Q4 2023 SeaWorld Entertainment Inc Earnings Call
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Operator: Good day, and welcome to the United Parks and Resorts Q4 2023 Earnings Conference Call. All participants will be in listen-only mode.
Good day, and welcome to the United Parks and Resorts Q4, 2023 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.
Operator: 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 a touch-tone phone.
After todays presentation, there will be an opportunity to ask questions.
Good question you May Press Star then one on a touchtone cellphone.
Operator: 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 from Investor Relations. Please go ahead. Thank you, and good morning everyone.
Draw. Your question. Please press Star then two please.
Please note. This event is being recorded I would now like to turn the conference over to Matthew Stroud with Investor Relations. Please go ahead.
Matthew Stroud: Thank you and good morning, everyone and welcome to United Parks, and resorts fourth quarter and fiscal 2023 earnings Conference call today's call is being webcast and recorded.
Matthew Stroud: Welcome to United Parks and Resorts' fourth quarter and fiscal 2023 earnings conference call. Today's call is being webcast and recorded. A press release was issued this morning and is available on our investor relations website at www.unitedparksinvestors.com. Replay information for this call can be found in the press release and will be available on our website following the call. Also, we have posted a slide presentation on our investor website along with the earnings press release that we will discuss during our prepared remarks. Joining me this morning are Marc Swanson, Chief Executive Officer, and Jim Forrester, Interim Chief Financial Officer and Treasurer.
Matthew Stroud: Our press release was issued this morning and is available on our Investor Relations website at Www, United Parks investors Dot com.
Matthew Stroud: Replay information for this call can be found in the press release and will be available on our website following the call.
Matthew Stroud: Also we have posted a slide presentation on our Investor website, along with the earnings press release that we will discuss journey our prepared remarks.
Matthew Stroud: Joining me. This morning are Marc Swanson, Chief Executive Officer, and Jim Forrester interim Chief Financial Officer and Treasurer.
Matthew Stroud: This morning we will review our fourth quarter and fiscal 2023 financial results, and then we will open the call to your questions. Before we begin, I would like to remind everyone that our comments today will contain forward-looking statements within the meaning of the federal securities laws. These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward-looking statements, including those identified in the risk 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 statement.
Marc G. Swanson: This morning, we will review, our fourth quarter and fiscal 2023 financial results and then we will open the call to your questions.
Marc G. Swanson: 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.
Marc G. Swanson: 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.
Marc G. Swanson: 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.
Marc G. Swanson: We undertake no obligation to update any forward looking statements.
Marc G. Swanson: 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 statement... and Reconciliations of Non-Gap Measures to the Most Comparable Gap Measure, www.seaworldentertainment.com. Now I'd like to turn the call over to our Chief Executive Officer, Marc Swanson. Thank you, Matthew
Marc G. Swanson: In addition on the call we May reference non-GAAP financial measures and other financial metrics, such as adjusted EBITDA and free cash flow.
Marc G. Swanson: 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.
Marc G. Swanson: Now I'd like to turn the call over to our Chief Executive Officer, Marc Swanson Marc.
Marc G. Swanson: Good morning, everyone, and thank you for joining us. I want to welcome you to our first quarterly earnings report under our new company name, United Parks and Resorts, Inc. We believe this name change better reflects what we have been and will continue to be a diverse collection of park brands and experiences. The name change affects only the name of the parent company, SeaWorld Entertainment Inc. Our award-winning portfolio of parks, SeaWorld, Busch Gardens, Discovery Cove, Sesame Place, Water Country USA, Adventure Island, and Aquatica, retain their respective park names.
Marc G. Swanson: Thank you Matthew good morning, everyone and thank you for joining us I want to welcome you to our first quarterly earnings report under our New company name, United Parks and Resorts Inc.
Marc G. Swanson: We believe this name change better reflects what we have been.
Marc G. Swanson: And we'll continue to be diverse collection of park brands and experiences.
Marc G. Swanson: The name change effects only the name of the parent company Seaworld Entertainment Inc.
Marc G. Swanson: Our award winning portfolio of parks, Seaworld Busch Gardens Discovery Cove, Sesame place water country, USA Adventure Island, and a quite OCA retain their respective park names.
Marc G. Swanson: What also remains unchanged is our deep commitment to creating experiences that matter for our guests and inspiring them to help protect animals and the wild wonders of the world. Before we turn to the quarterly and annual results, I want to point out that we uploaded a presentation to our investor relations site that includes some supplemental information that covers topics we have heard from our investors that they would like covered as well, as well as some other important points that we want to get across. I will refer to these slides later in my remarks.
Marc G. Swanson: What also remains unchanged is our deep commitment to creating experiences that matter for our guest and inspiring them to help protect animals in the wild wonders of the world.
Speaker Change: Before we turn to the quarterly and annual results I want to point out that we uploaded a presentation to our Investor Relations site that includes some supplemental information that covers topics. We have heard from our investors that they would like covered as well.
Speaker Change: As well as some other important points that we want to get across.
Speaker Change: I will refer to these slides later in my remarks.
Marc G. Swanson: Now, let me turn to the quarterly and annual results. We are pleased to report another quarter and fiscal year of strong financial results. In the fourth quarter, we delivered record attendance and record in-park per capita spending, despite significant adverse weather impacts, in particular across our Florida markets during peak visitation periods, and an unfavorable calendar shift in the quarter. For the full year, we delivered near-record results and grew our total revenue per capita for the sixth year in a row, despite significant adverse weather impacts throughout the year. We estimate that weather-related and calendar-shift impacts reduced attendance by approximately 75,000 visits in the fourth quarter. And that weather-related impacts reduced attendance by over 370,000 visits for the full year.
Now, let me turn to the quarterly and annual results.
Speaker Change: We are pleased to report another quarter and fiscal year of strong financial results.
Speaker Change: In the fourth quarter, we delivered record attendance and record in park per capita spending despite significant adverse weather impacts in particular across our Florida markets during peak visitation periods, and an unfavorable calendar shift in the quarter.
Speaker Change: For the full year, we delivered near record results and grew our total revenue per capita.
Speaker Change: For the sixth year in a row, despite significant adverse weather impacts throughout the year.
Speaker Change: We estimate that weather related and calendar shift impacts reduced attendance by approximately 75000 visits in the fourth quarter.
Speaker Change: And that weather related impacts reduced attendance.
Speaker Change: <unk> 370000 visits for the full year.
Marc G. Swanson: Weather aside, we continue to drive growth in total revenue per capita, including growth in admissions per capita and, in part, per capita, which has increased for 15 consecutive quarters, demonstrating the effectiveness of our revenue strategies, our pricing power, and the strength of consumer spending in our parks. Also, in 2023, along with our partners, we successfully opened our first SeaWorld Park outside of the United States in Abu Dhabi, which has been extremely well-received and In addition, we made meaningful investments across our parks and business that we are confident will deliver strong returns and will be a source of growth and profitability this year and into the future. I want to thank our ambassadors for all their dedicated efforts in 2023.
Speaker Change: Weather aside we continue to drive growth in total revenue per capita including growth in admissions per capita.
Speaker Change: And in in Park per capita.
Speaker Change: Which has increased for 15 consecutive quarters.
Speaker Change: Demonstrating the effectiveness of our revenue strategies, our pricing power and the strength of consumer spending in our parks.
Speaker Change: Also in 2023, along with our partners.
Speaker Change: We successfully opened our first.
Speaker Change: Seaworld parks outside the United States in Abu Dhabi.
Speaker Change: Which has been extremely well received and is performing ahead of expectations.
Speaker Change: In addition, we made meaningful investments across our parks and business that we are confident will deliver strong returns and it will be a source of growth and profitability this year and into the future.
Speaker Change: Want to thank our ambassadors for all their dedicated efforts in 2023.
Marc G. Swanson: Our attendance levels for fiscal 2023 were still below levels achieved in 2019, primarily due to a decline in international and group attendance, which we are confident will eventually recover to and surpass pre-COVID levels. We are also still more than three million visitors below our historical high attendance of approximately 25 million guests achieved in 2008. Our clear opportunity to drive meaningful, meaningfully more attendance to our parks, combined with our demonstrated ability to continue to grow total per capita spending, manage and reduce costs, and achieve strong returns on our investments, gives us high confidence in our ability to continue to deliver operational and financial improvements that will lead to meaningful increases in shareholder value. We are excited about our plans for 2024, including the prospect of more normalized weather and an incredible lineup of new, one-of-a-kind rides, attractions, and events, as well as new and improved in-park venues and offerings across our parks. We're also really excited about celebrating SeaWorld Park's 60th anniversary this year, which kicks off across our SeaWorld parks on March 21st and will run through the whole year.
Speaker Change: Our attendance levels for fiscal 2023 were still below levels achieved in 2019, primarily due to a decline in international and group attendance, which we're confident will eventually recover too and surpassed pre COVID-19 levels.
Speaker Change: We are also still more than 3 million visitors below our historical high attendance of approximately 25 million guests achieved in 2008.
Speaker Change: Our clear opportunity to drive meaningful meaningfully more attendance.
Speaker Change: So our parks combined with our demonstrated ability to continue to grow total per capita spending manage and reduce cost and achieve strong returns on our investments gives us high confidence in our ability to continue to deliver operational and financial improvements that will lead to meaningful increases in shareholder.
Speaker Change: Value.
Speaker Change: We are excited about our plans for 2024, including the prospect for more normalized weather and an incredible lineup of new one of a kind rides attractions and events and new and improved in park venues and offerings across our parks.
Speaker Change: We're also really excited about celebrating seaworld parks, 60th anniversary this year, which kicked off across our Seaworld parks on March 21, and will run through the whole year.
Marc G. Swanson: There will be even more reasons to visit our SeaWorld parks this year with special events, shows, attractions, and a whole lot more. We are happy to report that our new rides and attractions are all currently scheduled to open before the peak summer season. We are also encouraged to see 2024 bookings trending ahead of the prior year for both group sales and our Discovery Cove property. We expect meaningful growth and new records in revenue and adjusted EBITDA for 2024. As I mentioned, for 2024, we have an exciting lineup of new rides, attractions, events, and new and improved in-park venues and offerings, with something new and meaningful in our parks. We've outlined each of our new rides and attractions in our parks, in our press release, and we encourage you to visit them this year.
Speaker Change: There will be even more reasons to visit our Seaworld parks this year with special events shows attractions and a whole lot more.
