Q4 2022 SeaWorld Entertainment Inc Earnings Call
Hello, and welcome to the Seawall Parks Q4, 20 twenty-two earnings conference call.
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After today's presentation, there will be an opportunity to ask questions about your question Press Star then one on your Touchtone phone to withdraw your question. Please press Star then Sir. Please note today's event is being recorded and.
And I would like to turn the conference over your House a day Matthew Strout. It's just tried please go ahead.
Thank you and good morning, everyone welcome to Seaworld fourth quarter.
Physical 2022 earnings conference call today.
Today's call is being webcast and recorded.
A press release was issued this morning and it is available on our Investor Relations website at Www Seaworld investors Dot com.
Recently information for this call can be found in the press release and won't be available on our website following the call.
Joining me this morning, or Mark Swanson, Chief Executive Officer, and Jim Forester, interim Chief Financial Officer and Treasurer.
This morning, we will review our fourth quarter in fiscal 2022 financial results and then we will open the call to your question.
Also we have posted a short slide presentation on our Investor website, along with our earnings press release, and we will discuss during our prepared remarks.
Before we begin I would like to remind everyone that our comments today. It will contain forward looking statements within the meaning of the federal securities laws.
These statements are subject to a number of risks and uncertainties. It 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.
An addition on the call we may reference non-GAAP financial measures and other financial metrics, such as adjusted EBITDA free cash flow.
More information regarding our forward looking statements and reconciliations of non-GAAP measures to the most comparable GAAP measures is included in our earnings release available on our web site 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, Mark Swanson Mark.
Thank you Matthew good morning, everyone and thank you for joining us.
We are pleased to report or sudden consecutive quarter of record financial results.
In the fourth quarter, we delivered record revenue.
Our second highest net income and record adjusted EBITDA.
For fiscal 2022, we delivered record revenue record net income and record adjusted EBITDA.
Results for the fourth quarter versus the prior year would have been even better if it weren't for significant adwords adverse weather impacts and most of our markets during the November and December holiday period.
And the negative impact of hurricane in in October and Hurricane Nicole in November .
We estimate that these combined weather related impacts reduced attendance by approximately 249000 guest.
Visits during the quarter.
We continued to drive growth in total per caps, including during our Halloween and Christmas events during the quarter.
Demonstrating the effectiveness of our revenue strategies are pricing power and the strength of consumer spending and our parks.
I want to thank our ambassadors for their continued dedication.
Hurts and contributions without which the strong results would not have been possible.
As I've said before we have a strong and resilient business model and we believe that we have significant opportunities to continue to improve and meaningfully grow our revenue and profitability.
Our attendance levels for fiscal 2022 were below levels achieved in 2019, primarily due to a decline in both international and group related attendance, which we expect will eventually recover to and surpass.
Covid levels.
Also as we have discussed we are still more than 3 million visitors below our historical high attendance of approximately 25 million guests achieved in 2008.
This represents a clear opportunity to recapture lots of tenants we once achieved.
Furthermore, our pricing power strategies investments and opportunities around revenue management and.
Embark food and beverage retail and other embarked guests spending.
Give us confidence in our ability to continue to grow total per caps.
These factors along with the work we are doing to better manage and reduce costs.
Bind with a significant investments, we are making across our parks and business give.
Give us high confidence in our ability to continue to deliver operational and financial improvements that we expect will lead to meaningful increases and shareholder value.
We are pleased with the start to 2023 and looking forward. We are very excited about our plans with an exceptional lineup of new rides the.
Attractions events, and new and improved embark venues and offerings.
Given the investments that we have made and will be making.
The continued success of our strategies and our strong financial position, we expect that we continue to expect meaningful growth and new records and revenue and adjusted EBITDA for 2000 2003.
Four 2023, we have an outstanding lineup of new rides attractions and events.
The new and improved.
Dark venues and offerings with something new and meaningful and each of our parks.
Our new rides and attractions include the following.
Pipeline, the surface or at Seaworld Orlando.
The first of its kind surf kosar with seats and a surfing position that rise and fall to mimic the sensation of riding a wave.
The coaster will accelerate writers to 60 miles per hour through five airtime moments and an innovative wave curl in Virginia.
Arctic rescue at Seaworld San Diego.
The fastest and longest straddle coaster on the West Coast takes riders through three launches speeds up to 40 miles per hour.
Catapult falls at Seaworld San Antonio.
The world's first launched Foon coaster features the world's steepest flume drop north America's only flume with a vertical lift and the tallest flume drop in Texas.
Dark tester at Busch Gardens, Williamsburg, the first all indoor Stratocaster in North America.
Writers experienced for lunches at speeds up to 36 miles per hour through over 2400 feet of track.
Darren Getty Flyer Busch Gardens, Tampa Bay.
It's tallest and fastest screaming swing will take writers up 135 feet at speeds, reaching 68 miles per hour.
