Q4 2024 United Parks & Resorts Inc Earnings Call
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Speaker Change: Good day and welcome to the United Parks and Resorts 4th Quarter and Fiscal Year 2024 Earnings Conference Call. All participants will be in listen-only mode.
Speaker Change: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Matthew Stroud of Investor Relations. Please go ahead.
Matthew Stroud: Thank you and good morning everyone. Welcome to United Parks and Resorts fourth quarter and fiscal year 2024 earnings conference call. Today's call is being webcast and recorded.
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: Joining me this morning are Marc Swanson, Chief Executive Officer, and Jim Mikulajczyk, Chief Financial Officer and Treasurer.
Matthew Stroud: This morning, we will review our fourth quarter and fiscal year 2024 financial results, and then we will open the call to your questions.
Matthew Stroud: 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.
Matthew Stroud: 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.
Matthew Stroud: These risk factors may be updated from time to time and will be included in our filings with the SEC that are available on our website. We undertake no obligation to update any forward-looking statements.
Matthew Stroud: In addition, on the call, we may reference non-GAAP financial measures and other financial metrics such as adjusted EBITDA and free cash flow.
Matthew Stroud: More information regarding our forward-looking statements and reconciliations of non-gap measures to the most comparable gap measuring is included in our earnings release available on our website and can also be found in our filings with the SEC.
Matthew Stroud: Now, I would like to turn the call over to our Chief Executive Officer, Marc Swanson. Marc?
Marc Swanson: Thank you, Matthew. Good morning everyone and thank you for joining us. I would like to start today by taking the opportunity to welcome Jim Mikulajczyk, our new CFO, to the team at United Parks and Resorts.
Marc Swanson: Jim has been on board with us for a few months now, and we are pleased to have him here with his strong financial background and experience in the hospitality and leisure industry.
Marc Swanson: I would also like to thank Jim Forrester for his past service as interim CFO and treasurer. I'm glad.
Marc Swanson: Both Jim's are here as the team works to continue to manage this unique company and take advantage of the clear and meaningful opportunities we have to grow the business and realize substantial value for all stakeholders.
Marc Swanson: Before we turn to the quarterly and annual results, I want to point out that we have 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.
I will refer to these slides later in my remarks.
With that, let me get into our results.
Marc Swanson: We are pleased to report another quarter in fiscal year of strong financial results.
In the fourth quarter, we delivered near-record attendance.
Marc Swanson: records in part per capita and near record total revenue per capita despite particularly poor weather impacting the quarter.
For the full year, we delivered near record revenue.
record MPARC per capita, and record total revenue per capita
despite unfavorable weather during the year.
Marc Swanson: We have now grown, in part per capita, for 18 of the last 19 quarters.
and total revenue per capita for seven straight years.
Marc Swanson: Our revenue strategies are working and continue to demonstrate our pricing power and the strength of consumer spending in our parks.
Marc Swanson: We have had a pretty bad run of unusually poor weather over the last couple of years.
Marc Swanson: Fourth quarter and fiscal year results were impacted by meaningfully worse weather, including Hurricanes Debbie in August, Helene in September,
and Milton in October.
Marc Swanson: We estimate that the combined impact of the meaningfully worse weather was approximately 167,000 guests in the fourth quarter and 432,000 guests for the fiscal year.
Marc Swanson: Adjusting for these impacts, we estimate that fourth quarter attendance would have increased approximately 2% compared to the prior year quarter.
Marc Swanson: and full year 2024 attendance would have increased approximately 2% compared to 2023.
We repurchased 9.4 million shares.
approximately 15% of our total shares outstanding last year, underscoring...
our history of returning excess cash to our shareholders.
Marc Swanson: Our strong belief in the highly compelling value of our shares and our strong cash flow generation
Marc Swanson: We are excited about the clear opportunity we have to drive meaningfully more attendance to our parks.
Growth, total per capita spending.
Manage and Reduce Cost
and realize significant additional value from our strategic growth initiatives.
Marc Swanson: that we expect will lead to meaningful increases in shareholder value.
We are excited about our plans for 2025.
Marc Swanson: including the meaningful investments we have made across our parks and business.
Marc Swanson: and an incredible lineup of new, one-of-a-kind rides and attractions, popular events, improved in-park venues, and offerings across our parks.
Marc Swanson: We are pleased with our overall 2025 booking trends and are particularly happy to see our 2025 international sales growth up mid-single digits.
and our 2025 group, Bookings Growth Up Double Digits.
Marc Swanson: Assuming no worse weather than we experienced in 2024, we expect meaningful growth and new records in revenue and adjusted EBITDA in 2025.
Marc Swanson: I want to thank our ambassadors for all their hard work and dedication as we start 2025.
Marc Swanson: In 2024, we received numerous industry accolades including SeaWorld Orlando being voted as the number three nation's best amusement park by USA Today readers.
Marc Swanson: Aquatica Orlando voted as the number two for the nation's best outdoor water park by USA Today readers.
Speaker Change: Discovery Co. was awarded the 2024 Best Family Travel Award by Good Housekeeping.
Speaker Change: and Bush Gardens Williamsburg was named the world's most beautiful theme park for the 34th consecutive year by the National Amusement Park Historical Association.
Speaker Change: For 2025, we have an outstanding lineup of new rides and attractions.
Speaker Change: popular events, and new and improved in-park venues and offerings across our parks.
Our rides and attractions include the following.
at SeaWorld Orlando.
Speaker Change: A family-friendly, immersive flying experience taking guests on a journey to the top of the world to soar through the skies over the Arctic and dive into the icy depths.
In San Diego, we have Jewels of the Sea.
A captivating aquarium featuring multiple galleries, including
Speaker Change: One of the largest jelly cylinders in the country, as well as a multimedia experience.