Speaker Change: We are happy to report that our new rides and attractions are all currently scheduled to open before the peak summer season.
Speaker Change: We were also encouraged to see 2024 bookings trending ahead of prior year, both for group for both group sales and our discovery Cove property.
Speaker Change: We expect meaningful growth and new records in revenue and adjusted EBITDA for 2024.
Speaker Change: As I mentioned for 2024, we have an exciting lineup of new rides attractions events, and new and improved in park venues and offerings with something new and meaningful in our parks, we've outlined each of our new rides and attractions in our parks in our press release and we encourage you to visit them this year.
Marc G. Swanson: I will highlight just a few of them here. The first one is Penguin Trek at SeaWorld Orlando, an unforgettable multi-launch family coaster adventure where guests will navigate the harsh Antarctic environment in search of a colony of penguins. Penguin Trek will be an indoor-outdoor coaster experience, as well as the eighth and most immersive addition to the coaster capital of Orlando. The next one is Jewels of the Sea at SeaWorld San Diego. A first of its kind at SeaWorld Parks, the all-new Jewels of the Sea, the Jellyfish Experience, offers an immersive and interactive view into the mysterious underwater world of fascinating and graceful jellyfish.
Speaker Change: I will highlight just a few of them here.
Speaker Change: The first one is penguin tracked at Seaworld Orlando.
Speaker Change: And unforgettable multi launch family coaster adventure.
Speaker Change: Where guests will navigate the harsh Antarctic environment in search of a colony of Penguins.
Speaker Change: Penguin track will be an indoor outdoor coaster experience as well as the eighth and most immersive addition to the coaster capital of Orlando.
Speaker Change: The next one is jewels of the sea and Seaworld Seaworld San Diego.
Speaker Change: A first of its kind of Seaworld parks, the all new jewels of the see the jellyfish experience offers an immersive and interactive view into the mysterious underwater world a fascinating and graceful jellyfish.
Marc G. Swanson: This aquarium features three unique galleries, including one of the largest jelly cylinders in the country, as well as an immersive multimedia experience. The next one is Catapult Falls at SeaWorld San Antonio. Riders will experience the rush of the world's first launched flume coaster featuring the world's steepest flume drop. This family thrill experience will also feature the tallest flume drop in Texas. The next one is Loch Ness Monster: The Legend Lives On at Busch Gardens, Williamsburg. The legendary Loch Ness Monster will resurface as a fully restored experience loaded with all new thrills, dramatic storytelling, and innovative effects as it takes riders on Nessie's newly refurbished signature track.
Speaker Change: This aquarium features three unique galleries, including one of the largest jelly cylinders in the country as well as an immersive multimedia experience.
Speaker Change: The next one is catapult falls at Seaworld San Antonio.
Speaker Change: Writers will experience the rush of the world's first launched flume coaster, featuring the worlds steepest flume drop this family Thrill experience will also feature the tallest flume drop in Texas.
Speaker Change: The next one is likeness monster the legend lives on our Busch Gardens Williamsburg.
Speaker Change: The legendary Loch Ness Monster will resurface as a fully restored experience loaded with all new thrills dramatic storytelling and innovative effects as it takes riders on FCS newly refurbished signature track.
Marc G. Swanson: Finally, Phoenix Rising at Busch Gardens Tampa Bay. Riders will experience a fiery blaze of immersive, family-friendly excitement as they soar above the Serengeti Plain and drop into a ray of fun-filled twists and turns on the new Phoenix Rising. This family-suspended coaster includes an onboard audio soundtrack and speeds up to 44 miles per hour. As I mentioned, I would encourage you to go back to our press release, and you'll see there are other rides we are adding at other parks across our company that you can read more about. I've just hit the highlights.
Speaker Change: Finally, Phoenix rising at Busch Gardens, Tampa Bay riders will experience, a fiery blaze of immersive family friendly excitement as they saw above the serengeti plain and drop into array a fun filled twists and turns on the new Phoenix rising this family suspended coaster includes an onboard audio.
Speaker Change: Soundtrack and speeds up to 44 miles an hour.
Speaker Change: As I mentioned I would encourage you to.
Speaker Change: Ill go back to our press release and you'll see there is otherwise we're adding are at other parks across our company that you can read more about I've just hit the highlights.
Marc G. Swanson: Now, turning our attention to the slides that we posted. You know, we mentioned we created a presentation that addressed certain topics that we have heard from stakeholders and shareholders that they would like to be covered and some important points that we would like to get across. Slide four is titled Disciplined Capital Allocation Strategy. And on this page, we've outlined our capital allocation strategy. We have a thoughtful and clear capital allocations philosophy that we consider.
Speaker Change: Now turning our attention to the slides that we posted.
Speaker Change: Yeah, We mentioned, we created a presentation that address certain topics that we have heard from stakeholders and shareholders that they would like to be covered and some important points that we would like to get across.
Speaker Change: Slide four is titled disciplined capital allocation strategy.
Speaker Change: And on this on this page we've outlined our capital allocation strategy.
Speaker Change: We have a thoughtful and clear capital allocation philosophy, where we consider.
Marc G. Swanson: The highest and best use for our excess capital across four buckets. Number one, investing in the business. Number two, debt pay-down.
Speaker Change: The highest and best use for our excess capital across four buckets number one investing in the business number two debt pay down.
Marc G. Swanson: Number three, M&A, and number four, return capital to shareholders. Investing in the business is focused on three areas, continuing our ongoing maintenance spend to ensure our parks are well maintained. Continuing our cadence of new rides, attractions, shows, and events in our parks, creating new reasons to visit, and identifying and executing on high-conviction, high-RLI initiatives. As you'll see on the next page, we typically spend approximately $150 million to $170 million, $175 million per year on core CapEx and up to $50 million per year on expansion ROI CapEx. Looking at debt paydown, we are comfortable with current leverage levels and expect further deleveraging from future EBITDA growth. However, given our low leverage levels and the current cost of debt, paying down debt is not a current priority. Regarding M&A, we will opportunistically pursue M&A when attractive opportunities present themselves, but at present, no M&A opportunities are currently contemplated.
Speaker Change: Three M&A.
Speaker Change: Number four return capital to shareholders.
Speaker Change: Investing in the business is focused on three areas.
Speaker Change: Continuing our ongoing maintenance spend to ensure our parks are well maintained.
Speaker Change: Continuing our cadence of new rides attractions shows and events in our parks, creating new reasons to visit and identifying and executing on high conviction high ROI initiatives.
Speaker Change: As Youll see on the next page, we typically spend approximately $150 million to 170, Mike.
Speaker Change: $175 million per year on core capex and up to $50 million per year on expansion ROI capex.
Speaker Change: Looking at that debt pay down we are comfortable with current leverage levels and expect further deleveraging from future EBITDA growth.
Speaker Change: Given our low leverage levels and the current cost of debt paying down debt is not a current priority.
Speaker Change: Regarding M&A we.
Speaker Change: We'll opportunistically pursue M&A when attractive opportunities present themselves, but at present no M&A opportunities are currently contemplated.
Marc G. Swanson: The company has and will continue to aggressively return capital to shareholders when it makes sense to do so, in the form that makes the most sense. We have repurchased over 1 billion shares. $1 billion in shares since January of 2019, which is 23 million shares, or approximately 27% of shares outstanding.
Speaker Change: The company has and will continue to aggressively return capital to shareholders. When it makes sense to do so.
Speaker Change: In the form that makes the most sense.
Speaker Change: We have repurchased over 1 billion shares.
Speaker Change: 1 billion, sorry, one $1 billion in shares since January of 2019, which is 23 million shares or approximately 27% of shares outstanding.
Marc G. Swanson: And yesterday, the board of directors voted to recommend a new $500 million share buyback authorization, subject to approval by non-Hillpath shareholders. Needless to say, the board and the company believe our shares are maturely undervalued. Going forward, the board and the company will consider buybacks and or dividends, regular or special, as appropriate, based on market conditions and other relevant factors. Finally...
Speaker Change: And yesterday the board of directors voted to recommend a new $500 million share buyback authorization subject to approval by non hill path shareholders.
Speaker Change: Needless to say the board and the company believe our shares are materially undervalued.
Speaker Change: Going forward the board and the company will consider buybacks <unk> dividends regular or special as appropriate based on market conditions and other relevant factors.
Speaker Change: Finally.
Marc G. Swanson: If somehow it's not already clear and obvious, you should know that the board is highly aligned with shareholder interests. Turning to the next slide, Capital Spending Strategy. We have a clear and disciplined capital spend philosophy. If you think about capital spending in two buckets, Number one, core CapEx, and number two, Expansion slash ROI Capital. We estimate that our core CapEx will typically run between approximately $150 million and $175 million on an annual basis. This is the spend that we estimate supports growth in revenue and adjusted EBITDA in line with long-term base business expected growth rates. This amount includes maintenance CapEx and new rides and attractions. We estimate that our expansion slash ROI CapEx will run between approximately $0 and $50 million on an annual basis.
Speaker Change: If somehow it's not already clear and obvious you should know that the board is highly aligned with shareholder interest.
Speaker Change: Turning to next to the next slide disciplined capital spend strategy.
Speaker Change: We have a clear and disciplined capital spend philosophy.
Speaker Change: We think about capital spending in two buckets.
Speaker Change: Number one core Capex and number two expansion slash ROI capex.
Speaker Change: We estimate that our core Capex will typically run between approximately $150 million and $175 million on an annual basis.
Speaker Change: This is this is the spend that we estimate supports growth in revenue and adjusted EBITDA in line with long term base business expected growth rates.
Speaker Change: This amount includes maintenance capex of new rides and attractions capex.
Speaker Change: We estimate that our expansion slash ROI Capex will run between approximately zero and $50 million on an annual basis.
Marc G. Swanson: This is spend that supports growth in excess of normalized levels and includes high-conviction projects with 20% plus ROI unlevered cash on cash returns, including revenue-generating and cost savings projects, park expansions, new properties, etc. So, in total, we expect total normalized CapEx of approximately $150 million to $225 million on an annual basis. Turning to slide six, capital spend update. This slide provides more color on our 2023 capital spend and on our expected 2024 capital spend. As discussed in prior calls, given our significant excess cash flow generation in recent years, our board challenged us to pursue more than our normal cadence of ROI projects in 2023. As such, we spent approximately $80 million more on ROI CapEx in 2023 than we would normally spend, and we took on more projects than we would typically take on. Many of these projects were completed on schedule and delivered the expected ROI. Many others were delayed due to some combination of weather and us taking on more projects than we probably should have.