Theresa Kids cope at aquatic Orlando.
This all new water play area will feature watering palms tipping buckets sprain jets.
Water bottles and more plus kids can grab a tube and slide into fund on the all new Kid size wave slide.
Chuck-a-luck assures at adventure Island.
Slash and play zone located in the heart event in the heart of Adventure Island will feature an area with with over 25 spray elements and essential kid friendly place structure bound to entertain and engage even the youngest of guest.
Riptide race, a lot of country USA. The first duly pipeline slide in Virginia that will send writers through over 500 feet of slide although navigating high speed tunnels and tight turns alongside their opponents.
Bert and Ernie splashy shores at Sesame place Philadelphia.
A water play area, featuring water umbrellas, typically buckets sprained jets of water bottles and a sprain water tower.
And finally, the count specs counts Splash castle at Sesame place San Diego.
And enhanced water play area and expanded play structure, which features three tipping buckets.
Or water slides and over 100 other water play elements.
As we have done in previous quarters, we have posted a short presentation on our investor website, along with our earnings press release that provides a summary illustration of our earnings potential and some updates on our cost initiatives.
Slide number four is titled Seaworld illustrative adjusted EBITDA.
This presentation is not meant to be guidance. It is just meant as a simple illustration to show what we believe the earnings power of this business would be at 2019 attendance levels and if we return to the 2008 historical peak attendance levels.
While growing our total per capita revenue along with the cost savings opportunities we have identified.
Importantly, this analysis does not reflect the impact of cost inflation or pressure on the business over time.
To be clear again, this is not guidance and we're not projecting when when we will again achieve R 2019 tenants levels or 2008, peek attendance levels or the total per cap growth in cost savings noted on the slide. This is just an illustration of the earnings potential of this business under these scenarios.
As you can see from this illustration this business has the potential to do between $964 million.
And $1 billion $156 million of adjusted EBITDA under these scenarios, excluding cost inflation or pressure.
Slide five shows our latest 2022 attendants of approximately 22 million visitors and the potential for where our tenants can go by returning to historical levels.
As we have discussed and you can see.
We are still below 2019 levels.
And we are well below 2008 peek attendance.
We also show what our tenants would be if we achieved peak attendance at all of our parks in the same year.
As we have said, we have significant potential to achieve meaningfully higher attendance by getting back to historical levels.
Slide six shows the multiple opportunities we see to grow total revenue per capita.
The opportunities include growing group and international demand continued revenue management optimization investments in new and improved venues <unk>.
Continued rollout and improvement of our mobile App among.
Among other things.
We also see future opportunities to grow total revenue per cap from our growth initiatives.
Slide seven of the presentation presents an update in more detail about our cost efficiency and reduction initiatives that we shared last quarter.
As we highlighted we have enhanced our efforts around these initiatives and we have teams dedicated to realize these an additional opportunities.
As we highlighted last quarter.
This is just a select list and does not necessarily reflect everything we are working on or will work on over the coming months.
In quarters.
Again, this is not guidance and we're not projecting when we will achieve our 2019 attendance levels or 2008 attendance levels or the total per cap growth in cost savings and all that on the side or when we will achieve this level of adjusted EBITDA.
This is a Dallas is does not include our estimate the impact of any cost inflation and it assumes the attendance of park mix of 2022.
It is simply meant to show the potential adjusted EBITDA, we could achieve with the growth in attendance. The revenue per capita improvements and the cost reductions that we have identified.
Before moving to Jim and his update on financial performance, Let me comment on a few more items in greater detail.
First.
Let me speak to our balance sheet, which continues to be strong our fiscal 2022 year and net total leverage ratio is 2.78 times and we had approximately $451 million of total available liquidity, including over 75.
Reading over $79 million of cash on the balance sheet.
The strong balance sheet gives us flexibility to continue to invest in and grow our business and to Opportunistically allocate capital with the goal to maximize long term value for shareholders.
And the fourth quarter, we we repurchased approximately 1.4 million shares of common stock.
At a total cost of approximately $76 million.
In 2022.
We repurchased.
12.4 million shares of common stock.
Approximately 60% of total shares outstanding.
At a total cost of approximately $693.6 million.
We also continue to benefit from the rollout of our mobile App, which is used by an increasing number of gas in our parks and has been downloaded more than 4.5 million times.
As of the end of January mobile ordering has been expanded to additional restaurants and is now operating that over 50% of our target restaurants.
We are very excited about the potential of the app and its ability to improve the guests experience drive increases in revenue and decreases in cost.
Let me spend a few minutes talking about are inorganic growth plans.
On the international front Seaworld Abba-dabba is due to open later this year.
In advance of the official opening of a Seaworld Park.
<unk> first dedicated Marine research rescue rehabilitation and returned center. It was recently opened which I will just discuss more later in my remarks.