Speaker Change: Also, Journey to Atlantis, SeaWorld San Diego's first coaster, will be reinvented, paying tribute to the original, beloved...
Speaker Change: versioned while adding new elements to create a more exciting and immersive experience than before.
Speaker Change: We have Rescue Junior at SeaWorld San Antonio, an all-new kid-friendly realm featuring animal rescue themed rides and a water play area.
Speaker Change: In Busch Gardens, Williamsburg, we have The Big Bad Wolf, The Wolf's Revenge.
Speaker Change: The longest family inverted coaster in North America will take riders through over 2,500 feet of track at speeds of up to 40 miles per hour.
Speaker Change: We have Wild Oasis at Busch Gardens Tampa Bay, an all-new realm featuring the sights and sounds of the rainforest, a newly reimagined drop tower featuring digital,
sound effects, and an interactive water play Wonderland.
Speaker Change: a multi-level claiming canopy, and an all-new multi-species animal habitat for up-close encounters.
Speaker Change: At Sesame Place in Langhorne, Pennsylvania, we will be celebrating the 45th birthday celebration.
Speaker Change: This birthday celebration will kick off in the spring of 2025 featuring furry birthday fun all spring and summer long. Fan favorite entertainment across the park will be transformed with birthday themed visits.
Speaker Change: including the return of the spectacular fan-favorite Sesame Street birthday parade.
Speaker Change: And finally, at Water Country USA we have High Tide Harbor.
Speaker Change: An all-new multi-level water play structure designed for families to explore together.
Speaker Change: This exciting area features over 100 interactive water elements, including cannons, sprayers, and tipping fountains, ensuring endless fun for kids of all ages.
Speaker Change: During the fourth quarter, we repurchased 0.8 million shares for an aggregate total of approximately $37.7 million dollars.
Speaker Change: In 2024, we repurchased 9.4 million shares of common stock, or approximately 15% of total shares outstanding, at a total cost of approximately $482.9 million.
Speaker Change: The board and company strongly believe our shares continue to be materially undervalued. We have confidence in our business, our growth prospects, and the value of our assets.
Speaker Change: Any reasonable way you look at it, we feel we are maturely undervalued and that there is significant upside opportunity in our current share price.
Speaker Change: Our balance sheet continues to be strong. On December, our December 31st 2024 net total leverage ratio is 2.94 times.
Speaker Change: And we had approximately $798.4 million of total available liquidity, including approximately $115.9 million of cash on the balance sheet.
Speaker Change: The strong balance sheet gives us flexibility to continue to invest in and grow our business and to opportunistically allocate capital with the goal to maximize long-term value for shareholders.
Now, turning our attention to the slides that we posted.
Speaker Change: As I mentioned earlier, we have created a presentation that addresses certain topics. We have heard from our shareholders that they would like to be covered.
Speaker Change: and some important points that we would like to get across.
So going to slide 5, the Discipline Capital Allocation Strategy.
Speaker Change: We have a thoughtful and clear capital allocation philosophy where we consider the highest and best use for our excess capital across four buckets.
for The First Bucket, Investing in the Business.
Speaker Change: the second bucket, debt pay down, the third bucket, M&A, and the fourth bucket, return capital to shareholders.
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.
Speaker Change: creating new reasons to visit and identifying and executing on high-conviction, high-ROI initiatives.
Speaker Change: As you see on the next page, we expect to typically spend approximately 150 million to 175 million dollars per year on core CapEx and up to 50 million dollars per year on expansion and ROI CapEx.
Speaker Change: Looking at debt paydown, 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 will opportunistically pursue M&A when attractive opportunities present themselves, but at present no M&A opportunities are currently contemplated.
Thank you. Thank you. Thank you.
The company has and will continue to aggressively return
Speaker Change: capital to shareholders when it makes sense to do so in the form that makes the most sense.
We have repurchased over $1.5 billion.
dollars and shares since January of 2019.
Speaker Change: which is about 32 million shares, about 38% of the shares outstanding.
For the avoidance of doubt the board
Speaker Change: The largest shareholder in management believe our shares are materially undervalued and that buybacks remain attractive.
Speaker Change: The board is working through governance and other related dynamics to allow for a potential new buyback authorization.
Finally, as you know,
The board is highly aligned with shareholder interest.
Speaker Change: Turning to the next slide, slide number six, Disciplined Capital Spend Strategy.
Speaker Change: We have a clear and disciplined capital spend philosophy that is also consistent with what we presented last year.
Speaker Change: As a reminder, we think about capital spending in two buckets. The first bucket being core capex, and the second bucket being expansion and ROI capex.
Speaker Change: We estimate that our core CapEx will typically run between $150 and $175 million.
on an annual basis.
Speaker Change: This is spend that we estimate supports growth in revenue and EBITDA in line with long-term base business
Expected growth rates.
Speaker Change: This amount includes maintenance cap ex and new rides and attractions cap ex
Speaker Change: We estimate that our expansion and ROI CapEx will run between approximately zero and fifty million dollars on an annual basis
Speaker Change: This is the span that supports growth in excess of normalized levels and includes high conviction projects.
with 20% plus ROI unlevered cash on cash returns.
Speaker Change: including revenue generating and cost savings projects, park expansions, new properties, etc.
Speaker Change: So, in total, we expect normalized CapEx of approximately $150 million to $225 million on an annual basis.
Turning to slide 7, Capital Spend Update.
Speaker Change: This slide provides some more color on our 2024 capital spend and on our expected 2025 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. As such, we spent significantly more on ROI CapEx in 2023 than we would normally spend and took on more projects than we would typically take on.
Speaker Change: Some of these projects were completed on schedule and delivered the expected ROI. Others were delayed due to some combination of weather and us taking on more projects than we probably should have.
