SeaWorld Entertainment, Inc. (SEAS) Q4 2022 Earnings Call Transcript

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SeaWorld Entertainment, Inc. (NYSE:SEAS) Q4 2022 Earnings Conference Call February 28, 2023 9:00 AM ET

Company Participants

Matthew Stroud - VP, IR

Marc Swanson - CEO

James Forrester - Interim CFO & Treasurer

Conference Call Participants

Steven Wieczynski - Stifel, Nicolaus & Company

Philip Cusick - JPMorgan Chase & Co.

James Hardiman - Citigroup

Eric Wold - B. Riley Securities

Barton Crockett - Rosenblatt Securities

Michael Swartz - SunTrust

Paul Golding - Macquarie Research


Hello, and invited to nan SeaWorld Parks Q4 2022 Earnings Conference Call. [Operator Instructions]. Please note, today's arena is being recorded. I'd now for illustration to move nan convention complete to your big today, Matthew Stroud. Mr. Stroud, please spell ahead.

Matthew Stroud

Thank you, and bully morning, everyone. Welcome to SeaWorld's Fourth Quarter and Fiscal 2022 Earnings Conference Call. Today's telephone is being webcast and recorded. A property merchandise was issued this greeting and is disposable connected our Investor Relations website astatine Replay accusation for this telephone tin beryllium recovered successful nan property merchandise and will beryllium disposable connected our website pursuing nan call.

Joining maine this greeting are Marc Swanson, Chief Executive Officer; and Jim Forrester, Interim Chief Financial Officer and Treasurer. This morning, we will reappraisal our 4th fourth and fiscal 2022 financial results, and past we will unfastened nan telephone to your questions. Also, we person posted a short descent position connected our investor website on pinch our net property merchandise that we will talk during our prepared remarks.

Before we begin, I would for illustration to punctual everyone that our comments coming will incorporate forward-looking statements wrong nan meaning of nan national securities laws. These statements are taxable to a number of risks and uncertainties that could origin existent results to beryllium materially different from those forward-looking statements. Including those identified successful nan Risk Factors conception of our yearly study connected Form 10-K and quarterly reports connected Form 10-Q revenge pinch nan Securities and Exchange Commission.

These consequence factors whitethorn beryllium updated from clip to clip and will beryllium included successful our filings pinch nan SEC that are disposable connected our website. We undertake nary responsibility to update immoderate forward-looking statements. In addition, connected nan call, we whitethorn reference non-GAAP financial measures and different financial metrics, specified arsenic adjusted EBITDA and free rate flow. More accusation regarding our forward-looking statements and reconciliations of non-GAAP measures to nan astir comparable GAAP measures is included successful our net merchandise disposable connected our website and tin besides beryllium recovered successful our filings pinch nan SEC.

Now I would for illustration to move nan telephone complete to our Chief Executive Officer, Marc Swanson. Marc?

Marc Swanson

Thank you, Matthew. Good morning, everyone, and convey you for joining us. We are pleased to study our seventh consecutive 4th of grounds financial results. In nan 4th quarter, we delivered grounds revenue, our 2nd highest nett income and grounds adjusted EBITDA. For fiscal 2022, we delivered grounds revenue, grounds nett income and grounds adjusted EBITDA. Results for nan 4th fourth versus nan anterior twelvemonth would person been moreover amended if it weren't for important adverse upwind impacts successful astir of our markets during nan November and December vacation play and nan antagonistic effect of Hurricane Ian successful October and Hurricane Nicole successful November.

We estimate that these mixed weather-related impacts reduced attendance by astir 249,000 guests visits during nan quarter. We continued to thrust maturation successful full per caps, including during our Halloween and Christmas events during nan quarter, demonstrating nan effectiveness of our gross strategies, our pricing powerfulness and nan spot of user spending successful our parks.

I want to convey our ambassadors for their continued dedication, efforts and contributions, without which, these beardown results would not person been possible.

As I've said before, we person a beardown and resilient business model, and we judge that we person important opportunities to proceed to amended and meaningfully turn our gross and profitability. Our attendance levels for fiscal 2022 were beneath levels achieved successful 2019, chiefly owed to a diminution successful some world and group-related attendance, which we expect will yet retrieve to and surpass pre-COVID levels.

Also, arsenic we person discussed, we are still much than 3 cardinal visitors beneath our humanities precocious attendance of astir 25 cardinal guests achieved successful 2008. This represents a clear opportunity to recapture mislaid attendance we erstwhile achieved.

Furthermore, our pricing power, strategies, investments and opportunities astir gross management, in-park nutrient and beverage, unit and different in-park impermanent spending springiness america assurance successful our expertise to proceed to turn full per caps. These factors, on pinch nan activity we are doing to amended negociate and trim costs, mixed pinch nan important investments we are making crossed our parks and business, springiness america precocious assurance successful our expertise to proceed to present operational and financial improvements that we expect will lead to meaningful increases successful shareholder value.

We are pleased pinch nan commencement to 2023 and looking forward, we are very excited astir our plans pinch an exceptional lineup of caller rides, attractions, events and caller and improved in-park venues and offerings. Given nan investments that we person made and will beryllium making, nan continued occurrence of our strategies and our beardown financial position, we expect to -- we proceed to expect meaningful maturation and caller records successful gross and adjusted EBITDA for 2023.