She rolled out of a Daddy is a custom built 183000 square metres facility that will feature over 68000 marine animals, the world's largest aquarium and six different realms that showcased the complexity and Ah.
Interconnectivity and beauty of life under the seat.
We're very proud of this project and along with our partners in Abu Dhabi are excited about introducing a new region of the world.
To the wonders of Seaworld.
And introducing a next generation Seaworld Park.
The first new Seaworld Park, and 34 years.
We continued to progress discussions related to other international opportunities and expect to have more to share in coming quarters.
On the Sesame Street Park front, we continue our work towards opening our third Sesame place Park, and we will update you on more specifics when possible.
And the hotel front, we continue to make progress with our plans to build hotels and complement our park offerings.
Based on current plans and expectations.
We expect to have our first hotel opened in 2025.
Followed by our second hotel in 2000 2006.
We are working on design and planning for these two hotels and on site selection for additional hotels across our park portfolio.
We look forward to sharing more specifics in future quarters.
Before I turn the call over to Jim I want to take a few minutes to discuss Ah recently announced organizational changes unrelated new positions.
We have promoted shall items are former CFO to the role of Chief transformation officer, where she will be responsible for streamlining and re engineering organizational processes implementing high value initiatives and overseeing our business development and growth activities.
We also promoted Kyle Miller, our former Orlando park's president and Byron threat or former Texas parks President to the roles of co Chief Parks operations officers.
Where each will be responsible for the operations of specific regions of the country.
Pile will oversee the Florida parks environment will oversee the non Florida parks.
These new roles they won't be responsible for operational activities across our parks, including.
Driving strong and consistent operating standards across our parks <unk>.
Improving profitability planning park quality and guests experience.
Together, Thailand Byron have approximately 75 years of park operating experience with the company.
Our team and our stakeholders will really benefit from having these two outstanding individuals in these roles I cannot be more excited.
Overall, we are proud to report record net income for fiscal 2022 of $291.2 million and record adjusted EBITDA of $728 $2 million.
Which was achieved with attendance of 21.9 million guest which as I mentioned is still below are 2019 attendance and well below our historical high over of over 25 million guess, we achieved in 2008.
I want to thank our ambassadors for their hard work.
This past quarter in fiscal year.
Without their continued dedication and efforts the strong results would not have been possible.
With that I'm happy to introduce you all to Jim Forester, our interim CFO to discuss our financial results in more detail.
Jim has an impressive background, including over two decades of experience in the theme Park space and most recently, leading finance operations for our for our Orlando Parks, which as you know are among our strongest performing and largest parks, we're very fortunate to have Jim on our team.
Yep.
Thank you and good morning, everyone.
Somehow fitting that someone with enabled background and who was a child Marvel at the wonders of the animal World on Sunday Night television will lead the finance organization for this amazing company.
You Mark are bored and my team for giving me this opportunity.
Mark mentioned are results from operations for fiscal 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 as compared to pre COVID-19 levels.
Fiscal 2021 was also impacted by capacity limitations modified and our limited operations and or a temporary card closure decreased demand due to public concerns and government restrictions associated with the pandemic and more severe restrictions on international travel.
During the fourth quarter regenerated record total revenue of $395 million, an increase of $19.7 million or $5, 3% when compared to the fourth quarter of 2021.
The increase in revenue is due to an increase in total revenue per capita a 5.7% partially offset by a decrease in attendance a 0.3%.
Attendance was unfavorably impacted by adverse weather during the quarter and benefited from an increase in international guests when compared to the fourth quarter of 2021, which was impacted by more severe COVID-19 related restrictions on the international travel.
Mark mentioned, we have several weather related impacts during adverse weather during the November and December holiday periods and Hurricane Ian in early October and Hurricane Nicole in November we estimate that combined these adverse weather impacts contributed to a decline of approximately 249000 guests during the quarter.
We also continue to experience lingering effects of the pandemic with international visitations still not back to pre COVID-19 levels in the fourth quarter International visitation was still down 37% compared to the same quarter in 2019 for fiscal 2022 International visitation was down 49% compared to 2000.
19, while group visitation was down 60% compared to 2019.
Our pricing and product strategies continued to drive higher realized pricing, resulting in record total revenue per capita in the quarter of $79.10.
Compared to $74.87 in the fourth quarter of 2021 this.
This increase was driven by improvements in both admission per capita and in part per capita spending admission per capita increased by 4.5% to a record $45.63.
And in part per capita spending increased by 72% to a record $33 and 47 in the fourth quarter of 2022 compared to the fourth quarter of 2021.
The increase in ambition per capita was primarily due to the realisation of higher prices in our admissions products, resulting from our strategic pricing efforts when compared to the prior year quarter.
And parked per capita spending improve due to a combination of factors, including pricing initiatives and crude product quality and mix and the impact of new enhanced or expanded in park offerings, partially offset by the negative impact of less than optimal staffing.