Speaker Change: As discussed on previous calls, this led to certain operational disruptions.
Speaker Change: in certain periods, in some of our parks, and was a headwind to performance in certain parks at certain times.
Speaker Change: The good news is we learned from our experience in 2023 and we adjusted our approach in 2024.
Speaker Change: There were some remaining planned projects that we committed to in 2023 that we finished up in 2024 that took our 2024 ROI CapEx roughly $20 million above the high end of our normalized ROI spend target.
Speaker Change: In 2025, we currently expect to spend approximately $225 million at CapEx, split between $175 million of core CapEx and $50 million of expansion and ROI CapEx.
Speaker Change: We feel very good about these ROI projects and have high conviction on their impact in 2025 and beyond.
Turning to slide 8, our 2025 attraction lineup.
Speaker Change: On this page we highlight our new ride and attraction lineup for 2025 that we are particularly excited about. It's among one of the best lineups we have ever had.
On slide nine, capital spend, significant free cash flow generation.
Speaker Change: We lay out the significant discretionary free cash flow generation of our business.
Speaker Change: The slide speaks for itself and shows the high free cash flow conversion of our business and over 400 million dollars of normalized levered free cash flow that this business should be expected to generate on an annual basis.
Turning to slide 10, Strategic Initiatives Update.
Let me speak to some of our current strategic initiatives.
Speaker Change: First, on hotels, we continue to be excited about the opportunity we have and have
discussions with and have ongoing discussions with potential partners.
Speaker Change: We are taking our time to make sure we optimize the outcome here and no longer expect to have our first hotel open in 2026.
Speaker Change: We will keep you updated on the status of discussions and timing in the coming quarters.
The second point is on real estate monetization.
Speaker Change: As you know, we own over 2,000 acres of valuable land, including approximately 400 acres of unused land.
Speaker Change: There are discussions with potential partners on ways to unlock and or monetize this land so as to realize appropriate value for shareholders.
Speaker Change: We will update you on our progress over the coming quarters.
The third point is around sponsorships.
Speaker Change: We have been working over the past several months on various sponsorship opportunities that leverage our valuable assets and customer database.
Speaker Change: We expect this opportunity could eventually exceed $20 million in high-margin revenue, of which we expect to realize mid-to-high single digits in 2025.
Speaker Change: The fourth point is on international. We continue to be in discussions with partners on this front and various geographies and look forward to sharing more with you in the near future.
Thank you.
Speaker Change: The fifth point is around IP partnerships. We are in discussions with various partners to bring globally recognized IP to our parks via new rides, attractions, and or exciting activations.
Speaker Change: And finally, the sixth initiative is around a variety of other areas, including our mobile app, CRM, park enhancements, and technology investments.
Speaker Change: All of which we expect will help drive growth in the near term and over the coming years.
Turning to the next slide, titled Epic.
Speaker Change: This next slide is a slide that covers a recent favorite topic of discussion, the coming opening of Universal's Epic Universe Park in May of this year.
Speaker Change: First off, we're excited about the opportunity related to the opening of Epic Universe and welcoming our new neighbor.
Speaker Change: Second, we expect the park to be a great park and a great addition to the Orlando market.
Speaker Change: Third, we expect the opening of the park to lead to strong visitation to the Orlando Market.
which we believe in benefits the entire market.
Speaker Change: It is because of this type of investment that Orlando is the most visited city in the United States, attracting approximately 75 million visitors annually, up from approximately 40 million visitors 25 years ago.
Speaker Change: And fifth, like others, we have been preparing for the opening of EPIC and are confident in our ability to get our fair share of visitors in the market.
Lastly,
Speaker Change: We're really excited about our new revolutionary Immersive Arctic flying experience attraction. We will be opening this year in Orlando
Speaker Change: and our other planned, new, and exciting elements we will be introducing to our Orlando Park and announcing soon.
Turning to slide 12, this next page shows
Speaker Change: We have grown our EBITDA over the last 50 plus years as more capital was invested in the Orlando market and more and more parks were built and opened.
Speaker Change: Again, we welcome investment and we expect more investment in the coming decade and more visitation to the market, and it will be a benefit for market participants.
Turning to slide 13.
Speaker Change: This is around a meaningful opportunity to grow attendance by returning to historical levels.
Speaker Change: We have shown this slide before. If we return total attendance to 2019 levels that would be approximately 5% growth in attendance compared to 2024.
Speaker Change: If we return attendance to 2008 levels, our historical high, that would represent approximately 18% growth in attendance compared to 2024.
Speaker Change: The point here is we have clear and ample opportunity to grow attendance just by returning to levels we have previously achieved, ignoring population growth, sector share gains, etc.
Slide 14, Drivers of Future Attendance Growth.
Speaker Change: On this slide, we lay out a roadmap of how we think about attendance growth beyond returning to historical levels.
We have several ways we plan to grow a tenant.
Speaker Change: First, one would be benefiting from population growth, with our addressable markets growing in excess of U.S. national average. The second one would be improving our marketing effectiveness.
including growing awareness, increasing conversion, and optimizing our media spend.
Speaker Change: Third, creating new reasons for people to visit, such as new and expanded rides, attractions, events, and shows.
Fourth, growing our season pass base and visitation per member.
Speaker Change: Fifth, realize the benefits of our CRM build-out and optimize the strategy around that.
Speaker Change: Sixth, increase our focus on group sales across youth, corporate, and other buyouts.
Developing and growing our loyalty program.
And finally, number nine, executing on our strategic initiatives.
Speaker Change: Overall, we have confidence in our near, mid, and long-term strategy with respect to these drivers.
Slide 15 talks about the drivers of per-cap growth.
On this slide,
We show expected growth for admissions and impact per caps.
Speaker Change: You can study these slides on your own as they are fairly self-explanatory.
