Where you can do both.
We that's our goal we're not.
We want to grow tenants and we want to grow per caps, we think on a on a go forward basis, you can grow per caps that are at a pretty normalized.
As you guys know the recipe if you can grow attendance, a little bit grow per caps, a little bit and watch it costs the business.
<unk> is up pretty pretty nicely right. So.
That's how we're thinking about it.
Yes.
Forgot your second question.
On the App and the extent to which potential cost savings from the App are contemplated in that presentation. Yes, yes, sorry. Good question look we're pleased with the App.
As I mentioned, we're seeing people use the app, we are still I would say in the early stages. The stages of we do have we have mobile ordering and things like that.
And so theres certainly.
If you think about in a park if you could have a restaurant that is only <unk>.
Carryout only if you will are mobile only right.
I think you could obviously have some staffing savings there because you're effectively just making the food and people are picking it up.
Theyre paying on the App and things like that so that is more efficient and that's what we are rolling out or have rolled out and some of our parks. Our goal is to to have more of that and there is some some some things we got to do just logistically to make that happen a little bit better than some of our parks, but we're excited that we've got an app.
And people are using it.
Yeah.
The next question comes from Eric Wold with B Riley Securities.
Thanks, Good morning, I wanted to hit on maintenance.
$5 million million of attendance one more time, just asked a different way I guess.
Yes.
When we think about that what was changed besides the additional obviously one more part maybe what has changed structurally within the parks since then.
Couldn't accommodate more guests additional space more food and beverage more Raj I guess, one just trying to get a sense of how low that $25 million could actually be over time or maybe.
Asked a different way what do you think.
Tenants number it is where you're starting to see an adverse impact to guest experience I mean, if you have any information on.
Satisfaction scores look like back then with that level of attendance back in back into OE.
Yes.
That kind of peak number.
Yeah no. Thanks for the question, Eric and looked at.
To remind everybody that the $25 million is getting back to 2008.
If we are growing.
Since that time.
We'd probably be talking closer to $30 million or something in that range. So.
We absolutely have capacity in our parks I mean like I said, we don't we don't we have very few days, where we're at full capacity I'm talking like.
Fourth of July or new year's Eve, and that's still not at every park.
So we have room in our parks we've added.
A number of new attractions over the years, we have more attractions on the horizon.
We've done different different.
New lands in rounds, and things like that so I'm confident that we can we can still attract.
More people, obviously and still have plenty of room and can deliver on and.
<unk> experienced that.
People will find enjoyable so.
Feel good about that.
The capacity.
Availability in our parks if you will.
Got it thanks a lot.
Thank you. This concludes our question and answer session I would like to turn the conference back over to Mr. Marc Swanson for any closing remarks.
Well, thank you Brendan.
On behalf of shell and the rest of the management team at Seaworld Entertainment when a thank you for joining us this morning.
You 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 for joining us today, and we look forward to speaking with you next quarter.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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