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spk03: Good day and welcome to the United Parks and Resorts First Quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press two. Please note this event is being recorded. I would now like to turn the conference over to Matthew Stroud, Investor Relations. Please go ahead.
spk02: Thank you and good morning everyone. Welcome to the United Parks and Resorts First Quarter earnings conference call. Today's call is being webcast and recorded. A press release was issued this morning and is available on our Investor Relations website at .unitedparksinvestors.com. Replay information with this call can be found in the press release and will be available on our website following the call. Joining me this morning are Mark Swanson, Chief Executive Officer, and Jim Forrester, Interim Chief Financial Officer and Treasurer. This morning we will review our first quarter financial results and then we will open the call to your questions. Before we begin, I would like to remind everyone that our comments today will contain forward-looking statements within the meaning of Federal Security laws. These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward-looking statements, including those identified in the risk factor section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. These risk factors may be updated from time to time and will be included in our filings with the SEC that are available on our website. We undertake no obligation to update any forward-looking statements. In addition, on the call we may reference non-GAAP financial measures and other financial metrics such as adjusted EBITDA and free cash flow. More information regarding our forward-looking statements and reconciliations of non-GAAP measures to the most comparable GAAP measure is included in our earnings release available on our website and can also be found in our filings with the SEC. Now I would like to turn the call over to our Chief Executive Officer, Mark Swanson. Mark?
spk06: Thank you, Matthew. Good morning, everyone, and thank you for joining us. We are pleased to report record financial results this quarter, including record revenue and adjusted EBITDA. While attendance in the quarter benefited from a positive calendar shift, including the shift of the Easter holiday into the last day of the first quarter from the second quarter in prior year, this benefit was almost entirely offset by unusually wet and cold weather during the quarter, particularly on certain peak attendance days and mainly in our Florida parks. In part per capita revenue, excluding the impact of certain one-time revenue, increased 4% during the quarter, representing the 16th consecutive quarter of growth. Looking ahead, we are excited about our plans for 2024 with an exceptional lineup of new -a-kind rides, attractions, and events, improved in-park venues and offerings across our parks, some of which are already live and others that are anticipated to debut later this spring and summer. We are excited to have launched SeaWorld Park's 60th anniversary celebration featuring special events, shows, and attractions that will continue throughout the year. We hope many will come celebrate with us SeaWorld's 60-year history of conservation, education, and fun for all ages. We are also encouraged by the booking trends at our Discovery Cove property, along with our group bookings, which are running well ahead of 2023. In addition, in the first quarter of 2024, international visitation, while still down compared to 2019, improved meaningfully compared to 2023. We strongly believe we have a clear opportunity to drive meaningfully more attendance and total per capita spending, and we have high confidence in our ability to continue to deliver operational and financial improvements that will lead to meaningful increases in shareholder value. We continue to expect to deliver new records in revenue and adjusted EBITDA for 2024. I want to thank our stockholders and board of directors for their recent overwhelming approval of our $500 million share repurchase program, which we have already begun to implement and through which we are continuing our track record of returning meaningful capital to shareholders. Finally, I want to thank our ambassadors for their dedication and commitment as we prepare for what we believe will be an exciting and busy summer season. For 2024, we have an exciting lineup of new rides, attractions, events, and new and improved in-park venues and offerings with something new and meaningful in our parks. Let me highlight a few of our new rides and attractions, along with a couple events. In March, SeaWorld San Antonio opened Catapult Falls, the world's first launched flume coaster featuring the world's steepest flume drop and the tallest flume drop in Texas. Also, Aquatica Orlando opened Tassie's Underwater Twist, Florida's most immersive waterslide that takes riders on an exhilarating journey into a world of watery wonders set to an inspiring original musical score. The remaining new attractions include the following. In Williamsburg, Busch Gardens will open Loch Ness Monster, the legend lives on, an all-new experience loaded with all-new thrills, dramatic storytelling, and innovative effects as it takes riders on Nessie's newly updated signature track. In Orlando, SeaWorld Orlando will open Penguin Track, an unforgettable multi-launch family coaster adventure where guests will navigate the harsh Antarctic environment in search of a colony of penguins. This attraction includes a new realm featuring a restaurant, signature bar, and expensive gift shop along with one of the largest collections of penguins in North America. Penguin Track will be an indoor-outdoor coaster experience, the