For 2023, we person an outstanding lineup of caller rides, attractions and events and caller and improved in-park venues and offerings pinch thing caller and meaningful successful each of our parks. Our caller rides and attractions see nan following: Pipeline: The Surf Coaster astatine SeaWorld Orlando, nan first-of-its-kind surf coaster pinch seats successful a surfing position that emergence and autumn to mimic nan sensation of riding a wave. The coaster will accelerate riders to 60 miles per hr done 5 airtime moments and an innovative wave-curl inversion. Arctic Rescue astatine SeaWorld San Diego, nan fastest and longest straddle coaster connected nan West Coast takes riders done 3 launches astatine speeds up to 40 miles per hour. Catapult Falls astatine SeaWorld San Antonio, nan world's first launched flume coaster features nan world's steepest flume drop. North America's only flume pinch a vertical assistance and nan tallest flume-drop successful Texas. DarKoaster astatine Busch Gardens Williamsburg, nan first all-indoor straddle coaster successful North America. Riders acquisition 4 launches astatine speeds up to 36 miles per hr done complete 2,400 feet of track. Serengeti Flyer astatine Busch Gardens Tampa Bay, nan world's tallest and fastest screaming plaything will return riders up 135 feet astatine speeds reaching 68 miles per hour.

Turi's Kid Cove astatine Aquatica Orlando, this all-new h2o play area will characteristic watering palms, tipping buckets, spraying jets, h2o bobbles and more, positive kids tin drawback a conduit and descent into nosy connected nan all-new kid-size activity slide. Shaka Laka Shores astatine Adventure Island, nan caller slash and play area located successful nan bosom of Adventure Island will characteristic an area pinch complete 25 spray elements and a cardinal kid-friendly play building bound to entertain and prosecute moreover nan youngest of guests. Riptide Race astatine Water Country USA, nan first dueling pipeline descent successful Virginia that will nonstop riders done complete 500 feet of slide, each while navigating high-speed tunnels and tight turns alongside their opponents. Bert & Ernie's Splashy Shores astatine Sesame Place Philadelphia, a h2o play area featuring h2o umbrellas, tipping buckets, spraying jets, h2o bobbles and a spraying h2o tower. And finally, The Count's Splash Castle astatine Sesame Place San Diego, an enhanced h2o play area and expanded play structure, which features 3 tipping buckets, 4 h2o slides and complete 100 different water-play elements.

As we person done successful erstwhile quarters, we person posted a short position connected our investor website on pinch our net property merchandise that provides a summary illustration of our net imaginable and immoderate updates connected our costs initiatives.

Slide 4 is titled SeaWorld Illustrative Adjusted EBITDA. This position is not meant to beryllium guidance. It is conscionable meant arsenic a elemental illustration to show what we judge nan net powerfulness of this business would beryllium astatine 2019 attendance levels and if we return to nan 2008 humanities highest attendance levels, while increasing our full per capita revenue, on pinch nan costs savings opportunities we person identified.

Importantly, this study does not bespeak nan effect of costs ostentation aliases unit connected nan business complete time. To beryllium clear, again, this is not guidance, and we are not projecting erstwhile we will again execute our 2019 tenant levels aliases our 2008 highest attendance levels aliases nan full per headdress maturation successful costs savings noted connected nan slide. This is conscionable an illustration of nan net imaginable of this business nether these scenarios.

As you tin spot from this illustration, this business has nan imaginable to do betwixt $964 cardinal and $1.156 cardinal of adjusted EBITDA nether these scenarios, excluding costs ostentation aliases pressure.

Slide 5 shows our latest 2022 attendance of astir 22 cardinal visitors and nan imaginable for wherever our tenants tin spell by returning to humanities levels. As we person discussed, and you tin see, we are still beneath 2019 levels, and we are good beneath 2008 highest attendance. We besides show what our tenants would beryllium if we achieved highest attendance astatine each of our parks successful nan aforesaid year. As we person said, we person important imaginable to execute meaningfully higher attendance by getting backmost to humanities levels.

Slide 6 shows nan aggregate opportunities we spot to turn full gross per capita. The opportunities see increasing group and world demand, continued gross guidance optimization, investments successful caller and improved venues, continued rollout and betterment of our mobile app, among different things. We besides spot early opportunities to turn full gross per headdress from our maturation initiatives. Slide 7 of nan position presents an update successful much item astir our costs ratio and simplification initiatives that we shared past quarter.

As we highlighted, we person enhanced our efforts astir these initiatives and we person teams dedicated to recognize these and further opportunities. As we highlighted past quarter, this is conscionable a prime list, does not needfully bespeak everything we are moving connected aliases we'll activity connected complete nan coming months and quarters. Again, this is not guidance, and we are not projecting erstwhile we will execute our 2019 attendance levels aliases 2008 attendance levels aliases nan full per headdress maturation successful costs savings noted connected nan descent aliases erstwhile we will execute this level of adjusted EBITDA. This study does not see aliases estimate nan effect of immoderate costs inflation, and it assumes nan attendance and parkland operation of 2022. It is simply meant to show nan imaginable adjusted EBITDA we could execute pinch nan maturation successful attendance, nan gross per capita improvements and nan costs reductions that we person identified.

Before moving to Jim and his update connected financial performance, fto maine remark connected a fewer much items successful greater detail. First, fto maine speak to our equilibrium sheet, which continues to beryllium strong. Our fiscal 2022 year-end nett full leverage ratio is 2.78x and we had astir $451 cardinal of full disposable liquidity, including complete 75 -- including complete $79 cardinal of rate connected nan equilibrium sheet.

This beardown equilibrium expanse gives america elasticity to proceed to put successful and turn our business and to opportunistically allocate superior pinch nan extremity to maximize semipermanent worth for shareholders.

In nan 4th quarter, we repurchased astir 1.4 cardinal shares of communal banal astatine a full costs of astir $70.6 million. In 2022, we repurchased 12.4 cardinal shares of communal banal aliases astir 16% of full shares outstanding astatine a full costs of astir $693.6 million.

We besides proceed to use from nan rollout of our mobile app, which is utilized by an expanding number of guests successful our parks and has been downloaded much than 4.5 cardinal times. As of nan extremity of January, mobile ordering has been expanded to further restaurants and is now operating astatine complete 50% of our target restaurants. We are very excited astir nan imaginable of nan app and its expertise to amended nan in-park impermanent experience, thrust increases successful gross and decreases successful cost.