Operating expenses increased $14 $1 million for $8, 7% when compared to the fourth quarter of 2021 the.
The increase in operating expenses is probably due to increased labor related and other operating cost driven by increased operating days and expanded <unk> enhanced events, along with unusually high inflationary pressures, partially offset by structural cost savings initiatives when compared to the fourth quarter of 2021 opera.
Expenses as a percent of revenue for 45.2% for the fourth quarter of 2022 compared to $43, 70% for the fourth quarter of 2021.
I'll stop it gets improved from earlier in the year, we're still not yet at optimal levels, we continue to suffer from less than optimal staffing in various roles across our parks during the quarter, which among other things impacted our ability to fully capture in park revenue.
Labor costs in the fourth quarter were primarily driven by increased labor hours as our average hourly wage rate was only moderately higher and prior year.
Selling general administrative expenses decreased $11.8 million or 29% compared to the fourth quarter of 2021.
The decrease is primarily due to the decrease in non-cash equity compensation expense and the impact of cost savings and efficiency initiatives.
Selling general and administrative expenses as a percent of revenue was 11.5% for the fourth quarter of 2022 compared to 53% for the fourth quarter of 2021.
We believe that approximately 10% to $15 million of costs in the fourth quarter compared to 2019 or temporary unusual of inflation driven costs that we expect to moderate and becoming quarters.
We generated net income of $49 million for the fourth quarter, the second highest ever for the fourth quarter compared to a net income of $71.5 million in the fourth quarter of 2021.
Which included a favorable tax benefits and we generated record adjusted EBITDA of $153.7 million, an increase of zero point $9 million when compared to the fourth quarter of 2021.
The improvement and adjusted EBITDA for the fourth quarter of 2022 was primarily driven by an increase in total revenue per capita partially offset by an increase in expenses when compared to the fourth quarter of 2021.
But can our results for the full year, which we are still impacted by the COVID-19 pandemic.
It'll attendance was approximately 21.9 million guests an increase of 8.6% versus 2021.
Total revenue was a record one $703 billion, an increase of $227 $5 million or 51% when compared to 2021.
Fiscal 2022 total revenue per capita was a record $78.91.
Compared to $74.43 in 2021, a 6.0% increase driven by an increase in admissions per capita and then park per capita spending.
I mentioned per capita increase for 3% to a record $44.00 compared to $42.17 from 2041.
Mission per capita increase primarily due to the realisation of higher prices in our admission products, resulting from our strategic pricing efforts, which was partially offset by the net impact of the admissions product mix when compared to 2021.
And parked per capita spending improve by 8.2% to a record $34.91 from $32.26 in 2041.
The increase was primarily due to a combination of factors, including pricing initiatives improve product quality and mix and the impact of new enhanced or expanded in pork offerings when compared to 2021 and.
Embarked per capita spending was also unfavorably impacted by less than optimal staffing during certain times of the year, which impacted our ability to fully opry indoor open some of our food and beverage in retail outlets.
Operating expenses increased by $113 $3 billion for $18, 2% when compared to 2021, primarily from an increase in labor related costs and other operating costs.
Return to a more normalised operations and an increase in attendance operating expenses were also impacted by inflationary pressures, partially offset by the impact of structural cost savings initiatives when compared to 2021.
Selling in general and administrative expenses increased by $15.3 million or $8, 2% when compared to 2021, primarily due to increased marquee related costs and increased third party consulting costs, partially offset by a decrease in non-cash equity compensation expense and the impact of cost savings and efficiency.
Initiatives.
Net income for the year was a record $291 $2 million, an increase of $34.7 million. Adjusted EBITDA was also a record $728 $2 million, an increase of $66 $2 million for compared to 2021, which held the previous record in both net income and adjusted EBITDA.
Now turning to our balance sheet, our current deferred revenue balance at the end of the fourth quarter was $169.5 million an increase of approximately 9.5% when compared to December of 2021, which included the impact of some COVID-19 related product extensions and.
One time items.
At the end of January 2023 are passed face was off compared to January 2022, and was at a record level for January we are continuing to realise meaningful price increases on our past products with current past prices up more than 10% compared to prior year.
This is mark mentioned, we have a very strong balance sheet position as of December 31, 2022 are total available liquidity was $458 million, including $79.2 billion of cash and cash equivalents on our balance sheet and $371 $6 million available on our revolving credit facility.
Cash flow from operations with $95 $7 million for the fourth quarter of 2022 free cash flow was $45.7 million for the fourth quarter of 2022.
We repurchased approximately 1.4 million shares of common stock at a total cost of approximately $76 million in the fourth quarter of 2022.
In fiscal 2022, we repurchased approximately $12 4 million shares of common stock, where approximately 16% of our total outstanding shares at a total cost of approximately $693.6 million.