park's first family coaster as well as the eighth and most immersive addition to the coaster capital of Orlando. In San Diego, SeaWorld San Diego will open Jewels of the Sea, the jellyfish experience, a first of its kind attraction featuring a compelling mix of immersive media and live jellyfish. This interactive view into the mysterious underwater world of glowing and graceful jellyfish will be something to see. In Tampa Bay, Busch Gardens Tampa Bay will open Phoenix Rising, a family-friendly roller coaster that takes riders soaring above the Serengeti Plain, then drops into an array of fun-filled twists and turns that speeds up to 44 miles per hour. This will be the tallest and fastest inverted family coaster in North America. Other attractions and events set to open include Tikitapu Splash at Aquatica San Antonio, AquaGlo at Aquatica Orlando, 123 Playground and Sunny Day Carousel at Sesame Place, Philadelphia, Nitro Racer at Water Country USA, Castaway Falls at Adventure Island, and Dine with Elmo and Friends at Sesame Place San Diego. Now, let me give a brief update on some of our strategic initiatives. First, we continued to progress with our cost and efficiency-related work, and as we noted last quarter, we expect $50 million of real-life savings in 2024. As you all know, cost management and discipline is a key focus of our management team, and we have demonstrated our ability to deliver on cost efficiencies over the last few years. Second, on the digital transformation front, we continue to build out our CRM capabilities, which are still in their infancy, and roll out and improve our mobile app. In regards to our mobile app, we are pleased that it is being used by an increasing number of guests in our parks to improve their in-park experience. The app has now been downloaded more than 9.4 million times, up from 8.5 million at the end of Q4. Total revenue generated on the app is up approximately 10% compared to prior year, and we are now seeing an approximately 28% increase in average transaction value for food and beverage purchases made through the app compared to -of-sale orders. Mobile ordering is operating at approximately 88% of our target restaurants. We are excited about the potential of the app and its ability to improve the in-park guest experience, drive increases in revenue, and decreases in cost. We are continuing to refine current capabilities and develop additional capabilities to further increase engagement and optimize the experience. Third, on the international front, we are excited that SeaWorld Abu Dhabi is celebrating its one-year anniversary this month, and the performance is ahead of expectations. We continue to make progress with discussions related to other international opportunities and expect to have more to share in coming quarters. Fourth, on the hotel front, we are very excited about our hotel opportunity across our park portfolio. We continue to have conversations with various partners and will share more in the coming quarters. As we discussed last quarter, we are laser-focused on the ROI for these hotel opportunities. I'm very excited about the significant investments we are making and the many initiatives we have underway across our business that we expect will improve the guest experience, allow us to generate more revenue, and make us a more efficient and more profitable enterprise. We are building an even stronger and more resilient business that we are confident and expect will deliver improved operational and financial results and meaningful increases in shareholder value. Let me briefly comment on our balance sheet, which continues to be strong. Our March 31, 2024 net total leverage ratio is 2.57 times, and we had approximately $577 million of total available liquidity, including approximately $204 million of cash on the balance sheet in advance of us starting our summer season, where we typically generate the majority of our cash flow. This strong balance sheet gives us flexibility to continue to invest in and grow our business, and to opportunistically allocate capital with the goal to maximize long-term value for shareholders. In January, we repriced our term loan and reduced our interest rate by 50 basis points, or approximately $5 million per year. Earlier this month, we paid off our high-cost senior secured notes raised in 2020 with an add-on to our term loan, which we expect will save at least $2 million of interest per year, and we raised an incremental $152.5 million that we put on our balance sheet. I want to again thank our stockholders and board of directors for their recent overwhelming approval of our $500 million share repurchase program, which we have already begun to implement and through which we are returning capital to shareholders. During the first quarter, we repurchased 375,000 shares for an aggregate total of approximately $20.2 million. Subsequently, to March 31, 2024 through May 6, 2024, we purchased approximately 1.5 million shares for an aggregate total of approximately $80.6 million. Needless to say, the board and company believe our shares are materially undervalued. We have significant confidence in our business and our prospects, and as we shared with you last quarter, any reasonable way you look at it, we feel we are materially undervalued and that there is significant upside opportunity in our current share price. Our financial position is strong, our business is resilient, and our first quarter results, along with the coming opening of more of our ride, attraction, and event lineup, all of the initiatives that we have underway give us confidence in our ability to continue to achieve new records in revenue and adjusted EBITDA for 2024. With that, Jim will discuss our financial results in more detail.
