SeaWorld stock soars nearly 17% on rising attendance, revenues
About 900,000 more visitors crossed the turnstiles at SeaWorld’s theme parks by the end of July compared with the same time frame in 2017, executives said Monday, as the Orlando-based company posted the second straight quarter of strong growth.
SeaWorld stock’s soared nearly 17 percent, closing at $24.67 for an increase of $3.54.
“It is clear to us that SeaWorld has started to find its operational footing under new executive leadership,” said Stifel, an analyst firm that follows the company, in a note written Monday.
SeaWorld might be closer to a turning point, “but we see lingering challenges,” said Tuna Amobi, of CFRA Research, in an analyst note.
SeaWorld also disclosed it has reached a $4 million settlement for an investigation by the U.S. Securities and Exchange Commission into comments former executives made about the impact of the anti-whaling documentary “Blackfish.” SeaWorld did not admit guilt or deny the allegations under the settlement, which has not been made final, the company said.
The U.S. Department of Justice is also investigating the firm, SeaWorld said in a SEC filing last year.
The company, which has been hit with falling attendance over the years in part because of bad publicity stemming from “Blackfish,” is gaining momentum, SeaWorld interim CEO John Reilly told analysts in a post-earnings call.
Second-quarter attendance hit 6.4 million and revenue also was up, increasing to about $392 million for a 5 percent increase in the quarter that ended in June, the firm said. The company’s adjusted earnings were nearly $22.7 million, or 34 cents per share. Zacks Investment Research, based on analysts’ forecasts, said the consensus EPS forecast for the quarter was 27 cents.
SeaWorld plans to spend $150 million a year on capital expenses as it seeks to grow attendance by adding a new show, ride or event at each of its 12 parks every year, the company said.
However, Reilly acknowledged the late rollout as “disappointing” for Infinity Falls, a raft ride with a 40-feet drop that’s coming to SeaWorld Orlando. The ride’s opening will be announced in the new few weeks, which means Infinity Falls is missing most of the lucrative summer tourism season. It is SeaWorld Entertainment’s final new ride for 2018.
“We need to and will be better,” Reilly said, later adding he is confident Infinity Falls “will be one of the best, if not the best, rapid rides in the world.”
He declined to say how much the late opening affected the Orlando park’s attendance.
What has helped fuel SeaWorld’s strong numbers are passholder membership sales, which grew in the “double digits” in the second quarter. The company, which unveiled a new craft beer festival last week, offers more events and is communicating the perks of being a passholder better, Reilly said.
When asked about the looming competition from Universal and Disney, Reilly said he believed SeaWorld can compete because it offers the best value deal.
Universal has acquired land on West Sand Lake, and executives recently acknowledged they are looking at building a new theme park. Meanwhile, Walt Disney World will open its Star Wars-themed land in late fall 2019 at Hollywood Studios.
To analysts, Reilly touted the company’s plans to run more efficiently. SeaWorld has reached the $40 million net savings goal that was previously set and is working toward an additional $50 million of cuts from reducing vendors, “unnecessary spending,” and other ways. Reilly did not provide further details.
The firm did not give an update on the permanent CEO search, which began in February when Reilly was named the interim leader.
“We believe we have a strong foundation in place and the right core team to execute on our plans to deliver the results this company is capable of achieving,” was all SeaWorld Chief financial officer Marc Swanson said Monday.