Speaker Change: The takeaway is that we have, we are confident and believe our current per caps
Speaker Change: are sustainable and have further upside. 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: Importantly, on the admissions per cap slide, while we expect to grow admissions per cap
Speaker Change: at these rates over time, we are first and foremost targeting total revenue growth. As such,
Speaker Change: There may be, from time to time, times when we choose to focus on growing attendance versus growing admissions per caps.
Speaker Change: The next slide, slide 16, talks about cost efficiency and cost reductions.
and it outlines our current cost efficiency and reduction initiatives.
Speaker Change: As you can see in this page, we have currently identified approximately
$75 million of cost efficiency and reduction initiatives.
Speaker Change: which includes 40 million that we have identified in prior years and are working on in 25 and 35 million in new initiatives we will work on in
2025
of this $75 million.
Speaker Change: We expect $50 million of realized cost savings in 2025 with the remaining cost savings being achieved in 2026, along with other cost initiatives we develop over the course of this year.
Speaker Change: As you know, cost discipline and management has been and will continue to be a relentless focus of our management team and we have a track record of delivering on these activities.
Speaker Change: Slide 17 is the United Parks and Resorts Illustrative Adjusted EBITDA.
This is a slide we've previously discussed in past years.
As a reminder, this illustration
Speaker Change: is not meant to be guidance. It is just meant as a simple illustration to show what we believe the earnings power of this business would be at 2019 attendance levels. And if we return to 2008 historical peak attendance levels.
Speaker Change: While growing our total per capita revenue along with the cost-saving opportunities and strategic initiative opportunities We have we have noted
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 those scenarios, excluding cost inflation.
Speaker Change: Again, just a reminder, this is not guidance, but rather a simple illustration.
As we have said before, our business model...
It's fairly simple and not complicated.
Speaker Change: 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
substantially higher than what we achieved in 2024.
Thank you.
The next slide, United Parks Evaluation Overview.
outlines the current public market valuation of our shares.
As you can imagine, this page makes us quite frustrated.
Speaker Change: Public market is currently valuing our company at around seven times forward EBITDA and around 11 times forward unlevered free cash flow and at around a 12% levered free cash flow yield.
Speaker Change: We operate in an industry that historically was valued at over 11 times EBITDA.
Speaker Change: Also, we should note, these forward multiples are based off of Wall Street consensus estimates.
which are below our internal plans and expectations.
Speaker Change: The next slide talks about trading at significant discount despite outperformance.
Speaker Change: And on this slide, you know, I think it points out.
Speaker Change: Something that continues to be frustrating, our performance compared with leisure, hospitality, and entertainment company peers. As you can see, we have outperformed, in many cases significantly so, our peer groups, and yet trade at the lowest multiple of any of our peers.
Again, this continues to be incredibly frustrating to us.
The next slide talks about the implied future stock price.
Speaker Change: We simply show here what our implied share price would be if we traded in line with our peer groups or at discounts to our peer groups.
Speaker Change: Any reasonable way you look at it, we feel we are materially undervalued and that there are significant upside opportunity in our current share price.
Speaker Change: So, let's go to slide 21, the key takeaways, and I'll close with those. The first one, we had strong 2024 performance despite unusually bad weather.
Speaker Change: The second one, we have a disciplined capital spend strategy with approximately $150 million to $225 million in normalized annual CapEx spend. Third, we have significant discretionary free cash flow generation.
Speaker Change: Fourth, we have meaningful upside opportunity from executing on strategic initiatives such as hotels, real estate, international licensing, IP partnerships, and sponsorships.
Thank you. Thank you.
Speaker Change: Hi, we are positioned to opportunistically benefit from increased visitation to the Orlando market.
And seventh, we believe the company.
is extremely undervalued despite significant outperformance relative to peers.
Speaker Change: So, with that, I'm going to turn it over to Jim to discuss our financial results in more detail.
Thank you, Marc, and good morning, everyone.
Speaker Change: As Marc said at the outset of his remarks, I also want to take this opportunity to thank Jim Forrester for the work he did in the interim CFO role for the company. But moreover, his personal assistance in transitioning me into this role has been both gracious and an invaluable resource.
Speaker Change: Before getting underway, I just want to say how pleased and proud I am to be part of the team at United Parks.
Marc Swanson: If not obvious before Marc's comments and the slides prepared by the team, he certainly put an exclamation on the opportunities and value we have in front of all of us.
Marc Swanson: This is an incredible company with a remarkable group of ambassadors complete with valuable and irreplaceable assets and a differentiated experiential business model.
Marc Swanson: The company has accomplished a significant amount historically, but I can tell you, having only been here for a few months, we have only scratched the surface in terms of realizing this company's full potential.
Marc Swanson: I cannot be more excited to get after the meaningful growth opportunities that Marc alluded to earlier in the call and to deliver increased value for our shareholders and all stakeholders.
Marc Swanson: With that, let me turn to our financial results. During the fourth quarter, we generated total revenue of $384.4 million, a decrease of $4.6 million, or 1.2 percent when compared to the fourth quarter of 2023.
Marc Swanson: The decrease in total revenue is primarily a result of a decrease in attendance partially offset by an increase in total revenue per capita.
Marc Swanson: Attendance for the fourth quarter of 2024 decreased by approximately 79,000 guests, or 1.6% when compared to the prior year quarter.
Marc Swanson: The decrease in attendance was primarily due to meaningfully worse weather, largely due to Hurricane Milton, compared to the prior year quarter.
Marc Swanson: As Marc mentioned, the combined impact of the adverse weather was approximately 167,000 guests. Adjusting for these impacts, attendance would have increased approximately 2% compared to the prior year quarter.
Marc Swanson: Admission per capita decreased primarily due to the impact of lower pricing on certain promotional admission products.