Speaker Change: This is spend that supports growth in excess of normalized levels and includes high conviction projects with 20% plus ROI unlevered cash on cash returns, including revenue generating and cost savings projects Park expansions, new properties et cetera.
Speaker Change: So in total we expect total normalized capex of approximately $150 million to $225 million on an annual basis.
Speaker Change: Turning to slide six capital spend update.
Speaker Change: This slide provides more color on our 2023 capital spend and on our expected 2024 capital spend.
Speaker Change: As discussed in prior calls given our significant excess cash flow generation in recent years.
Speaker Change: Our board challenged us to pursue more than our normal cadence of ROI projects in 2023.
Speaker Change: As such we spent approximately $80 million more on ROI capex in 2023 than we would normally spend and we took on more projects than we would typically take on.
Speaker Change: Many of these projects completed on schedule and delivered the expected ROI. Many others were delayed due to some combination of weather and us taking on more projects than we probably should have.
Marc G. Swanson: As discussed on previous calls, this led to certain operational disruptions and peak periods in some of our parks and was a headwind to performance in certain parks at certain times. The good news is we learned a lot from our experience in 2023. And we expect
Speaker Change: As discussed on previous calls this led to certain operational disruptions in peak periods and some of our parks and was the headwinds to performance in certain parks at certain times.
Speaker Change: The good news is we learned a lot from our experience in 2023.
Speaker Change: And we expect.
Marc G. Swanson: The headwinds that we experienced in 2023 will be tailwinds going forward. In 2024, we currently expect to spend approximately $225 million on CapEx, split between $175 million of core CapEx and $50 million of expansion slash ROI CapEx. We feel good about these ROI projects and have high conviction about their impact in 2024. Turning to slide seven, capital spend case studies. We will show you some examples of projects completed in 2023, delayed in 2023, and what we have in store for 2025. On the next slide, capital spends and significant free cash flow generation. We simply lay out the significant discretionary free cash flow generation of our business. The slide speaks for itself and shows the high free cash flow conversion of our business and the $400 million of normalized, levered free cash flow that the business should be expected to generate on an annual basis. Turning to slide nine, the hotel update.
Speaker Change: The headwinds that we experienced in 2023 will be tailwind going forward.
Speaker Change: In 2024, we currently expect to spend approximately $225 million of Capex split between $175 million of core Capex and $50 million of expansion Slash ROI capex.
Speaker Change: We feel good about these ROI projects and have high conviction on their impact in 2024.
Speaker Change: Turning to slide seven capital spend case studies.
Speaker Change: We show you. Some examples of projects completed in 2023 delayed in 2023, and what we have in store for 2024.
Speaker Change: On the next slide capital spend significant free cash flow generation.
Speaker Change: We simply lay out the significant discretionary free cash flow generation of our business.
Speaker Change: This slide speaks for itself and shows the high free cash flow conversion of our business.
Speaker Change: And the $400 million of normalized leverage Levered free cash flow that the business should be expected to generate on an annual basis.
Speaker Change: Turning to slide nine hotel update.
Marc G. Swanson: We've gotten a lot of questions on hotels from investors. First, let me be clear that we believe there is a great opportunity for hotels in our parks. We own approximately 400 acres of developable land adjacent to our park. We know there is significant vacation hotel demand from guests in our markets, and we see an obvious opportunity to generate significant incremental EBITDA and value from hotels in our parks. Second, we have not decided to spend any capital actually constructing hotels.
Speaker Change: We've gotten a lot of questions on hotels from investors.
Speaker Change: First let me be clear that we believe there's a great opportunity for hotels in our parks.
Speaker Change: We own approximately 400 acres of developable land adjacent to our parks.
Speaker Change: We know there is significant vacation hotel demand from guests in our markets and we see an obvious opportunity to generate significant incremental EBITDA and value from hotels in our parks.
Speaker Change: Second we have not decided to spend any capital actually constructing hotels.
Marc G. Swanson: And in any event, we will not spend any capital to construct a hotel without high confidence in achieving 20% plus ROI unlevered cash on cash returns. Third, we have targeted the first hotels in the Orlando area, which is the largest tourist destination in the United States. Market research makes it clear that there is significant demand for hotels in this market. We are evaluating the opportunity for hotels and other park markets as well. Fourth, we expect hotels to be a meaningful contributor to EBITDA over time, but the contribution will depend on the business structure ultimately chosen. We are currently evaluating options with respect to who will build and manage these hotels, and we are in discussions with various development, management, and brand partners.
Speaker Change: And in any event, we will not spend any capital to construct the hotel without high confidence in achieving 20% plus ROI unlevered cash on cash returns.
Speaker Change: Third we have targeted the first hotels in the Orlando area, which is the largest tourist destination in the United States.
Speaker Change: Research makes it clear that there is significant demand for hotels in this market, we are evaluating the opportunity for hotels and other markets as well.
Speaker Change: Fourth we expect hotels to be a meaningful contributor to EBITDA over time, but the contribution will depend on the business structure ultimately chosen.
Speaker Change: Yes.
Speaker Change: We are currently evaluating options with respect to who will build and manage these hotels and.
Speaker Change: And we are in discussion with various development management and brand partners the.
Marc G. Swanson: The ultimate decision will be in the best interest of the company and its stakeholders, taking the risk-reward timing, capital requirements, and expected ROI into consideration. Moving on to the next slide, significant international and group attendance opportunities. As we have discussed, we strongly believe we have a meaningful opportunity to grow attendance across our parks, including by simply returning to historical levels we once achieved. This next slide shows, on the left, that in 2023, our attendance from group and international guests was still down approximately 1.3 million guests, or 30% from 2019 levels. On the right side of the slide, you can see that, excluding group and international visitation, our attendance was up in 2023 versus 2019, despite the severe weather headwinds we experienced during the year. In other words,
Speaker Change: The ultimate decision.
Speaker Change: We will be in the best interest of the company and its stakeholders, taking the risk reward timing capital requirements and expected ROI into consideration.
Speaker Change: Moving on to the next slide significant international and group attendance opportunity.
Speaker Change: As we have discussed we strongly believe we have a meaningful opportunity to grow with tenants across our parks.
Speaker Change: Including by just simply returning to historical levels, we once achieved.
Speaker Change: This next slide shows on the left that in 2023, our tenants from group an international guests will still down approximately $1 3 million guests or 30% from 2019 levels.
Speaker Change: On the right side of the slide you can see that excluding group and international visitation. Our attendance was up in 2023 versus 2019, despite the severe weather headwinds we experienced in the year.
Speaker Change: In other words, there is a one 3 million visit upside to our tenants just by recovering group and international attendance.
Marc G. Swanson: There is a 1.3 million visit upside for our tenants just by recovering group and international attendance. We are confident in our ability to recover these guests in the near to medium term. Turning to slide 11, a meaningful opportunity to grow attendance by returning to historical levels, this is a slide we have shown before. If we return total attendance to 2019 levels, that would be approximately 5% growth in attendance compared to 2023. If we return attendance to 2008 levels, a historical high, that would represent approximately 18% growth in attendance compared to 2023. If we achieve attendance levels where each park returns to its historical high level of attendance, that would represent a 25% increase in attendance compared to 2023. We have a clear and ample opportunity to grow attendance just by returning to levels we have previously achieved, ignoring population growth, sector share gains, etc.
Speaker Change: We are confident in our ability to recover these guests in the near to medium term.
Speaker Change: Yeah.
Speaker Change: Turning to slide 11 meaningful opportunity to grow attendance by returning to historical levels.
Speaker Change: This is a slide we have shown before.
Speaker Change: If were returned total attendance to 2019 levels that would be approximately 5% growth in attendance compared to 2023.
Speaker Change: If a return attendants to 2008 levels, our historical high that would represent approximately 18% growth in attendance compared to 2023.
Speaker Change: If we achieve attendance levels, where each park returns two hits its historical high level of attendance that would represent a 25% increase in attendance compared to 2023.
Speaker Change: We have clear and ample opportunity to grow attendance just by returning to levels. We have previously achieved ignoring population growth sector share gains et cetera.
Marc G. Swanson: On the next slide, Drivers of Future Attendance Growth, we lay out a roadmap of how we think about attendance growth beyond returning to historical levels. We plan to grow tenants over time by, number one, benefiting from population growth with our addressable markets growing in excess of the U.S. national average. Number two, creating new reasons for people to visit, such as new and expanded rides, attractions, events, and shows. Number three, determining our season pass base and visitation per member.
Speaker Change: On the next slide drivers of future attendance growth, we lay out a roadmap of how we think about attendance growth beyond returning to historical levels.
Speaker Change: We plan to grow tenants overtime by number one benefiting from population growth with our addressable market is growing in excess of U S National average.
Speaker Change: To creating new reasons for people to visit such as new and expanded rides attractions events and shows.
Speaker Change: Number three.
Speaker Change: Our season pass base and visitation per member.
Marc G. Swanson: Number four, continuing the recovery in international visitation, as well as increasing our focus on partnerships and marketing. 5, Growing Awareness, Increasing Conversion, Optimizing Arts and Media, Continuing our CRM build-out and optimizing the strategy around that. Number 7, increasing our focus on group sales across youth, corporate, and other large buyouts. And number eight, developing and growing a loyalty program.
Speaker Change: Number four continuing the recovery in international visitation as well as increasing our focus on partnerships and marketing.
Speaker Change: Number five growing awareness, increasing conversion optimizing our media spend.
Speaker Change: Number six continuing our CRM build out and optimize and optimize the strategy around that.
Speaker Change: Number seven increase our focus on group sales across youth corporate and other large buyouts.
Speaker Change: A number eight developing and growing our loyalty program.
Marc G. Swanson: We have confidence in the near, medium, and long-term strategy with respect to each of these drivers. Turning to the next slide, admissions per capita. Really, it's the next two slides, where we show the bridges for admissions and in-park per capita. You can all study these slides on your own as they are self-explanatory.
Speaker Change: We have confidence in the near medium and long term strategy with with respect to each of these drivers.
Speaker Change: Turning to the next slide admissions per cap.
Speaker Change: Really it's the next two slides, where we show bridges for admissions and in park per caps.
Speaker Change: You can all study these slides on your own as they are self explanatory.