spk02: Jim? Thank you, Mark. Our team is looking forward to sharing our quarter's strong performance with our audience this morning. During the first quarter, we generated record total revenue of $297.4 million, an increase of $4.1 million or .4% when compared to the first quarter of 2023. The increase in total revenue is primarily a result of an increase in attendance, partial set by decreases in emissions per capita, and in part per capita spending. Attendance for the first quarter of 2024 increased by approximately 72,000 guests, or .1% when compared to the prior year quarter. Attendance was positively impacted by a favorable calendar shift, including the earlier timing of Easter and certain school spring breaks, and was negatively impacted by adverse weather, particularly at our Florida parks, including during peak visitation periods. Excluding the impact of certain one-time revenue associated with the opening of SeaWorld Abu Dhabi in 2023, total revenue per capita increased 1.2%, and in part per capita spending increased 4%. Including the impact of certain one-time revenue associated with the opening of SeaWorld Abu Dhabi in 2023, total revenue per capita decreased .7% to $86.21, and in part per capita spending decreased .5% to $38.15 from the first quarter of 2023. Admission per capita decreased .9% to $48.06. Admission per capita decreased primarily due to the net impact of the admissions product mix when compared to the prior year quarter. In part per capita spending decreased primarily due to a decrease in one-time revenue related to our international services agreements, partially offset by the impact of pricing initiatives when compared to the first quarter of 2023. Operating expenses decreased $7.8 million or .5% when compared to the first quarter of 2023. The decrease in operating expenses is primarily due to a decrease in costs associated with our international services agreements, and a decrease in legal costs, including approximately $3.1 million related to the previously disclosed temporary COVID-19 park closures when compared to the first quarter of 2023. Selling, general administrative expenses decreased $0.4 million or .8% compared to the first quarter of 2023. We generated a net loss of $11.2 million for the first quarter compared to a net loss of $16.5 million in the first quarter of 2023. The increase in net income was primarily a result of the impact of lower operating expenses. We generated adjusted EBITDA of $79.2 million, an increase of $6.7 million when compared to the first quarter of 2023. Adjusted EBITDA was positively impacted by the decrease in expenses and an increase in total revenue. Now turning to our balance sheet. Our March 31, 2024 net total leverage ratio is 2.57 times, and we had approximately $577 million of total available liquidity, including $204 million of cash in the balance sheet. The strong balance sheet gives us flexibility to continue to invest in and grow our business and to opportunistically allocate capital with a goal to maximize long-term value for our shareholders. As previously mentioned, in January we repriced our term loan and reduced our interest expense, and earlier this month we paid off our high cost senior secure notes raised in 2020 with an add-on to our term loan, which will reduce the company's annual interest expense going forward. As part of the add-on, we raised an incremental $152.5 million that we put on our balance sheet. As Mark already mentioned, during the quarter, our stockholders and board of directors approved a new $500 million share buyback authorization in anticipation of us exhausting our previously authorized $250 million authorization from August 2022. During the first quarter, we repurchased 375,000 shares for an aggregate total of approximately $20.2 million. Subsequent to March 31, 2024, and through May 6, 2024, we purchased approximately 1.5 million shares for an aggregate total of approximately $80.6 million. As Mark said, we believe our shares are materially undervalued. Our deferred revenue balance as of the end of April was $217.7 million, excluding certain one-time items, deferred revenue increased approximately .4% when compared to April of 2023. As a reminder, our deferred revenue balance contains a number of products to include ticketing, vacation packages, and when season passes, and infillery products. We also continue to see many passholders who have been with us for at least a year who transitioned to -to-month payments at the completion of their initial pass commitment. This -to-month revenue does not show up as deferred revenue. Through April 2024, our pass base, including all pass products, was down 3% compared to April 2023, but up 32% when compared to April 2019. We are pleased that we are seeing mid-single to low double-digit price increases depending on our pass product compared to prior year. We believe we have our best pass benefits program ever, which we expect will drive additional increases in pass sales and a strong pass base for this year, especially now that we are in the peak advertising and selling season. We spent $87.3 million on CapEx in the first quarter of 2024, of which approximately $56.3 million was on Core CapEx, and approximately $31 million was on expansion and or ROI projects. For 2024, we expect to spend approximately $175 million on Core CapEx, and approximately $50 million of CapEx on growth and ROI projects. Now let me turn the call back over to Mark, who will share some final thoughts. Mark?