Let maine walk a fewer minutes talking astir our inorganic maturation plans. On nan world front, SeaWorld Abu Dhabi is owed to unfastened later this year. In beforehand of nan charismatic opening of nan SeaWorld Park, nan UAE's first dedicated marine research, rescue, rehabilitation and return halfway was precocious opened which I will talk much later successful my remarks.

SeaWorld Abu Dhabi is simply a custom-built, 183,000 quadrate meters installation that will characteristic complete 68,000 marine animals, nan world's largest aquarium and 6 different realms that showcase nan complexity, interconnectivity and beauty of life nether nan sea.

We are very proud of this task and on pinch our partners successful Abu Dhabi are excited astir introducing a caller region of nan world to nan wonders of SeaWorld and introducing a next-generation SeaWorld Park, nan first caller SeaWorld Park successful 34 years. We proceed to advancement discussions related to different world opportunities and expect to person much to stock successful coming quarters.

On nan Sesame Street Park front, we proceed our activity towards opening our 3rd Sesame Place parkland and we will update you connected much specifics erstwhile possible.

On nan edifice front, we proceed to make advancement pinch our plans to build hotels and complement our parkland offerings. Based connected existent plans and expectations, we expect to person our first edifice opened successful 2025, followed by our 2nd edifice successful 2026. We are moving connected creation and readying for these 2 hotels and on-site action for further hotels crossed our parkland portfolio. We look guardant to sharing much specifics successful early quarters.

Before I move nan telephone complete to Jim, I want to return fewer minutes to talk our precocious announced organizational changes and related caller positions. We person promoted Chelle Adams, our erstwhile CFO, to nan domiciled of Chief Transformation Officer wherever she will beryllium responsible for streamlining and re-engineering organizational processes, implementing high-value initiatives and overseeing our business improvement and maturation activities.

We besides promoted Kyle Miller, our erstwhile Orlando Parks President; and Byron Surrett, our erstwhile Texas Parks President to nan roles of Co-Chief Parks Operations Officers wherever each will beryllium responsible for nan operations of circumstantial regions of nan country. Kyle will oversee nan Florida parks and Byron will oversee nan non-Florida parks.

In these caller roles, they will beryllium responsible for operational activities crossed our parks, including driving beardown and accordant operating standards crossed our parks, improving profitability, planning, parkland value and impermanent experience. Together, Kyle and Byron person astir 75 years of park-operating acquisition pinch nan company. Our squad and our stakeholders will really use from having these 2 outstanding individuals successful these roles. I cannot beryllium much excited.

Overall, we are proud to study grounds nett income for fiscal 2022 of $291.2 cardinal and grounds adjusted EBITDA of $728.2 million, which was achieved pinch attendance of 21.9 cardinal guests which, arsenic I mentioned, is still beneath our 2019 attendance and good beneath our humanities precocious of complete 25 cardinal guests we achieved successful 2008. I want to convey our ambassadors for their difficult activity this past 4th and fiscal year. Without their continued dedication and efforts, these beardown results would not person been possible.

With that, I'm happy to present you each to Jim Forrester, our interim CFO, to talk our financial results successful much detail. Jim has an awesome background, including complete 2 decades of acquisition successful nan taxable parkland space, and astir recently, starring finance operations for our Orlando parks, which, arsenic you know, are among our strongest performing and largest parks. We are very fortunate to person Jim connected our team. Jim?

James Forrester

Thank you, Marc, and bully morning, everyone. It's someway fitting that personification pinch a naval inheritance and who was a kid marveled astatine nan wonders of nan animal world connected Sunday nighttime tv will lead nan finance statement for this astonishing company.

Thank you, Marc, our Board and my squad for giving maine this opportunity.

As Marc mentioned, our results from operations for fiscal 2022 and 2021 proceed to beryllium impacted by nan world COVID-19 pandemic, arsenic shown successful portion by nan diminution successful some world and group-related attendance arsenic compared to pre-COVID levels. Fiscal 2021 was besides impacted by capacity limitations, modified successful our constricted operations and/or a impermanent parkland closure, decreased request owed to nationalist concerns and authorities restrictions associated pinch nan pandemic and much terrible restrictions connected world travel.

During nan 4th quarter, we generated grounds full gross of $390.5 million, an summation of $19.7 cardinal aliases 5.3% erstwhile compared to nan 4th fourth of 2021. The summation successful gross is owed to an summation successful full gross per capita of 5.7%, partially offset by a alteration successful attendance of 0.3%.

The attendance was unfavorably impacted by adverse upwind during nan 4th and benefited from an summation successful world guests erstwhile compared to nan 4th fourth of 2021, which was impacted by much terrible COVID-19-related restrictions connected world travel. As Marc mentioned, we had respective weather-related impacts during adverse upwind during nan November and December vacation periods and Hurricane Ian successful early October and Hurricane Nicole successful November.

We estimate that combined, these adverse upwind impacts contributed to a diminution of astir 249,000 guests during nan quarter. We besides proceed to acquisition lingering effects of nan pandemic pinch world visitations still not backmost to pre-COVID levels. In nan 4th quarter, world visitation was still down 37% compared to nan aforesaid 4th successful 2019. For fiscal 2022, world visitation was down 49% compared to 2019, while group visitation was down 16% compared to 2019.

Our pricing and merchandise strategies proceed to thrust higher realized pricing, resulting successful grounds full gross per capita successful nan 4th of $79.10 compared to $74.87 successful nan 4th fourth of 2021. This summation was driven by improvements successful some admissions per capita and in-park per capita spending. Admission per capita accrued by 4.5% to a grounds $45.63 and in-park per capita spending accrued by 7.2% to a grounds $33.47 successful nan 4th fourth of 2022 compared to nan 4th fourth of 2021. The summation successful admittance for capita was chiefly owed to nan realization of higher prices successful our admissions products resulting from our strategical pricing efforts erstwhile compared to nan anterior twelvemonth quarter.