Marc G. Swanson: The punchline is that we are confident and believe our current per capita payments are sustainable and have clear further upside. We think about growing our per capita payments in line with inflation and then beyond inflation through our inherent pricing power and the various initiatives we lay out on these pages. Slide 15, Cost Efficiency and Cost Reductions, outlines our current cost efficiency and reduction initiatives.
Speaker Change: The punch line is that we are confident and believe our current per caps are sustainable and have clear further upside.
Speaker Change: We think about growing our per caps in line with inflation and then beyond inflation through our inherent pricing power and the various initiatives we lay out on these pages.
Speaker Change: Slide 15 cost efficiency and cost reductions.
Speaker Change: Outlines our current cost efficiency and reduction initiatives.
Marc G. Swanson: As you can see on the page, we have currently identified approximately $85 million in cost efficiency and reduction initiatives and expect $50 million of realized cost savings in 2024, with the remaining cost savings being achieved in 2025, along with other cost initiatives we develop over the course of this year. As you all know, cost discipline and management has been and is a relentless focus of our management team. And we have a track record of delivering on these margin-enhancing activities. Turning to slide 16, United Parks and Resorts Illustrative Adjusted EBITDA. This is a slide that we have previously discussed in previous years. And as a reminder, this presentation, this illustrative Adjusted Evo Potential, is not meant to be guidance.
Speaker Change: As you can see on the page we have currently identified approximately $85 million of cost efficiency and reduction initiatives and expect $50 million of realized cost savings in 2024 with the remaining cost savings being achieved in 2025, along with other cost initiatives, we developed over the.
Speaker Change: Course of this year.
Speaker Change: As you all know.
Speaker Change: Cost discipline and management has been and is a relentless focus of our management team.
Speaker Change: And we have a track record of delivering on these margin enhancing activities.
Speaker Change: Turning to slide 16, United Parks and resorts illustrative adjusted EBITDA.
Speaker Change: This is a slide that we have previously discussed in past years.
Speaker Change: And as a reminder, this presentation. This illustrative adjusted EBITDA potential is not meant to be guidance.
Marc G. Swanson: 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 2008 historical peak attendance levels, while growing our total per capita revenue along with the cost savings opportunities we have identified. As you can see from the illustration, this business has the potential to do between $1 billion and $1.2 billion of adjusted EBITDA under these scenarios, excluding any cost or cost inflation or pressure. Just as a reminder, this is not guidance but rather a simple illustration. As we've said before, our business model is simple and not complicated.
Speaker Change: 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 returned to 2008 historical peak attendance levels, while growing our total per capita revenue along with the cost savings opportunities we've identified.
Speaker Change: As you can see from the illustration. This business has the potential to do between 1 billion and $1 2 billion of adjusted EBITDA under these scenarios.
Speaker Change: Excluding any cost or cost inflation or pressure.
Speaker Change: Just as a reminder, this is not guidance, but rather a simple illustration.
Speaker Change: As we've said before our business model is simple and not complicated.
Marc G. Swanson: If we get a little attendance growth, a little per-cap growth, and we remain disciplined and focused on cost management, the EBITDA potential of this business is substantially higher than what we achieved in 2023. Turning to slide 17, United Parks Valuation Overview. This slide outlines the current public market valuation of our shares. As you can imagine... This page makes us quite frustrated.
Speaker Change: If we get a little attendance growth a little per cap growth and we remain disciplined.
Speaker Change: And focused on cost management, the EBIT potential of this business is substantially higher than what we achieved in 2023.
Speaker Change: Turning to slide 17, United Parks valuation overview.
Speaker Change: This slide outlines the current public market valuation of our shares.
Speaker Change: As you can imagine.
Speaker Change: This page makes us quite frustrated the public market is valuing our company as seven times forward EBITDA and nine four times forward Unlevered free cash flow and add a route and at around a mid teens levered free cash flow yield.
Marc G. Swanson: The public market is valuing our company at seven times forward EBITDA and 9.4 times forward unlevered free cash flow, and at around a mid-teens levered free cash flow yield. We operate in an industry that historically was valued at over 11 times EBITDA, and we strongly believe, deserves to trade at a much higher multiple than seven times EBITDA. Slide 18, trading at a significant discount despite outperformance. Even more frustratingly, this next slide shows our performance compared with leisure, hospitality, and entertainment company peers. As you can clearly see, we have outperformed, and in many cases, significantly so, our peer groups. And yet, we trade at the lowest multiple of any of our peers. This is really incredible to us and hard to understand.
Speaker Change: We operated in an industry that historically it was valued at over 11 times EBITDA and we strongly believe.
Speaker Change: Deserves to trade at a much higher multiple as seven times EBITDA.
Speaker Change: Slide 18 trading at a significant discount despite outperformance.
Speaker Change: So even more frustratingly. This next slide shows our performance compared with leisure hospitality and entertainment company peers.
Speaker Change: As you can clearly see we have outperformed in many cases significantly so our peer groups and yet we trade at the lowest multiple of any of our peers.
Speaker Change: This is really incredible to us and hard to understand.
Marc G. Swanson: The next slide, slide 19, implied future stock price. On the next slide, we show what our implied share price would be if we traded in line with our peer groups or at a discount to our peer groups. Any reasonable way you look at it, we feel we are materially undervalued and that there's significant upside opportunity in our current share price. And finally, let me turn to slide 20, which is the key takeaways. And there are six key takeaways. Number one:
Speaker Change: The next slide slide 19 implied future stock price on.
Speaker Change: On the next slide we show what our implied share price would be if we traded in line with our peer groups or a discount to our peer groups.
Speaker Change: Any reasonable way you look at it we feel we are materially undervalued and that there is significant upside opportunity in our current share price.
Speaker Change: Finally, let me turn to slide 20, which is the key takeaways.
Speaker Change: And there are six key takeaways number one.
Marc G. Swanson: Our capital allocation strategy is focused on maximizing returns for shareholders with a highly aligned board. Number two, we have a disciplined capital spend strategy with approximately $150 million to $225 million in normalized annual CapEx spend. Number three, we have significant discretionary free cash flow generation. Number four, we have a thoughtful approach to hotels and will not spend any capital to actually construct hotels without high conviction and 20% plus unlevered returns.
Speaker Change: Our capital allocation strategy is focused on maximizing returns for shareholders with a highly aligned board.
Speaker Change: Number two we have a disciplined capital spend strategy with approximately $150 million to $225 million and normalized annual capex spend.
Speaker Change: Number three we have significant discretionary free cash flow generation.
Speaker Change: Number four we have a thoughtful approach to hotels, and we'll not spend any capital to actually construct hotels without high conviction and 20% plus unlevered returns.
Marc G. Swanson: We see a path to $1 billion in adjusted EBITDA with multiple levers to drive value and further upside. And finally, number six, we believe the company is extremely undervalued despite significant outperformance relative to its peers. Thank you for letting me take you through that presentation, hopefully to address a number of questions that people have had. So with that, I will turn it over to Jim to discuss our financial results in more detail. Thank you, Marc.
Speaker Change: For five.
Speaker Change: We see a path to $1 billion in adjusted EBITDA with multiple levers.
Speaker Change: To drive value and further upside.
Speaker Change: And finally number six we believe the company is.
Speaker Change: It is extremely undervalued, despite significant outperformance relative to peers.
Speaker Change: Thank you for letting me take you through that presentation, hopefully to address a number of questions that people have had so with that I will turn it over to Jim to discuss our financial results in more detail.
James Hardiman: Good morning, and thank you all for your interest in our company. It's good to be able to join you to report on our quarterly performance. During the fourth quarter, we generated total revenue of $389.0 million, a decrease of $1.6 million, or 0.4%, when compared to the fourth quarter of 2022. The decrease in total revenue is primarily a result of decreases in admissions per capita, partially offset by increases in attendance and, in part, per capita spending. Attendance increased to approximately 23,000 guests when compared to the fourth quarter of 2022, primarily due to an increase in demand, partly from the company's Halloween and Christmas events, partially offset by the impact of adverse weather during peak visitation periods, particularly across our Florida markets, and the impact of a calendar shift in the quarter. Total revenue per capita in the quarter decreased slightly to $78.42 compared to $79.10 in the fourth quarter of 2022.
James Hardiman: Thank you Mark good morning, and thank you all for your interest in our company, it's going to be able to join you to report out our quarterly performance.
James Hardiman: During the fourth quarter, we generated total revenue of $389.0 million, a decrease of $1 $6 billion or 0.4% when compared to the fourth quarter of 2022.
James Hardiman: The decrease in total revenue was primarily a result of decreases in admission per capita partially offset by increases in attendance and in park per capita spending.
James Hardiman: Attendance increased approximately 23000 guests when compared to the fourth quarter of 2022, primarily due to an increase in demand partly from the company's Halloween and Christmas events, partially offset by the impact of adverse weather during peak visitation periods, particularly across our Florida markets and the impact of a calendar shift in the quarter.
James Hardiman: Total revenue per capita in the quarter decreased slightly to $78 42, compared to $79 10 in the fourth quarter of 2022.
James Hardiman: Admission per capita decreased 2.6% to $44.46, while in-park per capita spending increased by 1.5% to a record $33.96 in the fourth quarter of 2023 compared to the fourth quarter of 2022. Admission per capita decreased primarily due to the impact of the admissions product mix when compared to the fourth quarter of 2022, and Parkbird Capitalist spending improved due to pricing initiatives. Operating expenses increased $8.3 million, or 4.7%, when compared to the fourth quarter of 2022.
Speaker Change: Admissions per capita decreased two 6% to $44 46.
Speaker Change: While in Park per capita spending increased by one 5% to a record $33 96 in the fourth quarter of 2023 compared to the fourth quarter of 2022.
Speaker Change: Admission per capita decreased primarily due to the impact of the admissions product mix when compared to the fourth quarter of 2022.
Speaker Change: In Park per capita spending improved due to pricing initiatives.
Speaker Change: Operating expenses increased $8 3 million or four 7% when compared to the fourth quarter of 2022. The increase in operating expenses is primarily due to noncash expenses related to asset write offs and costs related to certain rides and equipment, which were removed from service.