spk06: Yeah, thanks, Jim. Look, before we open the call to your questions, I have some closing comments. In the first quarter of 2024, we came to the aid of 173 animals in need. Over our history, we have helped over 41,000 animals, including autumnal dolphins, manatees, sea lions, seals, sea turtles, sharks, birds, and more. I'm really proud of the team's hard work and their continued dedication to these important rescue efforts. We are certainly excited about 2024, and I want to thank our ambassadors for their dedication and commitment as we prepare for what we believe will be an exciting and busy summer season. We continue to believe there are significant additional opportunities to improve our execution, take advantage of clear growth opportunities, and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA. We continue to have high confidence in our long-term strategy and our ability to deliver significantly improved operating and financial results that we expect will lead to meaningfully increased value for stakeholders. So now we can open it up for your questions.
spk03: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. Please limit to one question and one follow-up question. At this time, we will pause momentarily to assemble our roster. Our first question comes from Steve Wysinski of Stiefel. Go ahead, please.
spk09: Yeah, hey guys, good morning. So, Mark, as we think about the remainder of this year, is there any way you can help us out with maybe how you guys are thinking about per caps, both on the admissions and the in-park side? We're just trying to understand a little bit better if there are going to be any more potential headwinds out there on both sides of the per caps, or if there's anything we need to think about over the second half of the year. And then as you think about the ability to take price on the admissions side of things, any updated thoughts on how you guys are thinking about taking more price? I know Jim talked about -single-digit price increases on past products, but any other color there would be helpful. Thanks.
spk06: Yeah, Steve, I can help you with that question. So first on pricing, look, obviously you heard Jim talk about the pricing increases we've seen on past pricing. So we're going to continue to execute on pricing. That's a tenet of our strategy that we've talked about, growing pricing on a -over-year basis. And so we'll continue to do that. I think as far as the remainder of the year on the per caps, there's a couple of things I think you've got to focus on a little bit. One, we're taking the pricing, but what is impacting per cap a little bit on the admissions side, obviously, is the mix. And Jim called that out. So you have group business being up more this year. And while that's great to see, group typically has a lower overall per cap than some of our other products. Multi-day tickets are up, so that spreads that revenue over multiple digits, which would be a drag on per cap at times. So there's the pricing we're taking, and then there's the mix of the products that are being used, which is going to have inflow. But I think overall we have confidence in the overall pricing strategy on the admissions side on a go-forward basis. I can tell you in April with the admissions per cap was just flat to very slightly positive. So that might give you some context about even with some of that mix, we got to where we are there in April. And then Jim mentioned the deferred revenue at the end of April being up 1.4 percent. And certainly I think that's another indication that we're getting pricing as well. As far as the impact, we normalized the Q1 number for the one-time benefit from the Havadavi last year. That should normalize here going forward. And then really what we should have is the cadence of our new things coming online, some of our new venues and whatnot. So again, we're excited about the opportunities there. I think we have some exciting things going on in Impark. We've got certainly some areas that we've got to do a better job of as well. But I think overall, the anomaly you saw here in Q1 with the international, that'll normalize going forward. And I can also tell you that Impark per cap was positive in April as well.
