United Parks & Resorts Inc.

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 1 on a touch-tone phone. To withdraw your question, please press 2. Please note this event is being recorded. I would now like to turn the conference over to Matthew Stroud, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to 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 www.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 securities 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 factors 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?

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 and 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-park 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, one-of-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're 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, featuring Tassie's Underwater Twist, Florida's most immersive water slide 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-lanched 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 expansive gift shop along with one of the largest collections of penguins in North America. Penguin Trek 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 Ticket to Poo Splash at Aquatica San Antonio, Aqua Glow 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 continue to progress with our cost and efficiency-related work, and as we noted last quarter, we expect $50 million of realized 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 point-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're very excited about our hotel opportunity across our 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 31st, 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. Subsequent to March 31st, 2024 through May 6th, 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, and all 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.