James Hardiman: The increase in operating expenses is primarily due to non-cash expenses related to asset write-offs and costs related to certain rides and equipment which were removed from service. Selling, general, and administrative expenses increased $0.3 million, or 0.7% compared to the fourth quarter of 2022. We generated net income of $40.1 million for the fourth quarter compared to net income of $49.0 million in the fourth quarter of 2022. The decrease in net income was primarily a result of the impact of higher operating costs, which generated adjusted EBITDA of $150.4 million, a decrease of $3.2 million when compared to the fourth quarter of 2022. Adjusted EBITDA was negatively impacted by a decrease in total revenue.
Speaker Change: Selling general and administrative expenses increased zero point $3 million or 0.7% compared to the fourth quarter of 2022, we.
Speaker Change: We generated net income of $40 $1 million for the fourth quarter compared to net income of $49.0 million in the fourth quarter of 2022. The decrease in net income was primarily a result of the impact of higher operating expenses, we generated adjusted EBITDA of $154 million.
Speaker Change: A decrease of $3 $2 million when compared to the fourth quarter of 2022, adjusted EBITDA was negatively impacted by a decrease in total revenue.
James Hardiman: Looking at our results for the full year, total attendance was approximately 21.6 million guests, a decrease of 1.5% versus 2022. Total revenue was $1.73 billion, a decrease of $4.7 million or 0.3% when compared to 2022. Fiscal 2023 total revenue per capita was a record $79.91 compared to $78.91 in 2022, a 1.3% increase driven by an increase in emissions per capita and, in part, per capita spending. Admission per capita increased 0.4% to a record $44.16 compared to $44.00 in 2022. Admission per capita increased primarily due to the realization of higher prices in our admissions products, resulting from our strategic pricing efforts and the impact of the park attendance mix, which was partially offset by the impact of the admissions product mix when compared to 2020.
Speaker Change: Looking at our results for the full year total attendance was approximately $21 6 million guests a decrease of one 5% versus 2022.
Speaker Change: Total revenue was a.
Speaker Change: 173 billion.
Speaker Change: A decrease of $4 7 million or 0.3% when compared to 2022.
Speaker Change: 2023 total revenue per capita was a record $79 91.
Speaker Change: Compared to $78 91, and 2022, and one 3% increase driven by an increase in admissions per capita and in park per capita spending admission per capita increased <unk>, 4% to a record $44 16 compared to $44.00 in 2022.
Speaker Change: Admission per capita increased primarily due to the realization of higher prices and our emissions products, resulting from our strategic pricing efforts and the impact of the park attendance mix, which was partially offset by the impact of the admissions product mix when compared to 2022.
James Hardiman: In-park per capita spending improved by 2.4% to a record $35.75 from $34.91 in 2022. This improvement was primarily due to pricing initiatives and an increase in revenue related to the company's international service agreements when compared to 2022, partially offset by factors including weather, the admissions product mix, closures, and disruption related to construction delays at certain in-park locations. Operating expenses increased by $23.2 million, or 3.2% when compared to 2022, primarily due to an increase in non-cash asset write-offs and self-insurance reserve adjustments and an increase in costs associated with our international service agreements, partially offset by the impact of implemented structural cost savings initiatives when compared to 2022. Selling, general, and administrative expenses increased by $21.2 million, or 10.6% when compared to 2022, primarily due to an increase in Net income for the year was $234.2 million, a decrease of $57 million.
Speaker Change: In Park per capita spending improved by two 4% to a record $35 75.
Speaker Change: From $34 91 and 2022.
Speaker Change: In Park per capita spending improved primarily due to pricing initiatives and an increase in revenue related to the company's international services agreements when compared to 2022, partially offset by factors, including whether the admissions product mix closures and disruption related construction delays at certain in park locations opt.
Speaker Change: Operating expenses increased by $23 2 million or three 2% when compared to 2022, primarily due to an increase in noncash asset write offs and self insurance reserve adjustments and an increase in costs associated with our international services agreements, partially offset by the impact of implemented structural cost savings initiatives.
Speaker Change: Compared to 2022.
Speaker Change: Selling general and administrative expenses increased by $21 2 million or 10, 6% when compared to 2022, primarily due to an increase in third party consulting costs and legal fees and an increase in labor related costs, partially offset by the impact of implemented cost savings and efficiency initiatives when compared.
Speaker Change: 2022.
Speaker Change: Net income for the year was $234 2 million a decrease of $57 million adjusted EBITDA was $713 $5 million, a decrease of $14 $8 million when compared to 2022.
James Hardiman: Adjusted EBITDA was $713.5 million, a decrease of $14.8 million when compared to 2022. Net income and adjusted EBITDA were negatively impacted by a decrease in total revenue and increases in operating expenses, selling general administrative expenses, and depreciation. Net income was also negatively impacted by higher interest. Now turning to our balance sheet, our December 31, 2023 net total leverage ratio is 2.53 times, and we have approximately $618.5 million of total available liquidity, including over $246.9 million of cash in the balance sheet. A strong balance sheet gives us flexibility to continue to invest in and grow our business and to opportunistically allocate capital with the goal of maximizing long-term value for shareholders. Just a few weeks ago, we refinanced our term loan B, locking in a more favorable interest rate that will save the company approximately $5 million in annual interest expense going forward. Our current deferred revenue balance as of the end of the fourth quarter was $155.6 million. Excluding certain one-time items, deferred revenue decreased to approximately 5.3% when compared to December of 2022.
Speaker Change: Net income and adjusted EBITDA were negatively impacted by a decrease in total revenue and increases in operating expenses selling general and administrative expenses and depreciation expense net income was also negatively impacted by higher interest expense.
Speaker Change: Now turning to our balance sheet. Our December 31, 2023, net total leverage ratio was 253 times and we had approximately $618 $5 million of total available liquidity, including over $246 $9 million of cash on the balance sheet. This strong balance sheet gives us flexibility to continue to <unk>.
Speaker Change: And grow our business and to Opportunistically allocate capital with the goal to maximize long term value for shareholders. Just a few weeks ago, we refinanced our term loan b locking in a more favorable interest rate that will save the company approximately $5 million in annual interest expense going forward.
Speaker Change: Our current deferred revenue balance as of the end of the fourth quarter was $155 $6 million, excluding certain onetime items deferred revenue decreased approximately five 3% when compared to December of 2022.
James Hardiman: As Marc already mentioned yesterday, our board of directors voted to recommend a new $500 million share buyback authorization subject to approval by non-Hillpath shareholders. Through yesterday, our past base, including all past products, was down slightly compared to February of 2023. We are pleased that we are seeing high single-digit price increases on our past products compared to prior years. Last fall, we launched our Best Past Benefits Program, which we expect will drive additional increases in past sales and a strong past base for this year. We're seeing strong past sales in recent weeks and are excited about our peak past selling period coming up during the spring and early summer period. As a reminder, our Deferred Revenue Balance contains a number of products including ticketing, vacation packages, annual and seasonal passes, and ancillary products.
Speaker Change: As Mark already mentioned yesterday, our board of directors voted to recommend a new $500 million share buyback authorization subject to approval by non hill path shareholders.
Speaker Change: Through yesterday, our pass base, including all past products was down slightly compared to February of 2023. We are pleased that we are seeing high single digit price increases on our past products compared to prior year last fall, we launched our best past benefits program effort, which we expect will drive additional increases in pass sales and a strong path.
Speaker Change: Base for this year.
Speaker Change: We're seeing strong pass sales in recent weeks and are excited about our peak pass selling period coming up during the spring and early summer periods.
Speaker Change: As a reminder, our deferred revenue balance contains a number of products to include ticketing vacation packages annual and seasonal passes and ancillary products. Some of those 2022 ticketing product balances were one time items as mentioned last year. We also continued to see an increase in the number of pass holders who have been with us for at least a year.
James Hardiman: Some of those 2022 ticketing product balances were one-time items, as mentioned last year. We also continue to see an increase in the number of pass holders who have been with us for at least a year who transition to month-to-month payments at a higher rate at the completion of their initial pass commitment. This month-to-month revenue does not show up as deferred revenue.
Speaker Change: <unk>, who transitioned to month to month payments at a higher rate and the completion of their initial pass commitment. This month to month revenue does not show up as deferred revenue as.
James Hardiman: As noted, we have a very strong balance sheet position. As of December 31, 2023, our total available liquidity was $618.5 million, including $246.9 million of cash and cash equivalents on our balance sheet and $371.6 million available on our revolving credit facility. We spent $70.6 million on CapEx in the fourth quarter of 2023, of which approximately $25.8 million was on core CapEx and approximately $44.8 million was on expansion and or ROI projects. For 2023, we spent $304.8 million on CapEx, including $181.8 million on core CapEx and $123 million on high-convection growth and ROI projects. Looking ahead to 2024, we expect to spend approximately $175 million on core CapEx and plan to spend Now, let me turn the call back over to Marc, who will share some final thoughts, Mark. Thanks, Jim.
Speaker Change: As noted we have a very strong balance sheet position as of December 31, 2023, our total available liquidity was $618 $5 million, including $246 $9 million of cash and cash equivalents on our balance sheet and $371 $6 million available on our revolving credit facility.
Speaker Change: We spent $76 million on Capex in the fourth quarter of 2023 of which approximately $25 $8 million was on core capex and approximately $44 $8 million was on expansion and our ROI projects for 2023, we spent $304 $8 million on capex, including one one.
Speaker Change: $81 $8 million on core Capex and $123 million on high conviction growth and ROI projects. Looking ahead to 2024, we expect to spend approximately $175 million on core Capex and plan to spend approximately $50 million on capex on growth and ROI projects that are a direct result.
Speaker Change: Of our 2020 for planning process.
Speaker Change: Now, let me turn the call back over to Mark who will share some final thoughts Marc.
Mark: Thanks, Jim.
Marc G. Swanson: Before we open the call to your questions, I have some closing comments. In the fourth quarter of 2023, we came to the aid of 98 animals in need. Throughout our history, we have helped over 41,000 animals, including bottlenose dolphins, manatees, sea lions, seals, sea turtles, sharks, birds, and more.
Mark: Before we open the call to your questions I have some closing comments in the fourth quarter of 2023, we came to the aid of 98 animals in need.
Mark: Over our history, we have helped over 41000 animals, including auto nose Dolphins Manatees Sea Lions seals Sea turtles sharks birds and more.
Marc G. Swanson: 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. We are excited about 2024. We have some great events going on now, including the Seven Seas Food Festival at SeaWorld Orlando, Mardi Gras at SeaWorld San Diego, SeaWorld Texas, and both Busch Gardens Parks.
Speaker Change: 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 of our ambassadors for all they did operate our parks.