spk09: OK, thanks, Mark. That's a really good color. And then I want to ask about the potential hotel investments. We continue to get asked about when we'll hear more about those hotel projects. And I feel like we've heard about these investments now for a while. But based on your commentary and your prepared remarks, it still seems like you're still quarters away. Maybe I'm reading a little bit too much into that before we hear anything. So just wondering why, maybe why it's taking so long to get any more color around those projects. And if you do do those potential projects, then how do you think about the way you go about those projects versus using your free cash flow for repurchasing shares and things like that? Thanks.
spk06: Yeah, sure. So, Steve, we talked a lot about this this last quarter. I think one of the things we had heard from from our investors is they wanted they wanted more color on hotels and how we're thinking about everything from the structure to the ROI. So I think we did a pretty good job last quarter of laying that out. And really, it's focused on finding that right structure, that right way to set this up, whether that's with a partner or however you want to think about it, that achieves that unlevered cash and cash return that we talked about of 20 percent. And we've committed to being laser focused on that ROI. We're going to take the appropriate time to make sure we get that right. And certainly to your point, that's what we're in the process of doing. So more to come on the coming quarters. As far as how we finance that, I certainly don't think it needs to be entirely out of cash. There's multiple ways you could do this. And certainly one option would be financing some portion of it. So again, I think what you're going to see us do is focus on the structure and the financing that makes the most sense for us. And we'll work with the board on that.
spk09: Okay. Thanks, Mark. Appreciate the color.
spk03: The next question comes from Matthew Boss of JPMorgan. Go ahead, please.
spk04: Great. Thanks. So Mark, I think it would be helpful if it would be possible to speak to underlying demand trends that you're seeing at your parks, maybe if any way to parse through the best you can, whether in some of the timing shifts during the quarter, and from a traffic perspective, what you've seen in April and early May, maybe regionally.
spk06: Yeah, hey Matthew. I'm not going to give you a ton of individual color on parks just for competitive reasons, but I can try to help you out on some of the shifting and weather impacts and whatnot. So obviously in the quarter, we have the benefit of Easter moving from April of last year into March of this year. And then you also had some incremental weekend days in March as well. That kind of shift that we called it, that normalized in April. So when you get to April, you have the reversal of the Easter shift, and then you have the reversal of those weekend days as well. And so really on a combined basis, March and April on a combined basis, if you just look at attendance for the two months, which would normalize for those shifts, attendance was slightly positive. What was the drag earlier in the year really was on the weather. And the weather really in Q1 was mainly in Florida, and that offset most of the benefit that we got from Easter and calendar shift in Q1. And especially if you happen to be in Florida over President's Day weekend, which is one of the bigger weekends obviously in Q1, we had quite a bit of rain in our markets in Orlando and Tampa on that Saturday and Sunday. In fact, the Daytona 500 got postponed until that Monday. So the weather really offset that benefit that we saw in Q1 for the most part, a good portion of it. And then I already gave you kind of the March, April combined.
spk04: Great. And then maybe Jim, as a follow-up, any customer pushback to price that you're seeing across your offerings or any changes to note in the promotional or competitive landscape to call out?
