SeaWorld Entertainment, Inc. Reports First Half 2016 Results

ORLANDO, Fla., Aug. 4, 2016

Overview

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016 ARIVA.DE Börsen-Geflüster Kurse United Parks & Resorts Company 48,20 € -0,41%				2015
		(In millions, except per share amounts)
Total revenues		$	371.1			$	391.6			$	591.4			$	606.2
Net income (loss)		$	17.8			$	5.8			$	(66.3)			$	(37.8)
Net income (loss) per share, diluted		$	0.21			$	0.07			$	(0.78)			$	(0.44)
Adjusted Net Income (Loss)[1]		$	18.0			$	18.7			$	(31.5)			$	(24.8)
Adjusted Net Income (Loss) per share, diluted[1]		$	0.21			$	0.22			$	(0.37)			$	(0.29)
Adjusted EBITDA[1]		$	83.8			$	100.2			$	77.8			$	96.3
Attendance			5.984				6.478				9.281				9.692

• The company has updated its Adjusted EBITDA^[1] guidance for 2016 to be in the range of $310 million to $340 million, see "Guidance" section which follows for a further discussion.
• Second quarter attendance was down 494,000 guests due to a decline in attendance at the company's Florida park locations along with a shift in the timing of holidays in 2016, which impacted nearly all of its park locations. Outside of the calendar shifts,    Florida attendance decreased primarily due to a decline in Latin American attendance, softness in the Orlando market, and the adverse impact of Tropical Storm Colin. 
• Results for the first half of 2016 provide a more meaningful comparison to the prior year period due to the calendar shift in the second quarter. First half attendance was down by approximately 411,000 guests, primarily from a decrease in Florida. Excluding Florida, total attendance at all other park locations increased by 67,000 in the first half of 2016.
• Revenue trends in California and Texas for the first half of 2016 continue to show improvement over the prior year.
• Selling, general and administrative ("SG&A") expenses increased by $15.0 million in the first half of 2016, which included an increase in non-cash equity compensation expense. Excluding this non-cash expense, SG&A expenses decreased by $4.3 million.
• July monthly total attendance was up 4% year-over-year on a comparable basis. This includes an increase in Florida attendance, where two new attractions, Mako and Cobra's Curse, opened in mid-June.

"While implementation of our plan through the first half of 2016 is delivering early indications of progress outside of Florida, second quarter overall was below expectations we shared in May, primarily due to an accelerated decline in Latin American guests at our Florida park locations, an overall downturn in the Orlando market in the latter half of June, and the impact of Tropical Storm Colin. Latin American attendance is down approximately 40%, or 235,000 guests year-to-date," said Joel Manby, President and Chief Executive Officer of the company.

"Although we are disappointed with the factors affecting our 2016 outlook, particularly in Florida, we are encouraged by some positive indicators at our other park locations.  For the first half of 2016, revenue in Texas is up approximately 2% compared to a decline of 17% in the same period last year. California continued to improve, and revenue was down 2% for the first half compared to a decline of 8% in the same period last year," Manby continued.

"In addition to the improving trends in California and Texas, SG&A expenses excluding non-cash equity compensation were down, and our reputation campaign is resonating, based on recent positive survey results. Early indications for the third quarter have also been encouraging as our new rides are receiving positive reviews and have contributed to year-over-year attendance gains in Florida for July.

"Our focus remains on implementing and delivering on our strategic plan of creating experiences that matter, providing distinct guest experiences that are fun and meaningful; driving organic and strategic revenue growth, addressing our challenges and operating with financial discipline. Though effecting the turnaround will take time, we are making progress and continue to take the actions necessary to return to sustainable growth," Manby added.

^[1] This earnings release includes several metrics, including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Free Cash Flow that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. ("GAAP"). See "Statement Regarding Non-GAAP Financial Measures" section and the financial statement tables for the definitions of Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Free Cash Flow and the reconciliation to their respective most comparable financial measures calculated in accordance with GAAP. Also, see "Guidance" section for the company's reasoning for not reconciling the forward-looking Adjusted EBITDA guidance range included in this earnings release.