Speaker Change: We are excited about 2024, we had some great events going on now, including seven Seas Food Festival at Seaworld, Orlando Mardi Gras at Seaworld, San Diego Zero, Texas, and both Busch Gardens parks.
Marc G. Swanson: We are proud of these events and the event calendar that we have scheduled for the rest of the year that gives our guests even more reasons to visit. And I want to re-emphasize SeaWorld, that the SeaWorld 60th anniversary celebration starting on March 21st and going all year at our SeaWorld Park.
Speaker Change: We are proud of these events and the event calendar that we have scheduled for the rest of the year that gives our guests even more reasons to visit.
Speaker Change: And I want to reemphasize the seaworld.
Speaker Change: The Seaworld 60, <unk> anniversary celebration.
Speaker Change: <unk> on March 21, and going all year at our Seaworld parks.
Marc G. Swanson: We are proud to celebrate 60 years of conservation, education, and fun for all ages. We continue to strongly believe there are significant additional opportunities to improve our execution, take advantage of clear growth opportunities, and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA. We continue to have confidence in our long-term strategy and our ability to drive significantly improved operating and financial results that we expect will lead to meaningfully increased 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 touch-tone phone. We ask that you limit yourself to one question and one follow-up. If you are using a speakerphone, please pick up the handset before pressing the key.
Speaker Change: Were proud to celebrate 60 years of conservation education and fun for all ages.
Speaker Change: Yeah.
Speaker Change: We continue to strongly believe there are significant additional opportunities to improve our execution.
Speaker Change: Take advantage of clear growth opportunities and continue to drive meaningful long term growth in both revenue and adjusted EBITDA.
Speaker Change: Continue to have confidence in our long term strategy and our ability to drive significantly improved operating and financial results that we expect will lead to meaningfully increase value.
Speaker Change: For stakeholders.
Speaker Change: Now, let's take your questions.
Speaker Change: We will now begin the question and answer session to.
Speaker Change: To ask a question you May press Star then one on your Touchtone phone, we ask that you limit yourself to one question and one follow up if you are using a speakerphone. Please pick up the handset before pressing the keys.
Operator: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Michael Swartz with Truist. Please go ahead. Everyone, good morning.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: This time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from Michael <unk> with <unk>. Please go ahead.
Michael: Hey, everyone. Good morning.
Michael Swartz: Maybe maybe just to start, Marc, with some of the commentary around, you know, the part or the start of the hotel or accommodations development plan. I think in the previous calls, you said you would look to finance some of that now. It sounds like you're not looking to finance any of that. I mean, maybe maybe help us understand what's changed in your thought process, just from the standpoint of appetite to invest in these sorts of things. Hey Michael, I think what we were saying there is that we're looking at all options, so I don't want to suggest that financing a portion of that is off the table. We're looking at all the different ways we could enter into a hotel structure, whether it's with a partner or licensing or whatever it may be. We have the land, as we've mentioned, and there are a lot of different ways we could go about this. I think what we've been hearing from a lot of our shareholders is that they want to hear more about this. There are multiple ways that people have done this.
Michael: Maybe maybe just to start mark with with some of the commentary around the <unk>.
Michael: Sorry, the hotel or accommodations development plans I think in the previous calls you said you would look to finance some of that now it sounds like you're not looking to finance any of that I mean, maybe help us understand what's changed in your thought process just from the standpoint of appetite to invest in these sorts of things.
Speaker Change: Hey, Michael.
Michael: What we were what we were saying there is that.
Speaker Change: We're looking at all options. So I don't want to suggest that financing a portion of that is off the table. We're looking at.
Speaker Change: All the different ways, we could we could enter into a hotel structure whether it's.
Speaker Change: With a partner or licensing whatever it may be and we have the land as we've mentioned and a lot of different ways. We could go about this I think what we've been hearing from a lot of lot of our shareholders as they wanted to hear more about this there's multiple ways that people have done. This what is clear is that.
Marc G. Swanson: What is clear is that people are fans of hotels. They recognize the potential of having hotels in our parks. Many other companies have been successful with that, as you know. So we're just saying, look, we're looking at all the different options. We want to be sure to drive the ROI that I mentioned in the slides, and there are multiple ways we could look at trying to achieve that. And keep in mind, it's not just the hotel itself but the EBITDA from the hotel.
Speaker Change: People are fans of hotels.
Speaker Change: Hotels, they recognized the potential.
Speaker Change: Potential of having hotels at our parks.
Speaker Change: Many other companies have been successful with that.
Speaker Change: As you as you know so we're just saying look we're looking at all the different options, we want to be sure to drive the ROI that I mentioned in the slides and theres multiple ways, we could we could.
Speaker Change: Look at trying to achieve that and keep in mind, it's not just the.
Speaker Change: The hotel itself the EBITDA from the hotel, you're going to get we believe incremental benefit from people.
Marc G. Swanson: You're going to get, we believe, incremental benefit from people being in your parks longer, capturing more of their day, more of their total spend. So we're excited about hotels. I think we're just trying to be transparent and let you know that we're still looking at different alternatives before we actually go about constructing the hotel. Okay, that's helpful.
Speaker Change: Being in your parks longer capturing more of their day more of their total spend. So we're excited about hotels I think we're just trying to be transparent and let you know that we're still looking at different alternatives before we actually go about constructing the hotel.
Speaker Change: Okay. That's helpful. And then just the second question from me on the commentary around Youre expecting meaningful growth in revenue and EBITDA for the year and I think you went through some of the longer term opportunities or levers to drive bottom line growth, but just as we think about the year ahead. What are the primary maybe puts and takes.
Michael Swartz: And then just a second question for me on the commentary around, you know, you're expecting meaningful growth in revenue and EBITDA for the year. And I think you went through some of the longer-term opportunities or levers to drive, you know, bottom line growth. But just as we think about the year ahead, what are the primary maybe puts and takes? I understand there are easy comps, and that's probably part of it.
Speaker Change: I understand there is easy comps and that's probably part of it but how should we be thinking about the main drivers of growth for the year ahead.
Marc G. Swanson: But how should we be thinking about the main drivers of growth for the year? Yeah, there's a couple things to think about. One, you know, certainly we had pretty significant weather impacts in 2023. So I think any sort of weather normalization would be, you know, significantly in our favor if that happens. We'll have to see if that happens.
Speaker Change: Yeah, there's a couple of things to think about one.
Speaker Change: Certainly we had a pretty significant weather impacts in 2023, so I think any sort of weather normalization would be.
Speaker Change: Significantly in our in our favor if that happens we'll have to see if that happens that the start to this year. If you followed the news has been.
Marc G. Swanson: The start to this year, if you followed the news, has been, you know, tough, tough weather comp, especially in Florida with El Nino, really since December and into January and February. You know, having said that, I've been in this industry a long time. A lot of us have been, you know; we expect the weather will eventually normalize at some point. We've had good years and bad years, and so, you know, more recently, we've had tougher years. But weather would certainly be one of the factors.
Speaker Change: Tough tough weather comps, especially in Florida with El Nino really since December and into January and February having said that I've.
Speaker Change: I've been in this industry, a long time, a lot of us have been.
Speaker Change: We expect weathers, we'll eventually normalize at some point, we've had good years and bad years, and so more recently, we've had tougher years, but weather would certainly be one of the factors and then I talked to all about the lineup of attractions rides events, new things, we have coming into our parks and certainly.
Marc G. Swanson: And then I talked all about the lineup of attractions, rides, events, new things we have coming into our parks. And certainly, you know, I think the lifeblood of this industry a lot is having new things in our parks, new things to talk about. And we have another, I think, really good lineup of new things. And we're getting the ride in Texas, for example, Catapult Falls, which just opened last weekend to a select number of people.
Speaker Change: I think the lifeblood of this of this industry a lot of times is having new things in our parks new things to talk about and we have another I think really good lineup of new things and we're getting the right in Texas for example, catapult falls.
Speaker Change: Just opened last weekend too.
Marc G. Swanson: It'll start to open here in March to more people, so we're excited, you know, to get some of these things open, and the others will open, you know, as we get into the peak summer season or sooner. So we're excited about the rides and attractions. And then, you know, beyond that, you've got the continued execution of our pricing initiatives, our revenue management initiatives. And then, I'd say lastly, the cost work that we have undertaken for some time now, and we'll continue to do that going forward. So, again, when we think about those things and put them all together, that leads to, I think, an exciting outlook for, you know, now, not only 2024, but beyond. And I think about the business in a really simple way, as I mentioned.
Speaker Change: A select number of people that will start to open here in March to more people. So we're excited to get some of these things open and the others are all open.
Speaker Change: As we get into the peak summer season or sooner so.
Speaker Change: We're excited.
Speaker Change: For the rides and attractions and then beyond that you've got the continued execution on our our pricing initiatives are.
Speaker Change: Revenue management initiatives, and then I'd say lastly, the cost work that we have undertaken for some time now and we will continue to do that going forward. So.
Speaker Change: Again, we think about those things and put them all together that leads to I think an exciting outlook for now.
Speaker Change: Not only 2024, but beyond and I think about the business and really simple way is as I mentioned, if we can grow our.
Marc G. Swanson: If we can grow our tenants a little bit each year, and I like the markets we're in. We're in Florida, we're in Texas, for example. We're in bigger, bigger markets and states that are growing. And then if we can grow our per cap, a little bit, and then watch our costs each year, that should translate into EBITDA. We've talked about that previously.
Speaker Change: Grow our tenants a little bit each year and I like the markets. We're in we're in Florida. We're in Texas. For example, you Werent bigger bigger markets in states that are growing.
Speaker Change: And then if we can grow our per caps, a little bit and then watch our cost each year that should translate into EBITDA. We've talked about that previously so that's how we think about the business here and we're certainly excited for 2024.
James Hardiman: So that's how we think about the business here, and we're certainly excited for 2024. Thanks, Marc. The next question comes from James Hardiman with Citi. Please go ahead. Hey, good morning.
Speaker Change: Thanks Mark.
Speaker Change: Next question comes from James Hardiman with Citi. Please go ahead.
James Hardiman: Hey, good morning.
James Hardiman: Thanks for taking my question. So I wanted to dig into the weather a little bit. I was a bit surprised by the 75K headwind.
James Hardiman: Thanks for taking my questions. So.
James Hardiman: I wanted to dig into the weather a little bit.