spk06: Yeah, hey, this is Murray. I can take that. So look on the pricing, look, we continue to focus on pricing. Like I said, it's a key tenet of our strategy. And look, there's going to be times that we run different offers, different things to try to pulse certain demand. So we're always focused on driving total revenue. And at times maybe that's through some offers and things like that. But overall, I think over the long run, over time, we believe pricing is something we can still get. And I kind of gave you a little more color on the mix and things like that that impacts PerCAP as well.
spk04: Great. That's the block. Thank you.
spk03: The next question comes from Chris Veronca of DojaBank. Go ahead, please.
spk07: Hey, good morning, guys. Nice quarter. Mark, you kind of reiterated the commitment to $50 million in cost saves and $24 million. I'm curious, can we find out how much of that was maybe realized in Q1 or the cadence of it through the year? And then once you hit that target, is there more to do behind that as the revenue base grows?
spk06: What I can say, Chris, is obviously we have a tremendous focus on cost. I think you can see that demonstrated in our Q1 numbers with the margin expansion. We've done a good job of growing revenue and managing our costs, which led to that margin expansion. So we're confident that we can continue to execute on our plans. And certainly part of those plans would be to try to identify additional savings beyond what I talked about. I don't have anything specific to share with you today, but I can tell you there's efforts around exactly that. And when we have more to share, we will on that.
spk07: Okay. I appreciate that, Mark. And follow-up is it might be difficult to answer specifically, but from where you guys sit and you look at the – take the Orlando market since it's your largest – do you feel like you're kind of gaining share as a percentage of the total market entertainment wallet, if that makes sense? Is there any way you guys measure that?
spk06: Yeah. So, Chris, I don't want to go into a ton of commentary about individual parks other than to say, I mean, we're pleased with our performance in Orlando. I'll leave it at that. This park – I'm sitting, I'm looking at the park right now. This park is a wonderful park. It's got a number of new events and things coming to the park this year. And I can tell you that we're pleased with the performance in that park relative to obviously some of our others. So feel good about Orlando and all we have to offer here.
spk07: Okay. Thanks, Mark.
spk03: Our next question comes from James Hardeman of Wedbush Securities. Go ahead, please.
spk08: Hi. Good morning. So I don't know if you can answer this, but just to sort of close the loop on Matt's question earlier, if we cut through all the noise of the shift through April, are you still up on a -to-date basis in terms of attendance?
spk06: No, we're not up on a -to-date basis. What I was trying to say is March and April combined, we're up slightly in attendance. And then you have the kind of hangover from the January-February weather. That's what I was trying to get at. So most of the weather impact occurred in January-February. There were some in March as well. But that's the way to think about it. The January-February, early March weather really negated the benefit of Easter and the other shifts. So that's what I was trying to say. And then when you combine March and April, which gets rid of some of that shifting noise, we're up a slight amount in attendance.
spk08: Got it. And then, and maybe I'm parsing words a little bit too much here, but I think the previous language in terms of how to think about 24 was for meaningful increases in revenue in EBITDA. And now we're talking about increases in revenue in EBITDA or record revenue in EBITDA. I guess speak to if that's a meaningful change, do you still expect meaningful growth this year? And as I think about the first quarter where revenues were pretty flat, but margins were up significantly, is that where you see the biggest opportunity this year in terms of sort of the ability to grow margin? Or as we think about the algorithms through the year, should we expect a little bit more balance in terms of revenue growth versus per-cap growth versus margin growth?
spk06: Yeah, thanks, James. I mean, first, I mean, we're still certainly very excited about 2024. So we're sitting here today, I mean, really from May on, if you will, May 1st on, you still got roughly 75% of the year ahead of you from an attendance standpoint based on historical trends. So we're still really excited about 2024. I think the opportunity for the growth can come from multiple areas. So you mentioned margins. I think another big one obviously is if you kind of think about what has been an issue for some quarters now, it's really been the weather. So if we get some tailwinds on the weather, I think that could certainly have a nice benefit to us as well. But we'll have to see how that plays out, whether it wasn't good to start the year, obviously, but we'll see if that reverses course here going forward. Got it.