In portion for superior spending improved owed to a operation of factors, including pricing initiatives, improved merchandise value and operation and nan effect of new, enhanced aliases expanded in-park offerings partially offset by nan antagonistic effect of little than optimal staffing. Operating expenses accrued $14.1 cardinal aliases 8.7% erstwhile compared to nan 4th fourth of 2021. The summation successful operating expenses is chiefly owed to accrued labor-related and different operating costs driven by accrued operating days and expanded and/or enhanced events, on pinch unusually precocious inflationary pressures partially offset by structural costs savings initiatives erstwhile compared to nan 4th fourth of 2021.

Operating expenses arsenic a percent of gross were 45.2% for nan 4th fourth of 2022 compared to 43.7% for nan 4th fourth of 2021. While staffing has improved from earlier successful nan year, we are still not yet astatine optimal levels. We proceed to suffer from little than optimal staffing successful various roles crossed our parks during nan quarter, which, among different things, impacted our expertise to afloat seizure in-park revenue.

Labor costs successful nan 4th fourth were chiefly driven by accrued labour hours arsenic our mean hourly costs complaint was only moderately higher than anterior year. Selling, wide and administrative expenses decreased $11.8 cardinal aliases 20.9% compared to nan 4th fourth of 2021. The alteration is chiefly owed to nan alteration successful noncash equity compensation disbursal and nan effect of costs savings and ratio initiatives.

Selling, wide and administrative expenses arsenic a percent of gross was 11.5% for nan 4th fourth of 2022 compared to 15.3% for nan 4th fourth of 2021. We judge that astir $10 cardinal to $15 cardinal of costs successful nan 4th fourth compared to 2019 are temporary, different inflation-driven costs that we expect to mean successful nan coming quarters.

We generated nett income of $49 cardinal for nan 4th quarter, nan 2nd highest ever for nan 4th fourth compared to a nett income of $71.5 cardinal successful nan 4th fourth of 2021, which included a favorable taxation use and we generated grounds adjusted EBITDA of $153.7 million, an summation of $0.9 cardinal erstwhile compared to nan 4th fourth of 2021.

The betterment successful adjusted EBITDA for nan 4th fourth of 2022 was chiefly driven by an summation successful full gross per capita, partially offset by an summation successful expenses erstwhile compared to nan 4th fourth of 2021. Looking astatine our results for nan afloat year, which were still impacted by nan COVID-19 pandemic, full attendance was astir 21.9 cardinal guests, an summation of 8.6% versus 2021. Total gross was a grounds $1.73 billion, an summation of $227.5 cardinal aliases 15.1% erstwhile compared to 2021.

Fiscal 2022 full gross per capita was a grounds $78.91 compared to $74.43 successful 2021, a 6.0% summation driven by an summation successful admissions per capita and in-park per capita spending. Admission per capita accrued 4.3% to a grounds $44.0 compared to $42.17 successful 2021. Admission per capita accrued chiefly owed to nan realization of higher prices successful our emissions products resulting from our strategical pricing efforts, which was partially offset by nan nett effect of nan emissions merchandise operation erstwhile compared to 2021.

In-park per capita spending improved by 8.2% to a grounds $34.91 from $32.26 successful 2021. The summation was chiefly owed to a operation of factors including pricing initiatives, improved merchandise value and operation and nan effect of new, enhanced aliases expanded in-park offerings erstwhile compared to 2021. In-park per capita spending was besides unfavorably impacted by little than optimal staffing during definite times of nan year, which impacted our expertise to afloat run and/or unfastened immoderate of our nutrient and beverage and unit outlets.

Operating expenses accrued by $113.3 cardinal aliases 18.2% erstwhile compared to 2021, chiefly from an summation successful labor-related costs and different operating costs owed to a return to much normalized operations and an summation successful attendance.

Operating expenses were besides impacted by inflationary pressures, partially offset by nan effect of structural costs savings initiatives erstwhile compared to 2021. Selling, wide and administrative expenses accrued by $15.2 cardinal aliases 8.2% erstwhile compared to 2021, chiefly owed to accrued market-related costs and accrued third-party consulting costs partially offset by a alteration successful noncash equity compensation disbursal and nan effect of costs savings and ratio initiatives.

Net income for nan twelvemonth was a grounds $291.2 million, an summation of $34.7 million. Adjusted EBITDA was besides a grounds $728.2 million, an summation of $66.2 cardinal erstwhile compared to 2021, which held nan erstwhile grounds successful some nett income and adjusted EBITDA.

Now turning to our equilibrium sheet. Our existent deferred gross equilibrium astatine nan extremity of nan 4th fourth was $169.5 million, an summation of astir 9.5% erstwhile compared to December of 2021, which included nan effect of immoderate COVID-19-related merchandise extensions and onetime items.

At nan extremity of January 2023, our past shape was up compared to January 2022 and was astatine a grounds level for January. We're continuing to recognize meaningful value increases connected our past products pinch existent costs prices up much than 10% compared to anterior year.

As Marc mentioned, we person a very beardown equilibrium expanse position. As of December 31, 2022, our full disposable liquidity was $450.8 million, including $79.2 cardinal of rate and rate equivalents connected our equilibrium expanse and $371.6 cardinal disposable connected our revolving in installments facility.

Cash travel from operations was $95.7 cardinal for nan 4th fourth of 2022. Free rate travel was $45.7 cardinal for nan 4th fourth of 2022. We repurchased astir 1.4 cardinal shares of communal banal astatine a full costs of astir $70.6 cardinal successful nan 4th fourth of 2022. In fiscal 2022, we repurchased astir 12.4 cardinal shares of communal banal aliases astir 16% of our full outstanding shares astatine a full costs of astir $693.6 million.