James Hardiman: I was a bit surprised by the 75 K weather headwind, maybe let's just start with that versus normal weather or versus last year, because if I remember correctly.
James Hardiman: Maybe let's just start with, is that versus normal weather or versus last year? Because if I remember correctly, last year you called out 249,000 weather headwinds. You had some hurricanes in the fourth quarter of last year.
James Hardiman: Last year, you called out.
James Hardiman: 249000 of weather headwinds you had some hurricanes in the fourth quarter.
Marc G. Swanson: So I guess the same question for the 370K you called out for the year. Is it versus a normal year? Is it versus last year? I'm just trying to figure out what attendance would ultimately look like if we were to get back to normal weather, even though, obviously, that's an illusion. Yeah, hey, thanks, James. No, that is what that is relative to 2022. So what I think the way I think about it is we didn't have, I think we've had some really good weather in either year.
James Hardiman: Last year. So I guess the same question for the 370 <unk> you called out for the year is it versus the normal years versus last year I'm, just trying to figure out what attendance would ultimately look like if we were to get back to normal weather.
James Hardiman: Obviously, that's an elusive concept.
Speaker Change: Yeah, Hey, Thanks, James now that is that is relative to 2022, so what I think the way I'd think about it.
Speaker Change: We didn't have.
Speaker Change: Really good weather in either year end, where I thought we may see some improvement I think all of us did some.
Marc G. Swanson: Where I thought we may see some improvement, I think all of us did, some improvement in 2023 really didn't materialize quite as we had expected. So, that is relative to 2022 being down over 370,000 people. I think it's been pretty well-documented, at least in the markets we're in. Keep in mind, relative to some of our competitors, we are in Florida, and I think that's been pretty well-documented here, especially more recently with December and then even into this year. So, that's the weather and how we think about it.
Speaker Change: Some improvement in 2023 really didnt materialize quite as we had expected so that is relative to 2022 to be down 300 over 370000 people.
Speaker Change: I think it's been pretty well documented at least in the markets. We're in.
Speaker Change: Keep in mind relative to some of our competitors. We are in we are in Florida, and I think thats been.
Speaker Change: Pretty well documented here, especially.
Speaker Change: More recently.
Speaker Change: With December and even into this year. So that's that's the weather and how we think about it.
James Hardiman: So I should be adding the $75K this year and the $249K last year for the fourth quarter to get to something like $324K. If we were to, you know, versus call it normal, or I guess that would be versus, the fourth quarter of 21, technically, but is that how you think about it? Um, yeah, I mean, well, the way I think about it, it was, you know, again, it's an estimate. But, you know, we said, you know, over 370,000 for the year. So that's for the full year; 75 of that was in the fourth quarter.
Speaker Change: So I should be adding the 75 K this year and the 249 last year for the fourth quarter to get to something like 324 K.
Speaker Change: If we were to call it normal or I guess that would be versus fourth.
Speaker Change: Fourth quarter of 'twenty, one technically but investors about how to think about it.
Speaker Change: Yes, I mean with the way the way I think about it. It was again, it's an estimate but we said over 370000 for the year. So that's for the full year <unk> 75 of that was in the fourth quarter and Thats relative to 2022. So I think you haven't right just make sure you.
James Hardiman: And that's relative to 2022. So I think you have it right; just make sure you adjust the quarter correctly and the year correctly. And keep in mind, it is an estimate, but we try to do the best we can on that. Okay, and then on the margin. You know, I guess this illustrative EBITDA walk, you know, certainly isn't guidance, but it, you know, it says, would seem to suggest that something north of 50% margins is on the table. But margins, the last two years have moved in the wrong direction. And then we've got a hotel business, which I assume is likely to be margin dilutive to, certainly, you know, 40% plus margin. So help me to connect the dots there.
Speaker Change: If you adjust the quarter correctly in the year correctly.
Speaker Change: Keep in mind. It is an estimate but we try to do the best we can on that obviously.
Speaker Change: Okay, and then on the margin front.
Speaker Change: I get that.
Speaker Change: Right of EBITDA walk certainly isn't guidance.
Speaker Change: How it goes.
Speaker Change: Would seem to suggest that something north of 50% margin.
Speaker Change: On the table.
Speaker Change: But margins.
Speaker Change: Last few years have moved in the wrong direction and then we've got a hotel business, which I assume is likely to be margin dilutive.
Speaker Change: Certainly.
Speaker Change: 40% plus margin so.
Speaker Change: You can connect the dots there.
Marc G. Swanson: What do you think is the long-term margin potential for this business? Obviously, you guys went from being a 20-something percent margin business to being a 40-something percent margin business, but then there's been some retrenchment.
Speaker Change: One what do you think is the long term margin potential for this business. Obviously, you guys went from being a 20 something percent margin business to be in a 47% margin movement, but then theres been some retrenchment. So so help us think through sort of what the I don't know.
Marc G. Swanson: So, help us think through sort of what the, I don't know, near and medium-term outlook is for. Sure. I mean, I think what I would point out, you kind of alluded to it, is like, if you look at where we are here at the end of 2023 and where we were back in like 2019, 2018, you know, there's been tremendous expansion in the margin. And so, you know, and that's even with this year, all the weather impacts that we had.
Speaker Change: Near and medium term outlook is for margins.
Speaker Change: Sure.
Speaker Change: I think what I would I would point out you kind of alluded to it is to look at.
Speaker Change: If you look at where we are here at the end of 2023, and where we were back in like 2019 2018, there has been tremendous expansion in the margin and so.
Speaker Change: Even with this year all the all the weather impacts that we had and what I. The way I think about it I think the way as a company. We think about it is if we had gotten some of that weather impacted attendance.
Marc G. Swanson: And what I think about it, I think the way, you know, as a company, we think about it is if we had gotten some of that weather-impacted attendance, that flows through at a very high rate, right? So I don't think you would have had a whole lot of incremental costs for those incremental people that we lost to weather. And so if you kind of do that math, I think you get margins that obviously would have been better than what we've shown here in 2023. But I don't have anything to guide you to.
Speaker Change: That flows through at a very high rate right. So I don't think you would've had a whole lot of incremental costs for those incremental people that we lost to weather and so if you kind of do that math I think you get margins that obviously would have been would have been better than what we show in here in 2023.
Speaker Change: I don't have anything that guide you to what what I, what I think about the way we think about it the way the board thinks about it is kind of what I said.
Marc G. Swanson: What I think about, the way we think about it, the way the board thinks about it, it's kind of what I said. Grow attendance a little bit a year, and grow our pricing on admissions and impact a little bit a year. We have some new initiatives in there that hopefully more people are buying the product, that type of thing to maybe be even a little stronger on the pricing. And then just watch our costs. And if we do that, margins should expand.
Speaker Change: ROE attendance, a little bit of year grow our pricing on admissions and in park, a little bit of year have some new initiatives in there that hopefully.
Speaker Change: More people are buying the product that type of thing to maybe be even a little stronger on the pricing and then just watch our costs and if we do that margins should expand I don't know how high they could ultimately go but that's how we think about the business.
Marc G. Swanson: I don't know how high they could ultimately go, but that's how we think about the business. And that's even, you know, contemplating hotels, which I'm assuming would be to some degree margin dilutive, but maybe not enough to really move the needle. Well, the point I wanted to get across on hotels is, Look, we know for hotels that the margin is a little lower, like you said. Now, I think the big difference for us is these are hotels that are on our property, adjacent to our parks, connected to our parks, however you want to think about it.
Stephen: Hey, Stephen.
Stephen: Contemplating hotels, which I'm, assuming would be to some degree margin dilutive, maybe not enough to really move the needle.
Stephen: Well the point I wanted to get across on hotels.
Stephen: As we look we know for hotels that.
Stephen: The margin is a little is a little lower like you said now I think the big difference for US is these are hotels that are on our property.
Stephen: Adjacent to our parks connected to our parks. However, you want to think about it and I think there's benefit from that that clearly others in the industry have seen. So my guess is that that I think is a better margin profile than perhaps a hotel that is not connected to a park and we're going to be careful.
Marc G. Swanson: And I think there's benefit from that that clearly others in the industry have seen. So my guess is that that, I think, is a better margin profile than perhaps a hotel that is not connected to a park. And we're going to be careful and work with the board and, you know, we're talking to different people, as I noted, to make sure we structure, however we end up structuring any sort of hotel construction, that it makes sense that we want to target that 20% plus cash on cash return. We know that's high or higher than others, but you have to consider that we're pulling into that number people visiting the park, people staying longer in the park We'll see.
Stephen: And work with the board and we're talking to different people as I noted to make sure. We structure. However, we end up structuring.
Stephen: Any sort of hotel construction that it makes sense that we want to target that 20% plus cash on cash return, we know that Ty are higher than others, but you got we're pulling into that number.
Stephen: People visiting the park people staying longer in the park, capturing more of their share of time and spending so.
Stephen: Got to kind of look at it holistically and Theres multiple ways, we could we could I think construct that.
Marc G. Swanson: But I mean, if the return was not there, obviously, you know, we wouldn't move forward with something that we didn't feel good about. Our next question comes from the line of Thomas Yeh with Morgan Stanley. Please go ahead. Thanks so much.
Stephen: We will see but I mean.
Stephen: If the return is not there obviously, we wouldn't move forward with something that we didn't feel good about.
Stephen: Our next question comes from the line of Thomas <unk> with Morgan Stanley. Please go ahead.
Thomas: Thanks, So much yeah. So can you help us unpack the missing piece on the group and international visitation.
Thomas Yeh: Yeah, can you help us unpack the missing piece on the group and international visitation? Just help us think through what possibly could stimulate that return and what you're kind of seeing in terms of the dynamics that might be keeping it below 2019 levels. Sure, Thomas.
Thomas: Help us think through what possibly could stimulate that return and what youre seeing in terms of the dynamics that might be keeping it below 2019 levels.
Speaker Change: Sure Thomas.
Marc G. Swanson: So. You know, when you, when you, and we had a slide on this, right? So, you know, international, in particular, is down, and group is down as well, down quite a bit less than international. I think the group business, we have some, you know, a dedicated team focused on that. And we're seeing, you know, better bookings in 2024 relative to 2023, and then also seeing more revenue out of those bookings.
Thomas: And we had a slide on this right. So your international in particular as it was down in group Group group is down as well down quite a bit less and then international I think the group business we have some.
Speaker Change: A dedicated team focused on that and we're seeing.