spk08: That's helpful. Thank you.
spk03: The next question comes from Thomas Ye of Morgan Stanley. Go ahead, please.
spk05: Thanks. Yeah, just kind of an extension on the consumer price sensitivity question and more about broader consumer health trends. I think you're a bit of a mix of regional attendance, maybe more so certainly than some of the destination parts that have voiced some consumer softening. Is there any evidence just in terms of your footprint more broadly around lower income versus higher income cohorts and how they've behaved over the last few months?
spk06: Well, as far as thinking about the health of the consumer, I mean, one of the things, there's a couple things we look at, but one of them would be certainly the in-park spending, right? So when you normalize for the impact of the Abu Dhabi revenue, we were up roughly 4% or 4% in the quarter. I think that's an indication that people are coming out to the parks and spending. And then I mentioned that in-park per capita was up in April as well. So to me, that's a good indication. People are spending. Jim mentioned the deferred revenue being up at the end of April and the price increases we've been seeing on our past products. Again, I think that's another indication that at least the consumers coming to our parks are spending. Beyond that, we have some other indicators. Discovery Cove bookings are up, Group bookings are up meaningfully. So I think if we were seeing, I'm not suggesting there's not consumers who are impacted with economic issues, but based on where we sit, the folks coming to our park, when we look at the aggregate numbers, we see positive trends in most cases.
spk05: Okay, that's helpful color. On the cost front, do you have any incremental color on just the broader labor to wage rate outlook? I think certain of your peers have flagged incremental pressure in certain areas or states. I don't know across your footprint if that's something that you're trying to offset. Certainly there are these cost efficiencies that you talked about. But from a broader macro perspective, is that something that you're kind of fighting against this year?
spk02: Thomas, it's Jim. I think as we've said in previous quarters, we're very pleased with the way we've been able to handle our labor expense. This quarter was no different than the previous quarters where we're actually down year over year in our labor rate. I think we've had a very successful focus on managing that labor expense through reductions in overtime, uses of technology, ensuring the right mix of support to our guests. We're actually improved overall from 2019 and 2023 by better metrics in our labor hours per guests required. So I think overall we've shown an ability to control that cost pretty effectively.
spk05: Okay, appreciate it. Thank you so much.
spk03: The next question comes from Paul Golding of Macquarie. Go ahead, please.
spk10: Thanks so much. Just a couple on the group and international progress. First, just to clarify in terms of mixed progression, sounds like group is ahead of 23 and international is also ahead of 23 but still behind 19. Should we take away from that that group is further ahead and ahead of 19 as well? And then a follow up to that, please.
spk06: Thanks. Yeah, thanks Paul. So what I was trying to say there is group is up not only to last year but also up to 2019. So group is outpacing international. International got better in Q1 of 24 but still is down to 2019. So yeah, group is outpacing international. Okay.
spk10: So as we see international come back, sounds like there's more room to go in international than there is potentially to go in group. How should we think about the per cap premium that you used to see maybe in 2019 on international relative to what we're seeing today just as we think through the potential uplift or room to go in per cap strength on that mix left to go in international. Thanks so much.
spk06: Sure, I can help you with that question. It's a good one. So remember back in 2019 we did about 2.3 million in international attendance. It was roughly 10% of our attendance back in 2019 as a company. So there's a lot of runway still to get back to that. So in Q1 of 24 we were still down roughly 35% to 2019 on international attendance. Now that's better than what we were down last year. Last year we were down for the full year about 44%. And so it's moving in the right direction but it gives you some sense of still being down a third of international attendance on when we used to do 2.3 million. It gives you a good sense of the size of potential that's ahead if we can recover international attendance. And certainly that's our goal and we're putting efforts behind that. So I think that is an upside down the road whenever that does recover. As far as your question on per cap, I would think international people oftentimes on a total visit basis have more spend in total. It really depends on what kind of ticket they buy but if they buy a multi-day ticket which some of them do obviously that per cap is going to be spread over multiple visits and would be less than like a single day ticket. So it can have a mixed impact as I was talking about earlier. I think in general we're pleased international is moving in the right direction. We need to get it back to 2019 levels but it gives you some sense of the opportunity there which is meaningful.