Marc Swanson: when compared to the prior year quarter. In part, per capita spending improved primarily due to pricing initiatives when compared to the fourth quarter of 2023.
Marc Swanson: Operating expenses increased $2.6 million, or 1.4% when compared to the fourth quarter of 2023. The increase in operating expenses is primarily due to increased non-cash adjustments when compared to the prior year quarter.
Marc Swanson: Selling, general, and administrative expenses increased $4.8 million, or 10.6% compared to the fourth quarter of 2023. The increase in selling, general, and administrative expenses primarily due to increased marketing initiatives compared to the prior year quarter.
Marc Swanson: We generated net income of $27.9 million for the fourth quarter compared to net income of $40.1 million in the fourth quarter of 2023.
Marc Swanson: We generated adjusted EBITDA of $144.5 million, a decrease of $6 million when compared to the fourth quarter of 2023.
Marc Swanson: Adjusted EBITDA decline due to a decrease in revenues and increase in expenses used to calculate adjusted EBITDA relative to the prior year quarter.
Marc Swanson: Total attendance was 21.5 million guests, a decrease of approximately 59,000 guests or 0.3%.
Marc Swanson: Net income for the year was $227.5 million, a decrease of $6.7 million, and adjusted EBITDA was $700.2 million, a decrease of $13.3 million, or 1.9%.
Marc Swanson: Our net total leverage ratio at the end of the quarter was 2.94 times.
Marc Swanson: This gives us considerable flexibility to continue to invest and grow our business and to opportunistically allocate capital with the goal to maximize long-term value for shareholders.
Marc Swanson: In December, we refinanced our Term Loan B, locking in a more favorable interest rate that will save the company approximately $8 million in annual interest expense going forward.
Marc Swanson: Earlier this year, we also increased the size of our revolver by $310 million, providing us even more access to liquidity to take advantage of potential opportunities.
Marc Swanson: Under our $500 million repurchase authorization from the board, during the fourth quarter, we repurchased 0.8 million shares for an aggregate total of approximately $37.7 million.
Marc Swanson: For the fiscal year 2024, we repurchased 9.4 million shares of common stock, or approximately 15% of total shares outstanding, at a total cost of approximately $482.9 million.
Marc Swanson: Our deferred revenue balance as of the end of December was $152.7 million, a decrease of approximately 1.9% when compared to December of 2023.
Marc Swanson: As a reminder, our Deferred Revenue Balance contains a number of products that include ticketing, vacation packages, annual and seasonal passes, and ancillary products.
Marc Swanson: We also continue to see many pass holders who have been with us for at least a year who transition to month-to-month payments at the completion of their initial pass commitment. This month-to-month revenue does not show up in deferred revenue and demonstrates continued pass holder loyalty.
Marc Swanson: Our year-over-year pass base was higher through the end of the fourth quarter 2024. Our year-end 2024 pass base, including all past products, was up 0.4% compared to year-end 2023.
Marc Swanson: Last quarter, we launched our best past benefits program ever for 2025, which has led to low single-digit increases in past prices, which we expect will drive a strong past base for the remainder of the year.
Marc Swanson: We spent $26.2 million on CapEx in the fourth quarter of 2024, of which approximately $22.3 million was on core CapEx and approximately $3.9 million was on expansion or ROI projects.
Marc Swanson: For 2024, we spent $248.4 million on CapEx, including $177.7 million on core CapEx and $70.7 million on high conviction growth and ROI projects.
Marc Swanson: For 2025, we expect to spend approximately $225 million dollars on CapEx, $175 million dollars on core CapEx, and approximately $50 million dollars on CapEx for growth and ROI projects.
Marc Swanson: And we believe this represents a normalized spending basis, with expectation to spend $150 to $175 million on core CapEx, rides, attractions, and maintenance, and up to $50 million on ROI growth CapEx with a clear and supportable return.
Marc Swanson: With that, let me turn the call back over to Marc who will share some final thoughts.
Marc Swanson: Thanks, Jim. Before we open the call to your questions, I just have some closing comments.
Marc Swanson: In the fourth quarter of 2024, we came to the aid of over 100 animals in need.
Over our history, we have helped over 41,000 animals.
Marc Swanson: including bottlenose dolphins, manatees, sea lions, seals, sea turtles, sharks, birds, and more.
Marc Swanson: Again, I'm really proud of the team's hard work and their continued dedication to these important rescue efforts.
Marc Swanson: We are excited about our ongoing and upcoming events this quarter, including Mardi Gras at our SeaWorld and Busch Gardens parks.
Marc Swanson: Seven Seas Food Festival at SeaWorld Parks and the Food and Wine Festival at Busch Gardens Tampa Bay.
Marc Swanson: I want to thank our ambassadors for their efforts during our recent holiday season and their preparation for our current and upcoming events this spring.
Marc Swanson: Needless to say, we continue to believe there are significant additional opportunities to improve our execution.
Marc Swanson: Take advantage of clear growth opportunities and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA.
Marc Swanson: continue to have high confidence in our long-term strategy and in our ability to deliver significantly improved operating and financial results that we expect will lead to meaningful increased value for stakeholders.
Now, we can take your questions.
We will now begin the question and answer session.
Marc Swanson: To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Marc Swanson: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you limit yourselves to one question and one follow-up, and to return to the queue for any additional questions you may have. At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Steve Wasinski with Stievel. Please go ahead.
Hey guys, good morning.
Steve Wasinski: So, Marc, if we could start with your commentary about how you guys are thinking 2025 is going to be a record year for EBITDA, assuming weather is normal. I guess if we went back to this time last year, I think we kind of heard the same commentary.
