SeaWorld Entertainment Earnings Call Nuggets: Booking Ticket Sales and Weather Impacts
SeaWorld Entertainment Inc (NYSE:SEAS) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Booking Ticket Sales
Scott Hamann – KeyBanc Capital Markets: What kind of visibility do you have with respect to the booking ticket sales that gives you confidence that the balance of the year is going to be stronger than in the first half?
Jim Atchison – President and CEO: Scott, this is Jim Atchison, thanks for your question. I’ll take that question. One of the things that we look at as we confirm and reaffirm our guidance for the year was our year-to-date issues versus, kind of, our year-ago issues, and in that respect what I’m speaking to is the weather impact that affected us significantly in the second quarter in particular of the first half of the year, we don’t anticipate lingering throughout the second half of the year. Let me also point out that implied in our $4.30 to $4.40 EBITDA guidance is about a 4% to 6% full year growth rate. So that would require us to have about a 4% to 7% growth in the second half of the year. The second half of the year, and particularly the quarter three is the far larger portion of the year for us. So we actually think with having Aquatica open in San Diego, our Antarctica park open in Orlando – bear in mind, both only had about 30 days in the first half of the year, we feel good – kind of – reaffirming our guidance. So to give a little more context, our Q3 number is about 55% to 60% of our EBITDA for the year. With these new attractions in place and the benefits we have from them, we’re here confirming this guidance as we move forward.
Scott Hamann – KeyBanc Capital Markets: Then just on the…?
Jim Atchison – President and CEO: Go ahead Jim.
James M. Heaney – CFO: I was going to add, the deferred revenue balance at $150 million is up 7% versus prior year, and that’s another good predictor of our revenue performance going forward.
Scott Hamann – KeyBanc Capital Markets: Then just a question on dynamic pricing. It seems like there’s been a few targeted pricing opportunities, I guess, primarily at SeaWorld Orlando. Just curious how that pilot is going; is that kind of something that’s a little bit different for the industry and where do you think the opportunity could be as you kind of roll that out more broadly?
Jim Atchison – President and CEO: No, Scott. We’re – as we’ve shared along the roadshow and at other times along the way, the work we’ve been doing in dynamic pricing, we’re very encouraged by. So this new – we have some new offers that we’re introducing through the fall, they are fairly well sensed in terms of – we have a weekday offer that’s only available online. While we’ve done promotions for years, this opportunity to do a promotion effectively that’s only online and only available Monday through Friday, we see as a great extension and kind of the next logical test and step for us with respect to dynamic pricing. So we feel very good about that. It’s been very well received. We’ve had good results here in the Florida market in particular. So we’re encouraged by it.
Timothy Conder – Wells Fargo Securities: Maybe to follow-on a little bit the question about visibility, gentlemen. You alluded to that you don’t expect the weather to continue to the impact that it had in the second quarter. I guess, first of all, can you quantify any of the impact in any way to the Virginia and the Florida parks in particular? And then secondly, just any comment on July and August to-date weather?
James M. Heaney – CFO: This is Jim Heaney. One way to kind of slice apart the attendance numbers are, if you look at our year-to-date number, we were 605,000 down in attendance versus the prior year. To break that down a little bit for you, a little over a third of that was due to the pricing and yield management efforts that took place in the quarter. So that was somewhat of an expected impact. About a third, we can attribute to the adverse weather we had in Florida and Virginia, and as you mentioned, all the parks except one in June. And then the last piece was a compression of Easter and spring break. That was a little bit less than a third of the variance versus the prior year. But those are basically the three drivers. The purposeful piece of it you’ll see going forward, the Easter and weather effects are somewhat a function of, obviously, the weather; the Easter effect, obviously, won’t repeat in the second half and that’s – one piece of attendance will pick up in the third and fourth quarters.
Jim Atchison – President and CEO: Tim, this is Jim Atchison. I’ll add to that that with regards to the issues and the strategy we’ve been executing around pricing and yield management, the attendance declines that we see there are obviously offset by what you see as a 10% increase in admissions per capita. So, we feel good about the strategy and what it’s delivering for us. What we didn’t anticipate in the Q2 was the significant impact weather would have…
James M. Heaney – CFO: Another way to look at – if you attribute two or three points of the attendance decline of the pricing and net that against the 10% admission per cap increase. We like that trade-off and having a couple fewer bodies in the park is also good for our ratings and the experience as well, and we save operating cost.
Timothy Conder – Wells Fargo Securities: Where gentlemen do you see on that trade-off, I guess, going forward here, whether you want to talk the balance of the year or more so looking into next year. Do you feel that you’ve pushed the envelope enough in the short-term on the admissions per cap, do you believe? Is there more opportunity on the in-park? Or how do you see that balance or dynamic on a go-forward? Or is it more surgical would you say going forward?
Jim Atchison – President and CEO: Well, I’ll borrow your line; surgical, Tim. This is Jim Atchison. One of the things – we feel that we still have a runway with respect to the sophistication we’ve been introducing around our pricing strategy. And a lot of this relates less so to headline; topline and GA pricing, it relates much more to yield management and particularly channel management. For example, we’ve been very encouraged by the efforts we’ve seen around migrating more of our business to our mobile platforms and e-commerce platforms. To give some perspective on that, we launched a mobile commerce site earlier this year and we had it in a much smaller format in prior years and our revenue is up 170% there. Now, those are small numbers but they’ll grow over time. So the percentages are a bit distorted. But having said that, our mobile efforts are enormous. The responses we’ve seen there have been very strong. So, we see more of the pricing being around the surgical approach, as you just described, and along with that we’re very encouraged by our in-park efforts where we’re seeing much higher in-park experiences and equity dining sales related to the shift to more business on our own e-commerce site. We can more artfully offer those up-sales and upgrades on our own site than through third-party. So, a lot of the work that we’re going to continue to benefit from on pricing is really going to be below the line and a bit back of house, if you will.