United Parks & Resorts Inc.

Good day and welcome to the United Parks and Resorts second 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 your telephone keypad. To withdraw your question, please press star, then 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 second 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 for 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 second 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 certain forward-looking statements within the meaning of the 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 the 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 living 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 another quarter of strong financial results. We grew attendance and revenue during the quarter despite not seeing any material improvement in weather during the quarter compared to prior year. We also achieved a record level for in part per capita spending, which is a testament to the continued success of our strategies and investment in this area. We are also happy to have been able to repurchase approximately 6.3 million shares since the end of March through August 5th, or nearly 10% of our outstanding shares at what we believe were depressed and highly attractive prices, underscoring our significant free cash flow generation and our commitment to thoughtfully and opportunistically return excess capital to shareholders. Looking forward, we continue to be encouraged by the booking trends at our Discovery Cove property, along with our group bookings, which continue to run well ahead of 2023. International visitation, while still down compared to 2019, was again up for the quarter compared to prior year. We're very excited about our remaining summer events, including Dan's Brew and Barbecue at SeaWorld Orlando, summer spectacular at SeaWorld San Diego, bourbon and barbecue at Busch Gardens Tampa Bay, beer fest, brews and barbecue at Busch Gardens Williamsburg, and red, white and barbecue at SeaWorld San Antonio over the next few weeks. Later in September, we will start our popular Halloween events, which will be followed by our Christmas events. These special events have continued to grow in popularity and I expect this year's events to be among the best ever. For the full year 2024, we continue to expect to deliver new records in revenue and adjusted EBITDA. We have high confidence in our ability to continue to deliver operational and financial improvements that will result in meaningful increases in revenue, adjusted EBITDA, and shareholder value. I want to thank all of our ambassadors for their hard work and dedicated efforts these past few months as we wrap up the summer season and head into our popular Halloween and Christmas events for the balance of the year. Now let me give a brief update on some other items. Let me comment on our debt repricing activity last week. Last week we launched an opportunistic debt repricing on the back of strong credit markets and tightening credit spreads. The repricing was going well and it was scheduled to price on Monday of this week. Needless to say, given the market volatility on Monday, we decided to pause the repricing and we'll come back to market when conditions normalize. During the second quarter, we repurchased 4.1 million shares for an aggregate total of approximately $213.4 million. Subsequent to June 30, 2024, through August 5, 2024, we purchased approximately 2.2 million shares for an aggregate total of approximately $116.1 million. The board and company strongly believe our shares are materially undervalued. We have significant confidence in our business, our prospects, and the value of our assets. In 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 balance sheet continues to be strong. Our June 30, 2024 net leverage ratio is 2.76 times, and we had approximately $605 million of total liquidity, including approximately $232 million of cash on the balance sheet in advance of us starting our summer season where we generate a majority of our cash flow. The 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. When we continue to progress with our cost and efficiency-related work, and we expect approximately $50 million of realized savings in 2024. We're actively working to build a new list of cost-efficiency initiatives and still have areas we have not meaningfully impacted as much as we'd like, including things like utilities, insurance-related items, and other areas. 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. On the digital transformation front, we continue to make investments in and build out our CRM capabilities and our mobile app. On CRM, we created a pilot program projected to generate incremental revenue and support existing marketing and email strategies while proving out a better more holistic approach to customer engagement, among other things. We expect the CRM will be a component of our growth strategy over time. In regards to the mobile app, we continue to make progress on functionality, adoption, usage, and financial impact. The app 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 10.7 million times up from $9.4 million at the end of Q1. Total revenue generated on the app continues to grow and we are now seeing an approximate 32% 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 more of our targeted 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. On the international front, we have discussions on several new international projects and expect to have more news to share in the coming quarters. On the hotel front, we continue to have discussions with various potential partners on a variety of structures. And as we have discussed previously, we are very excited about the opportunity to monetize portion of our substantial and valuable unused land holdings and have hotels integrated into our properties. As a reminder, we are very focused on achieving a minimum ROI for our capital projects. 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 profitable enterprise. we are building an even stronger and more resilient business that we expect will deliver improved operational and financial results and meaningful increases in shareholder value. With that, Jim will discuss our financial results in more detail. Jim?