Speaker Change: you guys didn't make that, and it seems like mostly due to weather. So, I guess my question is, even if we assume weather is normal for the year, is it still possible to achieve record EBITDA given the opening of EPIC, which Marc, you talked about in your prepared remarks, and maybe how you guys are thinking about the impact from EPIC, or maybe help us think about how other new park openings impacted or really didn't impact your assets in Orlando.
Speaker Change: Yeah, hey Steve, I can help you with that question. I mean, I think with EPIC, look, it's a great opportunity for us. The park...
Speaker Change: is relatively close to where we're located and I think what excites us is the opportunity that we have to pick off the number of people that we expect are going to come visit that park and in Orlando. So seeing that type of...
Speaker Change: high-quality great asset investment into a market that we're a You know significant participant in we view as a positive. So I think
Speaker Change: You know that bringing more people here here is a good thing, right?
We just then have to execute on our plans.
and I talked about...
some of the things that we're doing.
One would be, obviously, the new ride.
Speaker Change: that we have here in Orlando. We're really excited about that, and there's going to be more coming out about that soon. But, you know, it's a ride that you get at SeaWorld. It has an animal component to it, and I think that's one of our things. We are a differentiated product than the universal parks.
Speaker Change: We are a I think a better value we have a good value proposition
And those, among lots of other things, give us...
Speaker Change: confidence that we can continue to participate in the market growth.
Speaker Change: We showed that slide in the deck there that we've been here since the early 1970s and if you think about all the things that have opened over that time, and we have continued to participate in the EBITDA growth of the market.
Speaker Change: Okay, thanks for that, Marc. That's good color. And then second question, you know, Marc, you made an interesting comment, you know, on slide 18. You know, you say in that box there, you know, you guys think 2025 and 2026 Wall Street consensus is...
Speaker Change: significantly below your internal plan and expectations. So I'm not sure this is even a question but you know just want you to maybe you know opine a little more about you know what that means or maybe a better way to ask this is you know what what do you think Wall Street is getting wrong or under estimating with you know estimates at this point?
Speaker Change: Well, I think we showed on that slide, and I'm going to flip to it, but I think the consensus for next year was like.
Not even $700 million, so, I mean, we, I...
The consensus for next year is 701 and adjusted EBITDA.
Speaker Change: I can tell you our internal plans and expectations are obviously significantly higher than that.
Speaker Change: We have to execute on those plans, but I think, you know, it's all the things I went through that I think when you step back and add them all up, there's a lot of value in this business. There's a lot of things we are doing to try to drive that value, and I'm not sure it's always readily understood. So we're just pointing it out.
Speaker Change: We would be incredibly disappointed if we did not outperform these.
Speaker Change: these consensus estimates, and I think I would encourage you to
Speaker Change: You know, the strategies, the strategic initiatives, our history of growing per caps
Speaker Change: 18 out of the last 19 quarters for MPARC per cap, seven years in a row for total revenue per cap. I mean, there's things we're doing that I think have established a pretty good track record. We just have to continue to execute on those.
Okay, gotcha. Thanks, Marc, appreciate it. Yep.
Speaker Change: The next question comes from James Hardiman with Citigroup. Please go ahead.
Speaker Change: Hey, good morning. This is Sean Rooney on for James. What can you tell us about 1Q trends so far? Any specific weather headwinds or anything like that to call out so far this year?
Speaker Change: Yeah, I think the first quarter, I mean, it's pretty well reported.
Speaker Change: January was, you know, abnormally cold in in in Florida. I think the coldest we had since 2010 and I think we've seen some improvement in that obviously in February, but you know, I would say overall You know very
And I can tell you, I mean, our attendance is...
is up on a day-to-day basis through this past Sunday.
Speaker Change: So, you know, we're, we're, you know, we see growth there. We'll continue to see what, what develops the rest of the quarter. January and February, obviously, are, are relatively small months in the quarter. And then, you know, you got to factor in.
you have a negative Easter shift that's going to occur.
Speaker Change: later on this quarter. That'll hurt Q1 but benefit Q2. So once you get through the end of April, it all normalizes out. But if you're looking at Q1 in particular, that that'll be a headwind and then a positive in Q2 when Easter shifts to Q2.
Speaker Change: Got it. And then just curious about if you've seen any evidence of or have any expectation for visitation, deferral at your Florida parks ahead of epic opening.
Yeah, I mean...
Speaker Change: I think what I can say is, you know, people are going to come, we believe, to Orlando more so than when that park opens. I think right now.
You know
a lot of our tenants from the state of Florida.
Speaker Change: We get a good portion of our attendance from people that are local or nearby to the Orlando area.
Speaker Change: We're not fully or wholly dependent on a domestic traveler or an international traveler, which might be a little bit different than some of our competitors in the Orlando market.
Speaker Change: we get a good amount of attendance from Florida. So we'll see what develops, but we're excited for the opportunity, obviously, of having more people in the market.
Speaker Change: The next question comes from Thomas Yeh with Morgan Stanley. Please go ahead.
Thomas Yeh: response to the last question suggesting that that's in addition to the existing local market that you typically penetrate and do you have any expectation of how much that market expansion
Thomas Yeh: occurs from new competition coming in this year. And maybe just as it relates to your strategy.
Thomas Yeh: Should we expect an emphasis on growing revenues through attendance versus per capita this year since there potentially would be some more appetite, I'd imagine, to run more promotions on the edge to drive more visitors and capture some of the incremental market?
Thomas Yeh: As a follow-up, any updates on any anticipation for marketing support or labor-no-wage dynamics to think about as we think about kind of modeling the expense growth for the next year?
Thomas Yeh: All right, sure. Let me let me try to unpack a couple of those questions.
So, first on pricing, I think, again,
Thomas Yeh: But look, our goal every year is to grow pricing, right?
But our main focus is driving total revenue.
