SeaWorld attendance, revenues spike in strong first quarter

SeaWorld attendance and revenues jumped by double digits during the first quarter, a sharp reversal of the prolonged slide that has dogged the company in recent years.

More than 3.2 million people visited SeaWorld parks during the first three months of the year, an increase of nearly 15 percent over the same period a year ago, SeaWorld Entertainment reported Tuesday.

Quarterly revenues rose by an even greater percentage— 16.5 percent — to more than $217 million compared with $186.4 million a year ago.

Although the first quarter is a much slower time of year for the Orlando-based company, the latest earnings report represents a marked improvement over last year when SeaWorld saw its first quarterly visitation and revenues both drop by 15 percent.

The news pushed SeaWorld’s stock price up by more than 7 percent to close Tuesday at $16.99 a share.

The improved quarterly results come a little more than two months since SeaWorld announced the sudden departure of former CEO Joel Manby after he was unable to deliver a rebound in slumping attendance and revenues that have persisted years after the release of the anti-animal captivity film “Blackfish.”

SeaWorld does not break out attendance for individual parks, but lease payments the San Diego park makes to the city for its Mission Bay location reflect a marked improvement in revenues. Those payments, which are tied to SeaWorld admissions and food and beverage sales, rose by 30 percent during the first quarter compared to a year earlier.

That is a considerable improvement over SeaWorld San Diego’s performance last year when when more than a half million fewer people visited the park, an attendance drop of 14 percent.

Interim CEO John Reilly said the more robust revenues and visitation were driven by several factors, including renewed marketing initiatives, anticipation of new attractions and an earlier Easter holiday, which influences the timing of spring break during the first quarter.

Company Chief Financial Officer Marc Swanson estimated that the shift in the holiday was responsible for less than half of the growth in visitation last quarter. SeaWorld said there were 418,000 more visitors to its parks than a year earlier.

The company also has been heavily promoting its season passes for closer-in visitors, an offering that Reilly characterizes as “one of the best values in the industry.”

While buoyed by the financial results, the company still faces significant challenges sustaining the momentum it has realized so far this year.

In addition to its attendance woes, SeaWorld has been under investigation by both the Securities and Exchange Commission and the U.S. Department of Justice for executives’ disclosures and public statements in August 2014 and earlier about the impact of the “Blackfish” documentary. Just last month it was notified it could be facing possible sanctions for alleged violations of U.S. securities laws.

Reilly, though, remains optimistic, pointing to a strong marketing message being communicated on multiple platforms and a hefty lineup of attractions.

“Despite this strong start to the year, we know we have significant opportunity for further improvement,” he said.

SeaWorld analyst James Hardiman said the quarterly report exceeded Wall Street’s expectations, although he noted that the comparison period of a year ago was especially weak.

“It sort of gives them some breathing room that they needed,” said Hardiman of Wedbush Securities. “Last year was the fourth year of revenue declines and as much as they seemed confident that would end in 2018, until they put up some growth this year, it was hard to believe that.They’re not out of the woods yet but it’s still encouraging.”

While revenues were strong, SeaWorld reported a net loss for the quarter of $62.8 million, or 73 cents a share, up from a year-ago loss of $61.1 million, the equivalent of 72 cents a share. The company said that $21.5 million of those losses included costs associated with departing employees and a legal settlement.

Earlier this year during its year-end earnings call, SeaWorld previewed signs of a healthier quarter ahead, pointing to increases in season pass sales and total attendance. Reilly noted Tuesday that the company saw a 10 percent increase in season pass revenues.

Still, the first quarter provides a somewhat limited view of park performance, given that just five of SeaWorld’s 12 parks are open for the full three months.

SeaWorld remains hopeful that it will continue to see attendance growth following the opening this year of major attractions, including San Diego’s Electric Eel coaster, which makes its debut on Thursday. The Orlando park is planning to soak visitors this summer with a new river rafting ride it’s calling Infinity Falls.

And the company recently announced that a new Sesame Street land will arrive at SeaWorld Orlando next spring.

“We have a revamped capital strategy that we believe will also help drive attendance growth with the goal of offering a new ride, attraction, show or event in every park every year.”

Reilly characterized the coming attractions as “one of the most compelling line-ups we have ever had of new rides, attractions and events.”

One factor that may have contributed to the uptick in attendance, at least for the San Diego park, is that a year ago, the longstanding Shamu shows had just ended, and SeaWorld had yet to debut its replacement — the Orca Encounter. A similar phaseout of the theatrical killer whale shows is planned for the Orlando and San Antonio marine parks.

Reilly, who at one time was president of SeaWorld San Diego, repeatedly stressed the importance Tuesday of reminding the public about the animal rescue and ocean conservation work it continues to do. It is a consistent advertising message the company has delivered in recent years as its critics continue to fault SeaWorld for holding killer whales in captivity.

“We have made significant contributions toward animal rescue, animal research, conservation, the environment, and education,” Reilly said. “And we need to continue to showcase these activities through our marketing and communications strategy, so that more people know about this outstanding work.”

lori.weisberg@sduniontribune.com

(619) 293-2251

Twitter: @loriweisberg