SeaWorld suspends dividend payments to investors
SeaWorld Entertainment Inc. revealed more bad news for investors: It is suspending its quarterly stock dividend.
The company said late Monday that it will pay one more dividend next month of 10 cents, down from the previous 21 cents. It said it expects to “redeploy the additional capital to shareholders by opportunistically repurchasing” stock during the rest of this year.
SeaWorld’s stock fell 4.5% to $12.12 on Tuesday.
The Orlando, Fla., company, whose 12 parks include one in San Diego, has been struggling financially in recent years. The 2013 documentary “Blackfish” took a toll on attendance. SeaWorld hoped to combat the controversy stemming from that film by announcing in March that it no longer will breed killer whales. Now it is facing challenges tied to a slowdown in visits to its parks.
Cutting the dividend after October’s payment “signals the obvious struggles at SeaWorld and the deterioration on financials from weak performance … and operational performance is not about to snap back near term,” Michael Erstad, an analyst with M Science, said in an email.
Dividends generally are expected to be steady, “but share buybacks are at the discretion of the company and can be more readily adjusted without upsetting the market,” Pacific Asset Management analyst Bob Boyd said in an email.
Still, the move is about financial breathing room more than share repurchases, S&P Global Market Intelligence analyst Tuna Amobi said.
“I think ultimately they want to conserve funds and have more flexibility,” he said. “Some simple math numbers show they’re becoming more and more constrained.”
SeaWorld had $29 million in cash on hand in its last quarter, compared with $52.9 million a year earlier. The company is highly leveraged. In its most recent quarter, SeaWorld lowered its financial expectations for the upcoming year.
Attendance at SeaWorldparks nationwide dropped 7.6% in the second quarter, driven largely by a slump at its Florida locations. SeaWorld blamed that on a sharp decline in Brazilian guests and on Orlando’s softening tourism industry.
Investors and analysts had been saying for a while that SeaWorld’s dividend could be at risk.
“I think the handwriting has been on the wall,” Amobi said. “Every single time they report [earnings], this has come up.”
Pedicini writes for the Orlando Sentinel.
ALSO
U.S. guidelines on self-driving cars offer some clues on future policy
Premium gas provides no benefit to cars made for regular, AAA study finds
Wells Fargo updates: Sen. Elizabeth Warren rips into CEO’s ‘gutless leadership’