Thomas Yeh: Mixed components of just you know that can impact your per caps as well, but the focus is on growing total revenue and That's what we'll continue to focus on
Thomas Yeh: 25% or so of our tenants at the big park somewhere in that at Seaworld Orlando You know in that range is is domestic tourism A lot of those people we know drive here some fly here. So there's there's an opportunity to still capture
Thomas Yeh: incremental people that come here. So it's not like we don't have any tourists visit our park. We do. I don't want to imply that we don't. And those are the folks that we have to, I think, do a good job of picking off. And again.
compelling product, differentiated product.
Thomas Yeh: value proposition that we that we feel good about, the new rides, events, other things we're going to be doing in our parks in Orlando.
Thomas Yeh: this year. You know you add all those things up and that that's what you know we've got a gives us confidence that if we execute like we think we can we should get some share like you said of of the increased visitation to the market.
And I think finally, you asked about...
Thomas Yeh: and things like that. Wage pressures, perhaps, I think is what you were asking about. Look, we.
Thomas Yeh: We have a simple kind of way we look at it. We know there's going to be cost pressures.
Thomas Yeh: in certain things, you know, every year, right? Every year, you're gonna have some things that are growing more.
than others and our goal
you know, if you look at the cost that
We used to calculate adjusted EBITDA.
Thomas Yeh: We manage those to a very low growth rate, so I think we demonstrated that we can manage
Thomas Yeh: our costs, and, you know, either use those savings to offset other areas that are growing more than we'd like or make reinvestments in other areas. So, I don't know I want to comment on anything specifically, but, you know, that's our general view on that.
We appreciate the color. Thank you.
Speaker Change: The next question comes from Lizzie Dove with Goldman Sachs. Please go ahead.
Hi there, thanks for taking the question.
Speaker Change: The illustrative opportunity on the slides was interesting. I think you called out the kind of returning to 2008 attendance or peak attendance, which is...
Speaker Change: you know pretty significant growth from where we are now. I'm curious what has been the gating factor to getting there in recent years?
Speaker Change: It may be international as part of it, but I do think that, you know, the international deplayments are actually up now versus 2019 and what the kind of key catalysts are to kind of at least get a little bit closer to that.
Speaker Change: I can help you with that question, and you're right. It's an illustration, like you said, so not meant to be guidance or anything like that. But I think the point there is we once achieved the attendance numbers we showed, and kind of unpacking that.
Speaker Change: Some of the of the headwind more recently here has been obviously the international. So while international is improved over 2023 it's it's still down to 2019 you know probably in the range of
you know, for the fruitful year.
Speaker Change: 30% or actually probably more than that, 35, 36% down for the full year of 24 versus 19. So, if you go back, we talked in the past that international
back in 2018 was about 10% of our attendance.
Speaker Change: That, you know, translates to over 2 million people. So if you're still down, you know.
Thank you very much.
Speaker Change: The bookings coming out of that internationally are up and, you know, we saw the...
in the fourth quarter of twenty-four.
better performance in international than
versus 19 that we had seen.
Speaker Change: capturing more attendance in the summertime and I think there's opportunities there with with some of our events.
Speaker Change: our attractions, our shows, that type of thing that should, you know, allow us to have the opportunity to do that. We've got to execute on that, obviously, and to your point, we...
Speaker Change: we need to demonstrate that. So summer is another opportunity we have to capture some attendance on a go-forward basis.
Speaker Change: Got it, that's helpful, thank you. And then I guess just moving on to the kind of capital allocation and strategic optionality side of things, you know, you mentioned possibility of another buyback authorization.
Speaker Change: Leverage has picked up, but there's also, you've said, the opportunity for, you know, some sort of real estate monetization. I guess looking over the next couple of years, Chris, if you could help me put those pieces together, especially with, I think, cash taxes going up in 26.
Speaker Change: how the kind of capital allocation priorities kind of stack, your comfortability, the leverage, and maybe some more details around, you know, the potential for like real estate monetization.
Speaker Change: Sure, so I think you know, I think we laid out the how we think about the the four buckets of
Speaker Change: of Capital Allocation, but specifically I'll take your question on the monetization of real estate. So there's really two ways to look at real estate, right? So you've got...
The use of the land?
So you could use it, you know for
Speaker Change: You can use it for hotels, you can put it on a wall, you can put it on a wall, you can put it on a wall, you can put it on a wall.
Speaker Change: shopping, or housing, all the things that you can consider using your excess land for. And so as we laid out in our presentation, and we've talked about hotels, we've talked about, you know, other new rides and attractions. You know, the things we can do to
make that land more valuable and hopefully lead to
better results for us.
Speaker Change: The other one would really be kind of the underlying value of the land. And so one of the points we've been making a little bit more recently here, and specifically today,
Speaker Change: because we don't believe it's maybe fully understood by people is we have quite a bit of excess land and undeveloped land.
Speaker Change: So again, you could use that land for various things as I already mentioned, but you also have the value of that land. And our land is in markets that, you know, I think most people would find desirable to be in. So is there a way to monetize?
the underlying value of that land. Like you said, with...
Speaker Change: or something like that. And I think those are things that are interesting to consider. I think you're obviously well aware of our board makeup with the
Speaker Change: the board gets quite a few inbounds on ways we could value, unlock the value of that land and it's something that we're just sharing with you that we're
Speaker Change: open to considering those things. I don't have anything specifically shared, but I don't know that people appreciate the value of our land and that's really the point we're trying to get across.
Speaker Change: Despite some cash taxes that will come into play starting more so next year and the following year, we still have a high cost problem and an incredible free cash flow with a lot of opportunities at hand that Marc just alluded to. So despite a little bit more headwind on the cash tax side out next year, we still have a lot of free cash flow and a lot of opportunity.
to put money to work here and return for shareholders.
Got it. Thank you.