First Half 2016 Results

During the first half of 2016, the company generated revenue of $591.4 million, a decrease of $14.8 million, or 2%, compared to the same period in 2015.  The company generated a net loss for the first half of 2016 of $66.3 million, or a loss of $0.78 per diluted share, and an Adjusted Net Loss of $31.5 million, or a loss of $0.37 per diluted share.  For the first half of 2015, the company generated a net loss of $37.8 million, or a loss of $0.44 per diluted share, and an Adjusted Net Loss of $24.8 million or a loss of $0.29 per diluted share.

Adjusted EBITDA in the first half of 2016 was $77.8 million, a decrease of $18.5 million, or 19%, compared to Adjusted EBITDA of $96.3 million in the same period of 2015.  Net cash flow provided by operating activities was $111.7 million in the first half of 2016 compared to $142.1 million in the first half of 2015. 

The decrease in revenue was driven by a 4.2% decline in attendance and was partially offset by a 1.9% increase in total revenue per capita (total revenue divided by attendance). Attendance in the first half of 2016 declined by approximately 411,000 guests, or 4.2%, primarily due to weakness at the company's Florida park locations. Excluding Florida, total attendance at all other park locations increased by 67,000 guests.  The company believes that the weakness in Florida is attributable primarily to the following factors: (i) a decline in international attendance, particularly from the Latin America market which was down by approximately 235,000 guests; (ii) an overall softness in demand in the Orlando market as evidenced by a decline in local and passholder attendance at the company's Orlando parks in the first half of 2016, and reduced hotel occupancy at Orlando-area hotels in the latter half of June; and (iii) adverse weather impacts due to the effects of Tropical Storm Colin in June. The company believes the decline in passholder attendance at its SeaWorld Orlando park resulted from a decrease in season pass sales due to less discounting on season pass products for 2016, as compared to the first half of 2015. To address some of these issues, the company has introduced strategic season pass promotions along with other ticket offers and have kicked off a new summer event at SeaWorld Orlando to help drive demand for this park for the third quarter. In addition, two highly anticipated new attractions, Mako and Cobra's Curse, opened in mid-June.

Total revenue per capita improved to $63.72 in the first half of 2016 from $62.55 in the first half of 2015. Admission per capita (admissions revenue divided by attendance) increased by 0.4% to $38.89 from $38.72 in the prior year period. In-park per capita spending (food, merchandise and other revenue divided by attendance) increased to $24.83 in the first half of 2016, from $23.83 in the same period of 2015, primarily due to increased sales of the company's in-park products, such as all day dining packages and front of the line "Quick Queue" access.

Second Quarter 2016 Results

Second quarter results were negatively impacted by the earlier timing of Easter and the later timing of Memorial Day in 2016, as compared to the timing of such holidays in 2015.  During the second quarter of 2016, the company generated revenue of $371.1 million, a decrease of $20.5 million, or 5%, compared to the second quarter of 2015. The company reported net income of $17.8 million, or $0.21 per diluted share, and Adjusted Net Income of $18.0 million, or $0.21 per diluted share in the second quarter of 2016.  In the second quarter of 2015, the company generated net income of $5.8 million, or $0.07 per diluted share, and Adjusted Net Income of $18.7 million, or $0.22 per diluted share.

Adjusted EBITDA, was $83.8 million, a decrease of $16.4 million, or 16%, compared to Adjusted EBITDA of $100.2 million in the second quarter of 2015.  Net cash provided by operating activities was $79.5 million in the second quarter of 2016 compared to $104.4 million in the prior year second quarter. 

Attendance in the second quarter decreased by approximately 494,000 guests, or 7.6%, primarily due to a decline at the company's Florida park locations, along with the negative impact of an earlier Easter and a later Memorial Day in 2016 on the company's seasonal parks. The company believes that the weakness in Florida is attributable primarily to factors discussed in the previous section. Attendance from the Latin America market was down by approximately 127,000 guests for the second quarter. Excluding Florida, total attendance at all other park locations decreased by 202,000 guests due almost entirely to a decline at the company's Virginia park locations, which are seasonal parks, resulting from the holiday calendar shift.