We spent $50 million on Capex in the fourth quarter of 2022 of which approximately $37.2 million was on core capex and approximately $12.8 million was an expansion and our return on investment projects.
In light of our significant free cash flow generation over the past several months as we went through our planning process for 2023, we spent considerable time reviewing opportunities to deploy in principle high confidence Roy capital across our parks that would drive increased revenue decreased costs and our meaningfully imp.
Proved guest experience, we identified product filling up to $100 million related to enhancing improving and are creating new food and beverage outlets in retail venues and upgrading park infrastructure and technology.
In 2019, 92022, we averaged approximately $150 million per year on core Capex that includes investing meaningfully and new Ryan's attractions events and venues to have something new and compelling in our parks each year.
On top of that $150 million per year and core Capex. We have spent approximately $40 million per year on growth and Roy projects.
2023, we expect to continue to spend approximately $150 million to $180 million on court Capex and we plan to spend between $100 billion and 120 million Capex on growth and Roy projects that are a direct result of 2023 planning process.
We are already making progress on many of these opportunities and expect to have more specifics to share over the course of the coming year. In total we now expect to spend approximately $250 million to $300 million in Capex for 2023 <unk>.
We're excited about our <unk> and the ability to make these high confidence Roy investments and sincerely look forward to the benefits in return from these investments flowing through to our financial results.
Now, let me throw the call back over to Mark will share some final thoughts mark.
Thanks, Jim.
Before we open the call to your questions I have some closing comments.
The fourth quarter of 2022, we came to the aid of more than 100 animals in need.
For our history, we have helped over 40000 animals, including bottlenose Dolphins Manatees Sea Lions seals Sea turtles sharks birds and more.
Also in 2022, we partnered with a host of other organizations to expand our care and protection for aquatic life to include integrated support of the Florida Coral Rescue Center.
And the ongoing rescue work on the Florida Coral reef.
Also a few weeks ago. She rolls first rescue center outside of the U S and Abu Dhabi opened.
<unk> research Diaz.
Diaz Seaworld research and rescue located at Yahoo Island in Abu Dhabi is the first dedicated Marine research and rescue center in the Middle East North Africa region, and will be a key contributor to marine life conservation and both the UAE and the wider middle East North <unk>.
Africa region.
I'm really proud of the teams hard work and your continued dedication to these important rescue efforts.
I want to thank them and all of our ambassadors for all they do to operate our parks in this current environment.
We are certainly excited about 2023, we are on track to open all of our two.
2023, new rides and attractions in the coming weeks and months.
We continue to believe there are significant additional opportunities to improve our execution take advantage of clear growth opportunities.
Continue to drive meaningful longterm growth in both revenue and adjusted EBITDA.
We continue to have high confidence.
Long term strategy and in our ability to deliver significantly improved operating and financial results, though.
We expect will lead to meaningfully increased value for stakeholders.
Now, let's take your questions.
Thank you at this time, we will begin the question and answer session.
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At this time, we have paused momentarily to Osama roster.
As long as the first question comes from <unk> with Stifel.
So first it's kind of a housekeeping question I'm Gonna ask you about the impact of the of.
The weather in the quarter, which.
You know it was around 250000 visits and I guess just based on your current per cap levels. It the right way to think about this was the.
[noise] impact was probably somewhere between let's call it 78 million dollar hit.
<unk> and then on top of that.
Wondering how you guys are thinking about attendance for this year and look I I understand you don't give guidance I'm not.
Going down that path, but I'm just more trying to figure out how you guys are thinking about the return of that international one group guests that maybe how those forward booking trends have had been looking.
Yeah, Hey, Hey, Steve It's Mark I can take that question. So.
On the on the on the weather impact.
249000 people as we noted.
I can't give you an exact EBITDA estimation I think you can you can do the math on on the revenue per cap and you're probably not terribly far off of of what you said there maybe.
Maybe a tad higher but.
That's certainly I think of a place to to look at.
As far as how we think about the tenants in 2023.
We're excited about the rides and attractions and events things that we've got lined up in our parks as.
As far as the return of a group and international I mean, as you heard me say.
We expect those those will return overtime I don't know when that exactly will be there are still some some international travel hurdles. If you will from certain countries.
Group attendance as you.
I think as we said group attendants in Q4 was was right there with with 2019 it was actually.
Yeah.
Just barely positive so that one I think we feel a little bit more optimistic about.
And an international will just have to see how how travel opens back up and things like that.
Okay Gotcha.
And then second question would be around the illustrative.
He made the charge in your deck and look again I know you said multiple times this isn't guidance and I totally appreciate that but.
But if we look at the potential margins kind of what you have laid out here I mean, you've laid out of business that could be doing.
Up her forties low fifties type margin I'm, just trying to understand you know maybe how we should be thinking about the flow through of this business moving forward as your I mean look it seems like your cost structure at this point is somewhat pretty.
Pretty set in their as opportunities to drive it lower but I assume from here that flow through is really gonna be pushed more by.