We spent $50 cardinal connected CapEx successful nan 4th fourth of 2022, of which astir $37.2 cardinal was connected halfway CapEx and astir $12.8 cardinal was connected description and/or return connected finance projects. In ray of our important free rate travel procreation complete nan past respective months arsenic we went done our readying process for 2023, we spent sizeable clip reviewing opportunities to deploy successful [indiscernible] high-confidence ROI superior crossed our parks that would thrust accrued revenue, decreased costs and our meaningfully improved impermanent experience.

We identified projects holding up to $100 cardinal related to enhancing, improving and are creating caller nutrient and beverage outlets and unit venues and upgrading parkland infrastructure and technology. In 2019 and 2022, we averaged astir $150 cardinal per twelvemonth connected halfway CapEx and that includes investing meaningfully successful caller rides, attractions, events and venues to person thing caller and compelling successful our parks each year. On apical of that $150 cardinal per twelvemonth successful halfway CapEx, we person spent astir $40 cardinal per twelvemonth connected maturation successful ROI projects.

For 2023, we expect to proceed to walk astir $150 cardinal to $180 cardinal connected halfway CapEx and we scheme to walk betwixt $100 cardinal and $120 cardinal of CapEx connected maturation successful ROI projects that are a nonstop consequence of our 2023 readying process.

We are already making advancement connected galore of these opportunities and expect to person much specifics to stock complete nan people of nan coming year. In total, we now expect to walk astir $250 cardinal to $300 cardinal successful CapEx for 2023. We're excited astir our opportunities and nan expertise to make these high-confidence ROI investments and sincerely look guardant to nan benefits and returns from these investments flowing done to our financial results. Now fto maine move nan telephone backmost complete to Marc who will stock immoderate last thoughts. Marc?

Marc Swanson

Thanks, Jim. Well, earlier we unfastened nan telephone to your questions, I person immoderate closing comments. In nan 4th fourth of 2022, we came to nan assistance of much than 100 animals successful need. Over our history, we person helped complete 40,000 animals, including bottlenose dolphins, manatees, oversea lions, seals, oversea turtles, sharks, birds and more.

Also successful 2022, we collaborated pinch a big of different organizations to grow our attraction and protection for aquatic life to see integrated support of nan Florida Coral Rescue Center successful nan ongoing rescue activity connected nan Florida coral reef. Also, a fewer weeks ago, SeaWorld's first rescue halfway extracurricular of nan U.S., successful Abu Dhabi opened. Yas Research -- Yas SeaWorld Research and Rescue located astatine Yas Island successful Abu Dhabi is nan first dedicated marine investigation and rescue halfway successful nan Middle East, North Africa region and will beryllium a cardinal contributor to marine-life conservation successful some nan UAE and nan wider Middle East, North Africa region.

I'm really proud of nan team's difficult activity and their continued dedication to these important rescue efforts. I want to convey them and each our ambassadors for each they do to run our parks successful this existent environment. We are surely excited astir 2023. We are connected way to unfastened each of our 2023 caller rides and attractions successful nan coming weeks and months. We proceed to judge location are important further opportunities to amended our execution, return advantage of clear maturation opportunities and proceed to thrust meaningful semipermanent maturation successful some gross and adjusted EBITDA. We proceed to person precocious assurance successful our semipermanent strategy and successful our expertise to present importantly improved operating and financial results that we expect will lead to meaningfully accrued worth for stakeholders. Now let's return your questions.

Question-and-Answer Session


[Operator Instructions]. And this morning's first mobility comes from Steve Wieczynski pinch Stifel.

Steven Wieczynski

So first, conscionable benignant of a housekeeping question. I want to inquire astir nan effect of nan upwind successful nan quarter, which you noted it was astir 250,000 visit. And I guess, conscionable based connected your existent per headdress levels, is nan correct measurement to deliberation astir this was nan -- that effect was astir apt location between, let's telephone it, $7 cardinal and $8 cardinal deed to EBITDA. And past connected apical of that, conscionable wondering really you guys are reasoning astir attendance for this year. And look, I understand you don't springiness guidance. I'm not going down that path. But I'm conscionable much trying to fig retired really you guys are reasoning astir nan return of that world and group guests and possibly really those forward-booking trends person been looking?

Marc Swanson

Steve, it's Marc. I tin return that question. So look, connected nan upwind impact, 249,000 people, arsenic we noted. I can't springiness you an nonstop EBITDA estimation. I deliberation you tin do nan mathematics connected nan gross per headdress and you're astir apt not terribly acold disconnected of what you said there. Maybe it's astatine higher. But that's certainly, I think, a spot to look at.

As acold arsenic really we deliberation astir attendance successful 2023, look, we're excited astir nan rides and attractions and events, things that we've sewage lined up successful our parks. As acold arsenic nan return of group and international, I mean, arsenic you heard maine say, we expect those will return complete time. I don't cognize erstwhile that precisely will be. There's still immoderate world recreation hurdles, if you will, from definite countries. Group attendance, arsenic you -- I deliberation arsenic we said, group attendance successful Q4 was correct location pinch 2019. It was really conscionable hardly positive. So that one, I deliberation we consciousness a small spot much optimistic astir and past international, we'll conscionable person to spot really recreation opens backmost up and things for illustration that.

Steven Wieczynski

Okay. Got you. And past 2nd mobility would beryllium astir nan schematic EBITDA floor plan successful your deck. And look, again, I cognize you said aggregate times, this isn't guidance. And I afloat admit that. But if we look astatine nan imaginable margins of benignant of what you person laid retired here, I mean, you've laid retired a business that could beryllium doing precocious 40s, debased 50s-type margin. I'm conscionable trying to understand possibly really we should beryllium reasoning astir nan flow-through of this business moving forward? Is your -- I mean, look, it seems for illustration your costs building conscionable is somewhat beautiful set, and location is opportunities to thrust it lower. But I presume from here, that flow-through is really going to beryllium pushed much by nan pricing and in-park opportunities. Is that nan -- benignant of nan correct measurement to deliberation astir it?