spk10: Thanks so much Mark.
spk03: Our next question comes from Lizzie Dove of Goldman Sachs. Go ahead please.
spk01: Hi there, good morning. Congrats on a nice set of results. I feel like there's been more and more focus on Epic Universe coming next year. They've put more and more marketing out there about it. I'm curious kind of what your base case is and how you feel about the setup there whether it's from a pricing standpoint, whether you feel the need to maybe kind of invest more in the Orlando parks, anything on those lines would be helpful.
spk06: Thanks Lizzie. I can help you with that. Look on Epic, I don't have a crystal ball on how I think about Epic but generally we view things, new things in the market that we expect will bring people to the market as good for us and the industry as a whole. And here's why. You've got to remember SeaWorld Orlando has been here for 50 years. It opened in the early 1970s. And if you think about the number of parks that have opened since SeaWorld opened 50 years ago, you've got more Disney parks, you've got more Universal parks, you've got Legoland, we added two parks, Aquatica and Discovery Cove. And over that time, SeaWorld over that long term grew to EBITDA and participated in that growth of EBITDA to the market. So we like when more people come here. We have a differentiated product. We, I think, have a better value proposition for visiting our park relative to some of the competitors in town. And we have our own unique rides and events and things to do that people do find a lot of enjoyment in. We also get, I would guess, more of our attendance than they do, I'm not for certain, but we get a lot of our attendance obviously from the state of Florida into our SeaWorld Orlando park and Aquatica. So those are setups that we like that set up going forward. We've competed here for certainly a long time. I'm not suggesting Epic won't have an impact or anything like that. I'm sure there's going to be days where they're going to be very crowded and we might feel it. But we like the setup of we've been competing here for a long time. We like our product. We like our value proposition. We like what we have to offer. And so I think we've demonstrated over a long history that we've competed well with a lot of new things coming to the market during that time.
spk01: Perfect. That's helpful. And then just one follow-up. On the buyback, you made very solid progress there. I guess in theory, if I look at the numbers, it feels like with the cash you have and the revolver, you could potentially finish that by the end of this year. So how do you evaluate the pacing and capital allocation priorities of that versus deleveraging or capital investments or anything else hotels, I guess,
spk06: too? Yeah, thanks. Look, I mean, we'll work with, like we always do, we'll work with the board on the use of cash. I mean, certainly, I think to the extent the stock remains undervalued, like we believe it is, that would lean towards doing probably trying to do more of those buybacks, obviously. Right? And we saw that with the shareholder vote that was overwhelmingly approved. So I think a lot of people recognize, investors recognize that the stock is undervalued. So the pacing will really just come down to does it stay undervalued? And then how do we work with our team and the board to kind of navigate, like you said, the cash? But keep in mind that the business overall generates strong free cash flow. So you can model that out. It sounds like you kind of did. And we do have, you know, we are entering kind of the peak season here where we would we would generate more of our cash. So we'll keep you posted each quarter, but certainly, we're we're we recognize the stock is undervalued and certainly believe in the buybacks.
spk01: Great. Thanks so much.
spk03: This concludes our question and answer session. I would like to turn the conference back over to Mark Swanson, CEO, for any closing remarks.
spk06: Yeah, thank you, Cindy. You know, on behalf of Jim and the rest of the management team at United Parks Resorts, we want to thank you for joining us this morning. As you heard today, we are confident in our long term strategy. Each group will believe will drive improved operating and financial results and long term value for stakeholders. So thank you for joining. We look forward to speaking with you next quarter.
spk03: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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