The pricing and in park opportunities is that the right way to think about it.
Yeah, what I can tell you is I mean, there's there's a couple of ways. We think about the business is.
If we can grow attendance each year, a little bit grow per caps each year, a little bit and then manage our cost that should have.
To adjusted EBITDA growth and and margin expansion. So we do have efforts around around costs as as we have noted on the illustration in in my comments and in Jim's comments.
Certainly, we're not going to we're not going to new.
Stop stop those efforts and as you noted we have efforts around him growing on revenue in the different strategies. We do there. So I think it will certainly be.
Some combination of those of those two that that leads us to.
What what we expected to be be growth in the future.
Thank you and the next question comes from James hard around the city.
Hey, good morning, Thanks for taking my call. So I mean the cost.
Controls continued to be really impressive I guess most significantly on the SG&A line can you walk us through.
Some of the big bucket.
That you've been able to bring downright revenues up a bunch since 2019, SG&A SG&A lines down almost 50%, maybe just walk through what can that what did you cut in and what what's left the cut.
Hey, Hey, James So I can I can take that question looks theirs.
Some I think as Jim said in his remarks, there's some items like stock comp in there as well.
We have had an impact.
For the quarter, but yeah beyond.
Beyond that.
Yeah.
We have a number of initiatives around you know.
Looking at <unk>.
Spend an with vendors.
And marketing and things like that so.
Just across the company all our efforts around cost.
R R.
Not only apply to the parts of it apply to the to the corporate center as well and will continue.
To work on that obviously and that's something but there is a little bit of more detail in Jim's remarks as far as some of the non-cash expenses were down a little bit too.
Okay, and then sort of along those lines I mean.
Obviously results have been extremely impressive, particularly on the cost front normally you would say if it Ain't broke don't fix it.
But you guys did a pretty big management shakeup here, maybe maybe speak to the.
The rationale behind something this aggressive and I guess.
There have been a couple of notes and you're filing the queue and the previous caring about weaknesses internal controls does this address that in any way.
I think what I would tell you as we're.
As I said in my prepared remarks.
We're excited for the different roles that we have.
That we've created.
Shells sitting here at the table with me I can tell you.
She is certainly excited about the transformation efforts that she's leaving I think obviously, it's something with her background that I think she will be very good at and certainly gives her an opportunity to really dive into that more.
More so than than.
Previously, obviously and then with with the co.
Chief Parks operations officers.
Foot two very experienced leaders.
In those roles.
And they can get out to our parks a lot more often and make sure that we're.
Driving the standards and the efficiencies that we want to see across the company and I couldn't be more excited about that obviously.
As you heard with Jim's background is or interim CFO , we have someone who bring.
Brings a lot of park knowledge to the role, which I already see the benefits of having somebody who's run the finance operations at among our biggest parks here in Orlando.
And what he brings to the table. There. So we're excited about kind of mobilizing the team and and how we're going to move forward.
Thank you and the next question comes from Vancouver, cyclic J P. Morgan.
Hi, guys. Thank you or we can talk about capex. Thank you've gone from about 200 to $250 million to $300 million can you talk about the timing of ride launches through the year. How do you expect any marketing spend lunch for us to be shaped and anything else you go beyond twenty-three as well thanks very much.
Yeah, Hey, I can take that question look there's.
The.
The capex spending and Jim can maybe give you some.
Specific examples here when I'm done sharing that we talked a lot in his comments about.
Some of the additional efforts we have around.
Some spending in areas like whether it's new venues aesthetics technology.
Technology enhancements efficiency efforts whatever it may be and really that's the reason we can do that as you can imagine is is the strong cash flow that we've been generating so we're putting that some of that cash flow to work in the business and we're excited about those opportunities I think as far as the your question on the right.
<unk>.
We just open the ride down in Tampa.
Some of the other rights will be coming online here in the coming weeks and months and.
Obviously I think some of the some of the spend you would see associated with those with tied to that I would say in general we probably opened our rides a little earlier last year. So there may be a little bit of timing.
Tiny difference of some of those costs just from from when we open those this year, but Jim why don't you give me an example, or two some of the new things we've done with the Capex Sir.
Meet Sean brushing up on this call I notice what you would ask in the third quarter of the year. So.
Time, you had said something about 130 to 140 stable core and I'm not you know.
$40 million, so and Roy and we have increased since that guidance and since we put that out.
And a lot of that edition has been looking at those attractions not only that we're putting in place for 2023, but the advanced purchase and design for 2024 attractions and beyond so that increased a little bit since we last spoke.
We're doing some additional infrastructure needs around the properties of actually fairly major investment to include.
Based infrastructure, if you well for the physical plant plus enhancements for the guest experience and things like aesthetics. Specifically this year you can see a lot of focus on shade and restrooms.