Speaker Change: The next question comes from Ben Chaykin with Mizzouho. Please go ahead.
Speaker Change: Hey, good morning. A lot of detailed commentary on the preparatory remarks in the deck. It's very helpful. Thanks.
Ben Chaykin: Maybe just to follow up on pricing, how do you think about growing admission per caps two to 5% annually per the deck? And I ask this in the context of results for.
Speaker Change: 23 and 24 which are below that range I guess. Was 24 simply mix and if so how much or is it more kind of a product led 25 and beyond that gives you confidence and then one quick follow-up. Thanks
Speaker Change: Yeah, I mean, Ben, I'll just kind of go back to some of my prepared remarks. I mean,
We're, you know, we have a focus on growing pricing.
Pricing has probably been...
Speaker Change: a little more aggressive over the last couple years and we got to find that right balance at times.
Speaker Change: And then you've got the mixed factors that you noted. But I think.
What I can tell you is...
We we test and optimize things we
Speaker Change: We try to find that right balance of growing price and still growing attendance. There's going to be time, so...
Speaker Change: that we, you know, we're going to maybe be at odds with PerkApp because we like...
But when we have opportunities...
Speaker Change: learn from and optimize going forward. So there's multiple ways to look at it. I think the key takeaway is over the medium to long-term or over time, however you wanna think about it, we believe we can get pricing. A key, I guess,
Speaker Change: I think a key tenet of that is we continue to invest in our parks.
to come and see.
and experience.
Generally, you're going to be okay paying more for that.
Speaker Change: We'll continue to make those investments, which should support our pricing strategy as well. That includes not only...
Speaker Change: you know, the attractions, but even the venues in our parks, you know, we've...
Speaker Change: We've upgraded restaurants and gift shops and other things, bars and whatnot in our parks that, again, give people reason to come and spend money in our parks.
Speaker Change: Got it. Very helpful. And then one quick modeling question. Can you remind us what the cost bucket saves were in 24? If I recall, I think it was around $50 million as well. And then related to that, the $50 million cost saves for 25. Is that a function of any estimated top line or is it unrelated to top line trends?
Speaker Change: Unrelated to top line trends, these are areas that we've had targeted for the past couple of years in different studies that we've been doing and working with the team really across the board from cost of sales, labor.
Speaker Change: Operating expenses, administrative areas, so it's a continuation of a plan that we've been marching against and so there's some gross cost saves that we have in there. We're doing it strategically and thoughtfully to match it off against our spending levels and trying to deploy some of that money back into marketing initiatives that Marc mentioned so we can put the money back to work into growth and if some of it drops to the bottom line that's great also, but it's a continuation of the program that we've been working on.
we've had.
Speaker Change: Am I right that 24 was also around 50 million or close to it?
Thanks.
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Speaker Change: The next question comes from Michael Swartz with Truist. Please go ahead.
Michael Swartz: Hey, everyone. Good morning. Maybe just to follow up on Ben's question there about cost savings, I think the last time we talked, you had pointed to or alluded to something like $25 million, $30 million in cost savings that were anticipated to flow through in 2025, and now it sounds like it's $50 million. Do you have any color on what some of those incremental cost savings that you've identified might be?
Yeah, so so I'll just
Speaker Change: One comment on the flow-through aspect. We hope some flow-through, but a lot of this is on a gross basis and offsetting some of the spending and other investments we're making. In terms of incremental, the place where we've continued to have a lot of focus has been on the labor side. So I think we've we've
Speaker Change: been very thoughtful. We've gotten the same pressures other people have gotten across the market on some rate.
Speaker Change: and in all the markets that we operate in, with minimum wages and some rate increases. But we've been very good about thinking through the supply-demand side of when there's peak times, we have been able to move labor quickly and swiftly, and we've been able to pull it back.
Speaker Change: So, I think that labor item has continued to be favorable for us.
Speaker Change: and we've managed it extremely well. There's some things on the purchasing side, some utilities.
Speaker Change: that we've added about getting smarter and working with some of our utilities providers. So there's different pockets across the board in each of the areas that I mentioned at the outset. No one specific, though, that's driving overarching.
Speaker Change: Okay, that's helpful. And then just a second question, maybe a point of clarification. I think you would
Speaker Change: You had responded to an earlier question just around the first...
Speaker Change: I think you said on a day-to-day basis attendance is up, I don't think there would be any reason at least that I would know of the operating days to be different versus last year, so is that another way of saying that attendance is up year-to-date through the last weekend?
Speaker Change: Yeah, I was just quoting Because we're kind of mid month. So typically mid month we look on it on a day-to-day basis. So so we are up You know
Speaker Change: there's puts and takes you know each each month but you know through Sunday like I said on a day-to-day basis we're up
Speaker Change: Okay, and any way to think about the Easter shift as we're modeling here, if I look back
Speaker Change: I think a couple of years ago, a handful of years ago, when we had this three-week shift in Easter between the first quarter, second quarter, it was something like 150,000, 175,000 visits that shifted out. Is that the right way to think about it? I'm just trying to get a general sense.
Speaker Change: yeah I think I think you're you're you're in the in the right range there and we'll you know when we get on the phone with you guys next quarter we'll have we'll have that number but I think I think you're in the right way right range it'll come out of q1 so it'll be a negative to q1 and then a benefit to q2
So.
Okay, great, thanks.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Marc Swanson for any closing remarks.
Speaker Change: Alright, well thanks everyone. I appreciate you allowing us to take a little extra time to get through the slides.
Speaker Change: But on behalf of Jim and I and the rest of the management team here at United Parks & Resorts, I want to thank you for joining us. As you heard today, we're confident in our long-term strategy, which we believe will drive improved operating and financial results and long-term value for stakeholders. So thank you again, and we look forward to speaking with you all next quarter.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.