Marc Swanson

Yes. What I tin show you is, I mean, there's a mates of ways we deliberation astir nan business is if we tin turn attendance each twelvemonth a small bit, turn per caps each twelvemonth a small spot and past negociate our cost, that should person led to adjusted EBITDA maturation and separator description .

So we do person efforts astir costs, arsenic we've noted connected nan illustration and successful my comments, and successful Jim's comments. And certainly, we're not going to extremity those efforts. And past we -- arsenic you noted, we person efforts astir increasing our gross and nan different strategies we do there. So I deliberation it will surely beryllium immoderate operation of those 2 that leads america to what we expect will beryllium maturation successful nan future.


And nan adjacent mobility comes from James Hardiman pinch Citi.

James Hardiman

So I mean nan cost-controls proceed to beryllium really impressive. I guess, astir importantly connected nan SG&A line. Can you conscionable locomotion america done immoderate of nan large buckets that you've been capable to bring down, right? Revenue is up a bunch since 2019, that SG&A statement is down almost 50%. Maybe conscionable locomotion america done what's successful that, what did you trim and what's near to cut?

Marc Swanson

James, truthful I tin return that question. Look, there's -- there's immoderate -- I think, arsenic Jim said successful his remarks, there's immoderate items for illustration banal comp successful location arsenic well, which surely had an effect for nan quarter. But yes, beyond that, we person a number of initiatives astir looking astatine our walk pinch vendors and trading and things for illustration that. So really, conscionable crossed nan company, each our efforts astir costs are not only applied to nan parks, they use to nan firm halfway arsenic well. And we'll proceed to activity connected that, obviously, and that's something. But location is simply a small spot much item successful Jim's remarks arsenic acold arsenic immoderate of nan noncash expenses were down a small bit, too.

James Hardiman

Okay. And past benignant of on those lines, I mean, obviously, results person been highly impressive, peculiarly connected nan costs front. Normally, you'd opportunity if it ain't broke, don't hole it. But you guys did a beautiful large guidance shakeup here. Maybe speak to nan rationale down thing that's aggressive. And I conjecture location person been a mates of notes successful your filings, nan Q and nan erstwhile K astir weaknesses successful soul controls, does this reside that successful immoderate way?

Marc Swanson

I deliberation what I would show you is we're -- arsenic I said successful my prepared remarks, we're excited for nan different roles that we person -- that we've created. Chelle sitting present astatine nan array pinch me. I tin show you, she's surely excited astir nan translator efforts that she's leading. I think, obviously, it's thing pinch her inheritance that I deliberation she will beryllium very bully astatine and surely get benignant of an opportunity to really dive into that much truthful than previously.

Obviously, and past pinch nan co-Chief Parks Operations officers, we've put 2 very knowledgeable leaders successful those roles and they tin get retired to our parks a batch much often and make judge that we're driving nan standards and nan efficiencies that we want to spot crossed nan company. And I couldn't beryllium much excited astir that, obviously. And past arsenic you heard pinch Jim's inheritance arsenic our interim CFO, we person personification who brings a batch of parkland knowledge to nan role, which I already spot nan benefits of having personification who's tally nan finance operations astatine among our biggest parks present successful Orlando and what he brings to nan array there. So we're excited astir benignant of mobilizing nan squad and really we're going to move forward.


And nan adjacent mobility comes from Philip Cusick pinch JPMorgan.

Philip Cusick

If you tin talk astir CapEx. I deliberation you've gone from astir $200 cardinal to $250 cardinal to $300 million. Can you talk astir nan timing of thrust launches done nan year? How do you expect benignant of immoderate trading walk and motorboat costs to beryllium shaped and thing arsenic you spell beyond '23 arsenic well?

Marc Swanson

Phil, I tin return that question. Look, there's nan CapEx walk and Jim tin possibly springiness you immoderate circumstantial examples present erstwhile I'm done sharing, but we talked a batch successful his comments astir immoderate of nan further efforts we person astir immoderate spending successful ROI areas for illustration whether it's caller venues, aesthetics, exertion enhancements, ratio efforts, immoderate it whitethorn be. And really, that's -- nan logic we tin do that, arsenic you tin imagine, is nan beardown rate travel that we've been generating. So we're putting that -- immoderate of that rate travel to activity successful nan business, and we're excited astir those opportunities.

I deliberation arsenic acold arsenic nan -- your mobility connected nan thrust launches, we conscionable opened nan thrust down successful Tampa. Some of nan different rides will beryllium coming online present successful nan coming weeks and months. And obviously, I deliberation immoderate of nan walk you would spot associated pinch those would necktie to that. I would say, successful general, we astir apt opened our rides a small earlier past year. So location whitethorn beryllium a small spot of timing differences of immoderate of those costs conscionable from erstwhile we opened those this year. But Jim, why don't you springiness possibly an illustration aliases 2 of immoderate of nan caller things we've done pinch nan CapEx?

James Forrester

Sure. Phil, bully to meet you. I've been brushing up connected this call, I noticed what you had asked successful nan 3rd 4th of nan year. And truthful astatine that time, you would said thing astir 130 to 140 unchangeable halfway and astir $40 cardinal aliases truthful successful ROI. And we person accrued since that guidance and since we put that retired and a batch of that summation has been looking astatine those attractions, not only that we're putting successful spot for 2023, but nan precocious acquisition and creation for 2024 attractions and beyond. So that accrued a small spot since we past spoke. We are doing immoderate further infrastructure needs astir nan properties, really reasonably awesome investment, they see guidelines infrastructure, if you will, for nan beingness works positive enhancements for nan impermanent acquisition and things for illustration aesthetics, specifically this year, you're going to spot a batch of attraction connected shadiness and restrooms.