That core not to be outspoken by the ROI benefit of going up to 100 120 million range is a lot of food and beverage facility focus so we're going to be taking a look and double digit opportunities across the properties to provide new facilities or expand the current facilities.
And a great mobile ordering two legacy facilities and to increase the opportunity to make our business more efficient and those technology advancements.
Alright, thank you.
Thank you and the next question comes from Eric World with be Riley Securities.
Thank you good morning.
Two questions. One if you look back at the you know the illustrative you kind of.
<unk> targets you laid out back on the.
2020, <unk> 20, something over with you today.
The estimated costs went up by about 160 million Bucks is 159 million can you give us a sense of how much of that is <unk>.
Variable costs associated with higher in <unk> <unk> <unk>.
Spending and how much you can kind of a structural increase in operating costs and the <unk> the cost savings alright.
Yeah, Hey, Hey, Eric I can.
Again try to try to help you out here I mean again I.
Keep in mind that the illustration. It it's just that it's an illustration and if you look at the.
If you look at the foot for those.
I believe we know that right.
Flow through on this right so.
You can you can probably get some some sense of what what the what the flow through us on the per cap in attendance growth.
You know.
I mean, maybe you said more simply as we.
We should be able to add attendance.
To our parks and especially if we're just adding it to Ah.
A day, where we are already open and we're bringing in.
Another thousand people or something that that should not have a meaningful increase in costs for us.
Where you would get more structural costs increase would be if we have to.
Open days, we weren't open before or build new areas of the park that we didn't have before that type of thing, but in general if we're if we're kind of.
Adding to existing days that flow through is going to be pretty high.
Got it and then.
Kind of going back to a Nintendo question that we're we're kind of looking at this year I mean, how do you think about the.
With the the record season passes what you've done to push that how you think about it [noise] excuse.
She's in passwords and daily focus.
Twenty-three with with an expectation that obviously it sees them Pat usage.
Would ramp up and you've got obviously, some some increases in price you would need some patches 19 similar ones with daily you can you can you keep the the emissions per cat moving higher and twenty-three when all that would that pushing Paul.
Yeah, what I would tell you is.
We obviously believe our past products offer a great value and we've been able to get the higher pricing that you heard Jim talk about in his comments and when we when we when we were able to invest in the business like we've been doing with.
The rides and attractions and events refresh venues those type of things that that just makes that I think that value even more apparent for passholder. So I'm confident we can continue to drive.
Higher higher admissions per caps throughout pricing and we've I think we've demonstrated that over the last several quarters.
And look there can be a tradeoff as you noted between past and single day ticket I mean.
Really.
We're targeting that the total revenue.
Equation overall, but even within that equation you know I think we're optimistic we can continue to grow pricing and.
Ultimately grow grow protests.
Thank you and the next question comes from Michael Schwartz with Suntrust.
Hey, guys just wanted to start off and maybe follow up on Capex, you're Capex plans and he said 250 to 300 for 2023, which is the.
The the the highest amount since at least you've been public but maybe talk about the the rois piece of that which is I think what's being stepped up meaningfully and I know, you're you're generating a lot more cash now but is this a structurally higher level of Roy spending going forward or is this a timing element and then how do we think about the <unk> profile of some of the things you are in.
Best thing and twenty-three and beyond maybe to prior years.
Yeah, well I can start and then two months of anything you can't like I think we got urge you to the court the core number.
There's going to be in that 150 to 180 range and then again, we're we're taking advantage of the.
The cash flow generation that that we are generating and using that to deploy to to other Roy projects in our parks and as you can imagine I mean that we're not going to target.
<unk> in the in the single digits or things like that these are these are gonna be returns that we would feel good about spending the cash on.
So like I don't know that it's it's permanent I mean.
It'd be permanent if we continue to find more Roy opportunities, we're going to continue to go after them, but yeah.
At some point you probably do.
Reach a point, where you've you've done.
All you can do or you know those things start to slow down a little bit, but I think as long as there's continued opportunities to drive Roy whether it's refresh venues technology enhancements efficiency efforts aesthetic reasons.
We will pursue those.
Yeah, the only thing I would add Marcus we started these back in 2000 22021.
Do a couple of facility saw the improvements that resulted from those in food and beverage and use those postmortems to realize that we had a lot of opportunity, especially in our food and beverage operation. You'll see also the first 100 per cent guest exit.
So at the Sesame Park being installed this year, so we'll earns from that opportunity in the first of our parks and others like it some efficiency projects to reduce utilities and continued to again figure out where we can be more efficient reduce our labor costs from some of these implementations.
And continued to see if this is the right amount going forward to achieve those.
<unk> cost of savings targets.
Okay, Great and I think I think you laid out about $50 million and identified cost savings.
Per that illustrative example, and I think in the past you were talking about $30 million to $50 million. If I remember correctly, maybe what's what's driving that delta is that incremental projects is that certain things just firming up relative to the prior range that you gave.