Speaker Change: Better bookings in 2024 relative to 2023, and then also seeing.
Speaker Change: More revenue out of those bookings so I think our group business I feel is probably probably more near term potential than the international and some of the group things, we're doing around even new venues and sprucing up some venues we have just tremendous.
Marc G. Swanson: So I think our group business, I feel, probably has more near-term potential than the international business. And some of the group things we're doing around new venues and switching up some venues. We have just, I think, tremendous locations in our parks to host group events, corporate events, or whatever, your church group or whatever it may be, to come out to our park and have a really good time, and we can do some really special things that others can't do that are one of a kind with some of our experiences. On the international level, you know, obviously there are, there's, certainly some macro factors, I think others have talked about that as well, and obviously, we can't control airlift and exchange rates and things like that.
Speaker Change: Locations in our parks to host group events.
Speaker Change: Corporate events or whatever your church group or whatever it may be to come out to our park and have a really good time and we can do some really special things.
Speaker Change: That others that are one of a kind with some of our experiences on the international.
Speaker Change: Obviously, there is there is.
Speaker Change: Certainly some macro factors I think.
Speaker Change: So I've talked about have talked about that as well and obviously, we can't control air lift and exchange rates and things like that.
Marc G. Swanson: Well, what we are investing in in 2024 is some more resources in this area. We have a team that's going to be heading over to the United Kingdom this year to sit down and really make sure that people understand our parks and understand what we offer and how we can better connect with people, for example, in that country on a going forward basis. But we're going to, you know, I think do our part to try to drive more, more work in this area, and it will have to depend on some macro factors as well, internationally. So I don't know when that'll return, obviously, but I think we're confident over some period of time here that it eventually will, and certainly most of our international business is in the state of Florida, and I think with all the things there are to do here I just don't know when it'll actually return to 2019 levels. Okay, that's helpful.
Speaker Change: Well, while we are investing in 2020 for us is some more.
Speaker Change: Resources in this area, we have a team that's going to be heading over to <unk>.
Speaker Change: United Kingdom here this year.
Speaker Change: Sit down and really make sure where people understand our parks and understand what we offer and how we can better connect with people for example in that country.
Speaker Change: On a go forward basis, but we're going to.
Speaker Change: I think do our part to try to drive more more.
Speaker Change: More work in this area and it will have to depend on some macro factors as well internationally. So I don't know when that will return, obviously, but I think we're confident over some period of time here that it that eventually will end.
Speaker Change: Certainly most of our international is in the state of Florida.
Speaker Change: I think with all the things there are to do here in the state of Florida. It will continue to be attract an attractive market for international visitation.
Speaker Change: I just don't know when it will actually returned to 2018 levels.
Speaker Change: Okay. That's helpful.
Thomas Yeh: Yeah, and then on slide 1314, you reference targeting per cap growth of two to 5% per year. Is it fair to say that this year you were managing to weather headwinds, and it led to greater promotional activity, maybe some pressure on even the per cap in addition to attendance? And how much of that do you think, I guess, is in your control relative to outside competitor promotional activity and how you might respond to that? Yeah, good question.
Speaker Change: And then on slide 13, and 14, you referenced targeting per cap growing 2% to 5% per year is it fair to say that this year, you were managing to weather headwinds and it led to the greater promotional activity may be some pressure on the even on the per cap. In addition to the attendance and how much of that do you think I guess is in your control relative to.
Speaker Change: Outside competitor promotional activity and how you might respond to that.
Speaker Change: Yeah. Good question look on per caps.
Marc G. Swanson: Look, on per cap, there are a couple things. One, we're going to target, as we noted on the slide, pricing growth each year. And, you know, that's kind of a tenet of our strategy. But, having said that, we're also targeting total revenue. So at the end of the day, total revenue is ultimately what matters, right?
Speaker Change: There's a couple of things one we're going to target as we noted on the slide we're going to target.
Speaker Change: <unk> growth growth each year.
Speaker Change: That's kind of a tenant of our of our strategy.
Speaker Change: Having said that we're also.
Speaker Change: Targeting total revenue so at the end of the day total revenue is ultimately what what what matters right. So.
Marc G. Swanson: So there's going to be times where we may run offers or promotions or do things that might be at odds with the per cap but drive a greater amount of total revenue. But I will say, over the course of, you know, the long-term or near-term, however you want to think about it, we do believe we can continue to grow prices. That is our strategy, but we're going to take advantage of times when we want to test and learn or, to your point, maybe we have to react to some weather impacts and run an offer to generate some additional visitation.
Speaker Change: There's going to be times, where we may run.
Speaker Change: Offers or promotions or do things that might be at odds with the per cap, but drive a greater amount of total revenue but.
Speaker Change: But I will say over the course of long term or near term. However, you want to think about it. We do believe we can continue to grow pricing that is the strategy of ours, but we're going to take advantage of times, where we want to test and learn or or to your point, maybe we have to react to some weather impacts and run and offer to generate some additional.
Robert Orant: But that's all tied because we think it's going to generate more total revenue. So total revenue is the key equation there, but with the goal of maximizing price along the way. Our final question today comes from Robert Orant with KeyBank. Please go ahead.
Speaker Change: Visitation, but thats all tied because we think it is going to generate more total revenue. So total revenue is the key equation, there, but with the goal of maximizing price along the way.
Speaker Change: Our final question today comes from Robert Aurand with Keybanc. Please go ahead.
Robert Orant: Hi, thank you for taking my questions. I wanted to ask about the $85 million in cost savings and the $50 million in 24. I think the slides indicate that's a gross number. Can you give us any color on how you're thinking about maybe the net cost savings there?
Robert Aurand: Hi, Thank you for taking my questions wanted to ask about the 85 million in cost savings and the $50 million 24.
Robert Aurand: The slides indicate that the gross number can you give us any color on how youre thinking about maybe the net cost savings there.
James Hardiman: Yeah, for as far as the debt cost savings, again, we've illustrated that we think we're going to achieve about $50 million of that $85 million in 2024. We think a large portion of that is going to flow through, and that's what we're planning on as far as our budget for this year. While there is a little bit of an increase due to inflation or expansion, we think an appreciable amount of that will actually flow through the budget. Yeah, Robert. I mean, we have, as Jim noted, a lot of efforts around cost efficiencies. But look, there's still time pressures, right? So, you know, utilities, insurance costs, things like that.
Robert Aurand: Yes.
Speaker Change: As far as the net cost savings.
Speaker Change: Again, we've demonstrated that we think we're going to achieve about $50 million of that 85% in 2024.
Speaker Change: We think a large portion of that is going to flow through.
Speaker Change: And that's what we're planning on as far as our budget for this year.
Speaker Change: While there is a little bit of increase due to inflation or expansion. We think are appreciable amount of that will actually flow through the bottom line.
Speaker Change: Yes, Robert I mean, we have as Jim noted.
Speaker Change: Lot of a lot of efforts around cost efficiencies, but look there's still.
Speaker Change: Still a times pressures right so utilities.
Speaker Change: Insurance costs things like that those those are things that we are working on plans to try to mitigate that as much as we can obviously, but theres going to be some pressures against that number as he noted, but we're going to we have a tremendous amount of focus on this and I think the other thing that is we did some investment in 2023 to set us up for success in 2024.
James Hardiman: Those are things that we are working on plans to try to mitigate that as much as we can, obviously, but there's going to be some pressures against that number, as he noted, but we're going to have a tremendous amount of focus on this. And I think the other thing is that we did some investment in 2023 to set us up for success in 2024 to mitigate costs, especially the cost of sales, and some of our contracts to be renegotiated at better rates. So we feel more confident in the ability to deliver this number in 2024 and beyond. Okay, and maybe one follow-up on the cost savings, then the 85 million. Yeah, I think in previous calls, you've been talking about a $60 million number, and I was hoping you could kind of just bridge the two; you made what's incremental between the two.
Speaker Change: To mitigate costs, especially in cost of sales.
Speaker Change: Some of our contracts to be renegotiated at better rates. So that's why we feel more confident in the ability to deliver this number in 2024 and beyond.
Speaker Change: Okay, and maybe one follow up on the cost savings than the $85 million I think in previous calls you had been talking about a $60 million number and I was hoping you could kind of just bridge. The two you maybe what's incremental between the two.
James Hardiman: Yeah, we I know this time last year, we provided a $50 million illustration, and we increased it to $60 million over the summer. And now we're at 85. I would say that, we believe 40 to 45 million of that was achieved in 2023. And therefore, there's an incremental, let's say 15, that's part of this 85 that will be achieved over a given period of time. Again, we haven't identified the full extent of that.
Speaker Change: Yes, I know.
Speaker Change: At this time last year, we provided a $50 million illustration and we increased it to $60 million over the summer and now were at 85, I would say that we believe.
Speaker Change: 40% to $45 million of that was achieved in 2023.
Speaker Change: And therefore, there is an incremental let's say 15.
Speaker Change: It's part of this 85 that will be achieved over a given period of time again, we haven't identified the full extent of that but you can see we've already achieved or are planning achieve a lot of that by the end of 2024.
James Hardiman: But you can see, we've already achieved, or we're planning to achieve, a lot of that by the end of 2020. This concludes the question and answer session. I would now like to turn the conference back over to Marc Swanson for any closing remarks. Thank you, Scott. Look, thanks, everyone, for letting us walk you through those slides. If you do have questions, follow-up questions, you know, reach out to Matthew or myself or Jim, and we're happy to answer any additional questions you may have. I know it was a little long, but we wanted to get some information out there, so just reach out if you have any follow-up. So, on behalf of Jim and myself and the rest of the team here at United Parks and Resorts, we want to thank you for joining us this morning. As 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. So, thank you, and we look forward to speaking with you next quarter. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. The Ultimate Parody Site!
Speaker Change: This concludes the question and answer session I would now like to turn the conference back over to Marc Swanson for any closing remarks.
Speaker Change: Thank you Scott look thanks, everyone for.
Marc G. Swanson: Let me just walk you through those slides if you do have questions follow up questions reach out to Matthew or myself or Jim and we're happy to happy to answer any additional questions you may have.
James Hardiman: I know it was a little long, but we wanted to get some information out there. So just reach out if you do have any follow up so on behalf of Jim and myself and the rest of the team here at United Parks and resorts, we want to thank you for joining us this morning.
Speaker Change: 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. So thank you and we look forward to speaking next quarter.
Speaker Change: Okay.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].
James Hardiman: Okay.