Total revenue per capita improved to $62.02 in the second quarter of 2016 compared to $60.45 in the prior year second quarter. Admission per capita increased by 1.7% to $37.43 in the second quarter of 2016 from $36.81 in the prior year second quarter. In-park per capita spending increased by 4.0% to $24.59 in the second quarter of 2016, from $23.64 in the prior year second quarter, primarily due to increased sales of the company's in-park products, such as all day dining packages and front of the line "Quick Queue" access.

Dividends

On June 8, 2016 the company's Board of Directors declared a cash dividend of $0.21 per share to all common stockholders of record at the close of business on June 20, 2016, which was paid on July 1, 2016. 

Guidance

The following updated guidance is based on the company's performance in the first half of 2016, recent developments and current management expectations. All financial guidance amounts are estimates subject to change, including as a result of matters discussed under the "Forward-Looking Statements" caption below and the company undertakes no obligation to update its guidance. The company now expects Adjusted EBITDA for 2016 to be in the range of $310 million to $340 million.

The financial statement tables that accompany this press release include a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to the applicable most comparable U.S. GAAP financial measure for the three and six months ended June 30, 2016. However, the company has not reconciled the forward-looking Adjusted EBITDA guidance range included in this press release to the most directly comparable forward-looking GAAP measure because this cannot be done without unreasonable effort due to the high variability, complexity, low visibility and seasonal nature of the company's business with respect to estimating forward-looking amounts for impairments and disposition of assets, income taxes and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA.

Conference Call

The company will hold a conference call today, Thursday, August 4 at 9 a.m. Eastern Time to discuss its second quarter 2016 financial results. The conference call will be broadcast live on the Internet and the release and conference call can be accessed via the company's website at www.seaworldentertainment.com by clicking on the "Investor Relations" link located on the upper right corner of that page. For those unable to participate in the live call, a replay of the webcast will be available after 12 p.m. Eastern Time August 4, 2016 via the "Investor Relations" section of www.seaworldentertainment.com. A replay of the call can also be accessed telephonically from 12 p.m. Eastern Time on August 4, 2016 through 11:59 p.m. Eastern Time on August 18, 2016 by dialing 855-859-2056 from anywhere in the U.S. or 1-404-537-3406 from international locations, conference code 46541727.

Statement Regarding Non-GAAP Financial Measures

This earnings release and accompanying financial statement tables include several supplemental non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, and Free Cash Flow. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, and Free Cash Flow are not recognized terms under GAAP, should not be considered in isolation or as a substitute for a measure of financial performance or liquidity prepared in accordance with GAAP and are not indicative of net income or loss as determined under GAAP. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Free Cash Flow and other non-GAAP financial measures have limitations that should be considered before using these measures to evaluate the company's financial performance or liquidity. Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, and Free Cash Flow, as presented, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.

The financial statement tables that accompany this press release include a reconciliation of historical non-GAAP financial measures to the applicable most comparable U.S. GAAP financial measures.

About SeaWorld Entertainment, Inc.

SeaWorld Entertainment, Inc. (NYSE: SEAS) is a leading theme park and entertainment company providing experiences that matter, and inspiring guests to protect animals and the wild wonders of our world. The company is one of the world's foremost zoological organizations and a global leader in animal welfare, training, husbandry and veterinary care. The company collectively cares for what it believes is one of the largest zoological collections in the world and has helped lead advances in the care of animals. The company also rescues and rehabilitates marine and terrestrial animals that are ill, injured, orphaned or abandoned, with the goal of returning them to the wild. The SeaWorld^® rescue team has helped more than 28,000 animals in need over the last 50 years.

SeaWorld Entertainment, Inc. owns or licenses a portfolio of recognized brands including SeaWorld, Busch Gardens^® and Sea Rescue^®. Over its more than 50-year history, the company has built a diversified portfolio of 12 destination and regional theme parks that are grouped in key markets across the United States, many of which showcase its one-of-a-kind zoological collection of over 800 species of animals. The company's theme parks feature a diverse array of rides, shows and other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for its guests.

Copies of this and other news releases as well as additional information about SeaWorld Entertainment, Inc. can be obtained online at www.seaworldentertainment.com. Shareholders and prospective investors can also register to automatically receive the company's press releases, SEC filings and other notices by e-mail by registering at that website.

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