Yeah, Hey, I can take that question I think.
As we as we do more work and more time on this and have more people kind of dedicated to these efforts. It's kind of like you said, we're able to I think for him up some of these numbers have a better sense of of what what's doable. So you're seeing some of that in those numbers. Obviously, so we sat 30 to 50, we showed you 50, and obviously you have.
Have plants, our goal is to always be identifying additional cost savings and we have some some teams now.
That can help do that.
Thank you and the next question comes from Barton Crockett with Rosenblatt.
Okay, Hi, Thanks for taking the question I wanted to ask about the the Capex.
Outlook as I understand it.
You were looking at it meaningfully higher Capex and 2023.
Your.
You're capex spending of 2022, its already elevated and a lot of that I thought was going into the Tiffany Park opening out in San Diego.
So I'm just wondering cause that's already opened what can you be more of a little bit more specific about one.
Driving the increase in 2023.
And.
Is that kind of a peak or does it keep growing up maybe 2024 and beyond as you start building more hotels.
And you know I thought the international with capitalized maybe there's some spend there.
Yeah, Hey, Barton that's a matter of fact I can I can try to help you on that question. So again I would reference you back to Jim's comments that we said the core would be 150 to 180 and again that that's going to be here, your new rideshare attractions and and things like that in the park and then we said.
For 2000 twenty-three Roy would be 100 to 120.
To get us to the 250 to 300.
Again that that second bucket is you know.
I would not think of that as like permanent in nature, it's going to be dependent on what type of ROI opportunities we have.
You noted if there's other things that we we pulling overtime, whether it's the timing of hotels, new parks things like that they would fall into that bucket, but again, it's going to be dependent on.
Things that we identify and execute on or new or new opportunities for expansion things like that and we will try to continue to.
Provide some updates.
At the appropriate time going forward.
Okay, I mean that just kind of clean out of that a little bit I mean that would be I think the highest capex.
Total between the.
Essentially maintenance and the expansion, maybe <unk>, a public company or certainly in many years.
They kind of change in your.
Your stand.
Opportunities are to invest and.
These investments that we would expect to get any sense of return next year is it's really spend for twenty-three and see the return and later period.
Well a couple of comments, so I mean one.
I mean, we're also generating something where we are at record adjusted EBITDA. So casually over generating is allowing us to obviously reinvest in the business and I think Jim made a really good comment about some of the some of the projects. We did in earlier years refreshes that.
Only take.
Months to do not years to do and they have an impact and that given year. When you refresh a restaurant or a venue or a bar or something like that we can see that we can see that impact more more quickly than it is something that takes multiple years. So I do think there certainly.
Benefits to 2023 from the from the Capex, we're spending now those things I'll come online at different times.
So the full run rate is not necessarily going to occur this year, but.
Those things up and we would expect to get the benefit I think we're just.
<unk> opportunities, we have we have more people, who who who are kind of.
Uncovering this opportunities if you will and we're also clearly junk generating the cash to be able to pursue those opportunities. So there's a little bit more for ya.
Thank you and the next question comes from pole vaulting once mcquarrie capital.
[laughter]. Thanks, so much first I wanted to ask about the sub optimal staffing levels. Here. You also noted the mobile ordering is that 50 per cent of food venues I believe so I just wanted to ask where we may start to see an offset between those two in other words.
What we could expect in terms of staffing up from Ah Ah Ah labor hours perspective to get to optimal levels to hit those those per cap opportunities.
Versus filling that and with technology and the expenses associated thanks.
Yeah, So smart guy can take that like we talk about.
About the the mobile app a little bit there.
And in my remarks, and we're at.
Over 50% of the restaurants that you know that we've targeted to have mobile ordering and will continue to.
Hopefully grow that grow that over time, and we know clearly like like you would see in other companies. There's some benefits to doing that as far as convenience and and generally lower cost and things like that as far as the the optimal staffing I mean, we've called that out because we know at times there's there's.
You know areas of our parks that we want to have a better staffing that and we.
And opportunities for for more revenue generation from from being about.
That are better staffed primarily in our our food and beverage areas would probably be the area. We we would see that the most so.
There's there's.
I think a desire to to not only increased the mobile app, but also.
Make sure for those that aren't using the mobile app, we still have opportunities for them to spend money I don't know when that exact intersection will occur but one.
One of the things, we're doing with with our Labor management is really.
Pretty meaningful project around kind of labor optimization scheduling deployment things like that and I think those are the type of things, we would we would take into consideration.
Thank you and that's kind of what was the question and answer session and I would like to turn to Florida remarks wants on for any closing comments.
Well, thank you Keith.
On behalf of gym in the rest of the management team at Seaworld Entertainment Wanna. Thank you for joining US. This morning as you heard today, we're 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.
The conference has now concluded. Thank you for attending today's presentation may now disconnect your lines.
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