That core, not to beryllium outspoken by nan ROI use of going up to that $120 cardinal scope is simply a batch of nutrient and beverage installation focus. So we're going to beryllium taking a look successful double-digit opportunities crossed nan properties to supply caller accommodation aliases grow nan existent facilities, merge mobile-ordering to bequest accommodation and to summation nan opportunity to make our business much businesslike successful those exertion advancements.


And nan adjacent mobility comes from Eric Wold pinch B. Riley Securities.

Eric Wold

So 2 questions. I conjecture one, if you look backmost astatine nan schematic benignant of financial targets you laid retired backmost connected nan 2020 telephone -- 2020 versus today, nan estimated costs went up by astir $160 cardinal to $159 million. Can you springiness america a consciousness of really overmuch of that is adaptable costs associated pinch benignant of higher per headdress spending and really overmuch is benignant of a structural summation successful operating costs benignant of nett of nan costs savings you've implemented?

Marc Swanson

Yes. Eric, I tin again, effort to thief you retired here. I mean, again, support successful mind that nan illustration, it's conscionable that it's an illustration. And if you look astatine nan footnotes, I judge we noted correct nan flow-through connected this, right? So you tin astir apt get immoderate consciousness of what nan flow-through is connected nan per headdress and attendance growth. I mean, possibly said much simply is we should beryllium capable to adhd attendance to our parks and particularly if we're conscionable adding it to a time wherever we're already open, and we're bringing successful different 1,000 group aliases something, that should not person a meaningful summation successful costs for us.

Where you would get much structural costs summation would beryllium if we person to unfastened days, we weren't unfastened earlier aliases built caller areas of nan parkland that we didn't person before, that type of thing. But successful general, if we're benignant of adding to existing days, that flow-through is going to beryllium beautiful high.

Eric Wold

Got it. And past benignant of going backmost to an attendance mobility that was asked aliases benignant of looking astatine this year. I guess, really do you deliberation astir nan grounds play walk is what you've done to push that? How do you deliberation astir play walk versus regular attraction successful '23? Just pinch an expectation, and obviously, play walk usage would ramp up and you've sewage evidently immoderate increases successful pricing pinch play walk arsenic I presume akin ones pinch daily. Can you support nan admissions per headdress moving higher successful '23 and pinch that push and pull?

Marc Swanson

Yes. What I would show you is we evidently judge our walk products connection a awesome value, and we've been capable to get nan higher pricing that you heard Jim talk astir successful his comments. And erstwhile we're capable to put successful nan business for illustration we've been doing pinch caller rides and attractions and events and refreshed venues, those type of things, that conscionable makes that, I think, that worth moreover much evident for walk holders.

So I'm assured we tin proceed to thrust higher admissions per caps done our pricing. And I deliberation we've demonstrated that complete nan past respective quarters. And look, location tin beryllium a trade-off, arsenic you noted, betwixt walk and single-day ticket. I mean, really, we're targeting nan full gross equation overall. But moreover wrong that equation, I deliberation we're optimistic we tin proceed to turn pricing and yet turn per caps.


And nan adjacent mobility comes from Michael Swartz pinch SunTrust.

Michael Swartz

I conscionable wanted to commencement disconnected and possibly a follow-up connected CapEx. Your CapEx plans, I deliberation you said $250 cardinal to $300 cardinal for 2023, which is nan -- that's nan highest magnitude since astatine slightest you've been public. But possibly talk astir nan ROI portion of that, which is, I think, what's being stepped up meaningfully. And I cognize you're generating a batch much rate now. But is this a structurally higher level of ROI spending going forward? Or is this a timing element? And past really do we deliberation astir nan ROI floor plan of immoderate of nan things you're investing in, successful '23 and beyond possibly to anterior years?

Marc Swanson

Yes. I tin start, and past if Jim wants to opportunity anything, he can. Look, I deliberation we guided you to nan halfway number is going to beryllium successful that $150 cardinal to $180 cardinal range. And past again, we're taking advantage of nan rate travel procreation that we are generating and utilizing that to deploy to different ROI projects successful our parks. And arsenic you tin imagine, I mean, that -- we're not going to target ROIs successful nan azygous digits aliases things for illustration that. These are going to beryllium returns that we would consciousness bully astir spending nan rate on.

So look, I don't cognize that it's permanent. I mean successful a sense, it would beryllium imperishable if we proceed to find much ROI opportunities, we're going to proceed to spell aft them. But astatine immoderate point, you astir apt do scope a constituent wherever you've done each you tin do aliases those things commencement to slow down a small bit. But I deliberation arsenic agelong arsenic there's continued opportunities to thrust ROI, whether it's refreshed venues, exertion enhancements, ratio efforts, artistic reasons, we will prosecute those.

James Forrester

Yes. The only point I would add, Marc, is we started these backmost successful 2020 and 2021, we do a mates of facilities, each nan improvements that resulted from those successful nutrient and beverage. And usage those [indiscernible] to recognize that we had a batch of opportunity, particularly successful our nutrient and beverage operation. You'll spot besides nan first 100% impermanent exit travel astatine nan Accessory parkland being installed this year. So we study from that opportunity successful nan first of our parks and others for illustration it, immoderate ratio projects to trim utilities and proceed to, again, fig retired wherever we tin beryllium much efficient, trim our labour costs from immoderate of these implementations and proceed to spot if this is nan correct magnitude going guardant to execute those gross and cost-of-savings targets.

Michael Swartz

Okay. Great. And I deliberation you laid retired astir $50 cardinal successful identified costs savings for that schematic example. And I deliberation successful nan past, you were talking astir $30 cardinal to $50 million, if I retrieve correctly. Maybe what's driving that delta? Is that incremental projects? Is that definite things conscionable firming up comparative to nan anterior scope that you gave?

Marc Swanson

Yes. I tin return that question. I deliberation it's -- arsenic we do much activity and much clip connected this and person much group benignant of dedicated to these efforts, it's benignant of for illustration you said, we're capable to, I think, patient up immoderate of these numbers, person a amended consciousness of what's doable. So you're seeing immoderate of that successful those numbers, obviously. So we said $30 cardinal to $50 million. We showed you nan $50 cardinal and obviously, we person plans. Our extremity is to ever beryllium identifying further costs savings and we person immoderate teams now that tin thief do that.


And nan adjacent mobility comes from Barton Crockett pinch Rosenblatt.

Barton Crockett

Okay. I wanted to inquire astir nan CapEx outlook. As I understand it, you're looking astatine it meaningfully higher CapEx walk successful 2023 and your CapEx walk successful 2022 is already elevated. And a batch of that, I thought was going into nan secondary parkland opening retired successful San Diego. So I'm conscionable wondering since it's already opened, what -- tin you beryllium much -- small spot much circumstantial astir what's driving nan summation successful 2023? And is that benignant of a peak? Or does it support going up into 2024 and beyond arsenic you commencement building much hotels? And I thought nan world was capital-light, but possibly there's immoderate walk there.

Marc Swanson

Yes. Barton, it's Marc. I tin effort to thief you connected that question. So again, I'd reference you backmost to Jim's comments that we said nan halfway would beryllium $150 cardinal to $180 million. And again, that's going to beryllium your caller rides, your attractions and things for illustration that successful nan park. And past we said for 2023, nan ROI would beryllium $100 cardinal to $120 cardinal to get america to nan $250 cardinal to $300 million. Again, that 2nd bucket is -- I would not deliberation of that arsenic for illustration imperishable successful nature. It's going to beryllium limited connected what type of ROI opportunities we have.

As you noted, if there's different things that we propulsion successful complete time, whether it's nan timing of hotels, caller parks, things for illustration that, they would autumn into that bucket. But again, it's going to beryllium limited connected things that we place and execute connected aliases caller opportunities for description , things for illustration that. And we'll effort to proceed to supply immoderate updates astatine nan due clip going forward.

Barton Crockett

Okay. I mean that -- conscionable to thin connected that a small bit. I mean that would be, I think, nan highest CapEx full betwixt nan fundamentally attraction and nan description , possibly ever arsenic a nationalist institution aliases surely successful galore years. So a large benignant of alteration successful your stance connected opportunities location to invest. And are these investments that we would expect to get immoderate consciousness of return adjacent year? Or is this really walk for '23 and spot nan return successful later periods?

Marc Swanson

Well, a mates of comments. So I mean, one, I mean we're besides generating -- I mean we're astatine grounds adjusted EBITDA. So nan rate travel we're generating is allowing america to evidently reinvest successful nan business. And I deliberation Jim made a really bully remark astir immoderate of nan projects we did successful earlier years, refreshes that only return months to do, not years to do, and they person an effect successful that fixed twelvemonth erstwhile you refresh a edifice aliases venue aliases a barroom aliases thing for illustration that, we tin spot that effect much quickly than thing that takes aggregate years.

So I do deliberation there's surely benefits to 2023 from nan CapEx we're spending now. Those things each travel online astatine different times. So nan afloat tally complaint is not needfully going to hap this year. But arsenic those things open, we would expect to get nan benefit. I deliberation we are conscionable seeing opportunities. We person much group who are benignant of uncovering those opportunities, if you will. And we're besides intelligibly generating nan rate to beryllium capable to prosecute those opportunities. So there's a small spot much for you.


And nan adjacent mobility comes from Paul Golding pinch Macquarie Capital.

Paul Golding

First, I wanted to inquire astir nan suboptimal staffing levels here. You besides noted that mobile ordering is astatine 50% of nutrient venues, I believe. I conscionable wanted to inquire wherever we whitethorn commencement to spot an offset betwixt those 2? In different words, what we could expect successful position of staffing up from labour hours position to get to optimal levels to deed those per headdress opportunities versus filling that successful pinch exertion and nan expenses associated.

Marc Swanson

Yes. So I tin return that. Look, we talk astir nan mobile app a small spot location successful my remarks, and we're astatine complete 50% of nan restaurants that we've targeted to person mobile ordering and we'll proceed to hopefully turn that complete time. And we cognize clearly, for illustration you would spot successful different companies, location are immoderate benefits to doing that arsenic acold arsenic convenience and mostly little costs and things for illustration that.

As acold arsenic nan optimal staffing, I mean, we've called that retired because we cognize astatine times, there's areas of our parks that we want to person amended staffing at. And we -- and opportunities for much gross procreation from being amended staff, chiefly successful our nutrient and beverage areas would astir apt beryllium nan area we'd spot that nan most.

So there's, I think, a desire to not only summation nan mobile app, but besides make judge for those that aren't utilizing nan mobile app, we still person opportunities for them to walk money. I don't cognize erstwhile that nonstop intersection will occur. But 1 of nan things we're doing pinch our labour guidance is really a beautiful meaningful task astir benignant of labour optimization, scheduling deployment, things for illustration that. And I deliberation those are nan type of things we would return into consideration.


Thank you and this concludes nan question-and-answer session. And now I would for illustration to move nan level to Marc Swanson for immoderate closing comments.

Marc Swanson

Well, convey you, Keith. On behalf of Jim and nan remainder of nan guidance squad astatine SeaWorld Entertainment, I want to convey you for joining america this morning. As you heard today, we are assured successful our semipermanent strategy which we judge will thrust improved operating and financial results and semipermanent worth for stakeholders. Thank you, and we look guardant to speaking pinch you adjacent quarter.


Thank you. The convention has now concluded. Thank you for attending today's presentation. You whitethorn now disconnect your lines.

Editor: Naga

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