United Parks & Resorts Inc.

Good day and welcome to the United Park Third Quarter 2024 Earnings Conference Call. All participants will be in the 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 your touch-tone phone. To withdraw your question, please press star, then 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.

Thank you, and good morning, everyone. Welcome to United Parks and Resorts' third 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 third 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 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 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 measures 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 Another quarter of solid financial results. Third quarter results were impacted by both a negative calendar shift and meaningfully worse weather, including Hurricane Debbie in August and Hurricane Helene in September. The combined impact of the calendar shift and the meaningfully worse weather was approximately 320,000 guests. Adjusting for these impacts, attendance would have increased approximately 3% compared to the prior year quarter. continue to see strong demand for our parks during normalized operating conditions, and we are growing total revenue per capita. Our investments and strategies related to our in-park revenue areas continue to pay off as we again delivered record in-park per capita spending during the quarter, representing growth in 17 of the last 18 quarters. During the quarter, we strengthened our balance sheet and liquidity positions by increasing the size of our revolving credit facility and decreasing its cost. We also continue to take advantage of our significant free cash flow generation and follow through on our commitment to return excess capital to shareholders by opportunistically and aggressively buying back our shares at extremely depressed and highly attractive prices. We repurchased approximately 4.9 million shares or more than 8% of our total outstanding shares since the end of June through November 6th. Year to date, we have repurchased approximately 9.4 million shares, or approximately 15% of our total outstanding shares. Last week, we wrapped up another busy Halloween season at our parks, featuring our award-winning Halloween events. Excluding our Tampa park, we again realized record-breaking attendance our increasingly popular Hallow's Scream event across our parks. October results were significantly impacted by Hurricane Milton, which resulted in 14 operating day closures in our Florida market and an extended impact at our Tampa parks as that market recovered from the impact of the storm. Attendance trends over the past three-week period post the impact of Hurricane Milton have been strong. with attendance up approximately 8% on a day-to-day basis through November 3rd. In the coming weeks, we will begin our award-winning Christmas events at our SeaWorld, Busch Gardens, and Sesame Parks. We believe our Christmas events this year will be our best ever, featuring our popular rides, attractions, and exhibits, and with new and exciting shows, specialty food and beverage offerings, and holiday shopping for guests of all ages. I want to thank our ambassadors for their dedication and efforts during our busy summer season, as well as during our Halloween events and our upcoming Christmas events. As we look out into 2025, we are extremely pleased with what we are seeing in our four demand indicators. 2025 intended date ticket sales, group bookings, and discovery code bookings are all trending up double-digit percentages ahead of prior year. We also recently launched our new and improved Premium Pass program, which features our best benefits ever, and we have seen strong sales since launch, with sales up over 10% to date. Our results year-to-date continue to demonstrate the strength and resiliency of our business model and the increased demand for our parks in our unique and differentiated offerings. While we are encouraged by the payoffs we are seeing from our investments and initiatives across our enterprise, we know we have a lot more work to do. As we wrap up planning for our 2025 season and beyond, we're confident in our ability to take advantage of clear and significant opportunities we have to improve our operations, grow our footprint, further monetize our highly valuable assets and brands, and deliver meaningful increases in revenue, profitability, and shareholder value. We announced our lineup of new rides, attractions, events, and upgrades for 2025. This lineup includes an immersive flying experience, taking guests on a breathtaking journey to the top of the world as this revolutionary attraction invites thrill seekers and families alike, to soar through the skies over the Arctic and dive into the icy depths like never before at SeaWorld Orlando. Wild Oasis, an all-new realm featuring the sights and sounds of the rainforest, the rush of the newly reimagined drop tower featuring state-of-the-art digital and sound effects, an interactive water play wonderland, a multi-level climbing canopy, and an all-new multi-species animal habitat for up-close encounters with some of the world's most fascinating animals at Bush Gardens, Tampa Bay. Rescue Junior, an all-new kid-friendly realm featuring animal rescue-themed rides, water play area, and so much more at SeaWorld San Antonio. Big Bad Wolf, The Wolf's Revenge, North America's longest family inverted coaster, delivering a unique, are delivering a highly immersive and thematic experience where families are swept into a world of unparalleled excitement at Busch Gardens Williamsburg. Jewels of the Sea, the Jellyfish Experience attraction offers an immersive and interactive view into the mysterious underwater world of glowing and graceful jellyfish at SeaWorld San Diego. Also, Journey to Atlantis, SeaWorld San Diego's first coaster will be reinvented, paying tribute to the original beloved version while adding new elements to create a more exciting and immersive experience than ever before. During the quarter, we repurchased 4.1 million shares for an aggregate total of approximately $211.7 million. Subsequent to September 30, 2024, through November 6, 2024, we repurchased approximately 0.8 million shares for an aggregate total of approximately $37.7 million. The board and the company strongly believe our shares continue to be materially undervalued. We have 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. On September 30, 2000, excuse me, our September 30, 2024 net total leverage ratio is 2.98 times, and we had approximately $759 million of total available liquidity, including approximately $77 million of cash on the balance sheet. 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. We continue to make progress on realizing our cost savings initiatives so far this year, and we still have approximately $6 million more to realize in the fourth quarter. We currently have approximately $20 million of new initiatives planned for 2025 and expect an additional $7 million of full year run rate impact in 2025 from initiatives started in 2024. As you know, cost management discipline is a key focus of our management team and we have demonstrated our ability to deliver on cost efficiencies. Now, excuse me, let me update you on some of our other initiatives. In regards to the mobile app, we continue to make substantive progress on functionality, adoption, usage, and financial impact. It is being used by an increasing number of guests in our parks to improve their in-park experience and is available at an increasing number of targeted locations. The app has now been downloaded more than 12 million times, up from 10.7 million times at the end of Q2. Total revenue generated on the app continues to grow. and we are now seeing an approximate 35% increase in average transaction value for food and beverage transactions made through the app compared to point-of-sale orders. 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 costs. We are still in the early innings of fully monetizing the app. Our CRM program is generating incremental revenue by supporting our existing marketing strategy while demonstrating a more holistic approach to customer engagement. We continue to believe that CRM will play a role in our long-term growth strategy, providing deeper insights and more meaningful connections with our guests as we continue to scale. On the international front, we continue to progress several discussions on new projects, and expect to have more exciting news to share on two new projects in particular in the coming quarters. On the real estate front, we continue to refine our hotel plans and have discussions with various potential partners. We are also discussing other opportunities to develop and monetize our strategic real estate holdings. As we have discussed previously, we are very excited about the opportunity to monetize our substantial and valuable unused land holdings and have hotels integrated into our properties. As a reminder, we are laser focused on achieving a minimum ROI for all capital projects. We are excited about our new efforts and the resources we have put towards growing our group business. We see significant opportunity to grow our group business across our park portfolio. As I mentioned, we are seeing a double digit increase in group bookings for 2025, and we are excited about unlocking the full potential of this profitable channel. We have also recently put more focus around capturing sponsorship opportunities in our parks. We recognize the opportunity we have to generate meaningful profits from leveraging the audience we have in our parks, and the success many of our competitors have had in this area. This is not something that we have recently focused on as much, and as a result, we believe we have the potential to generate meaningful incremental profits over time from creating a dedicated effort around this opportunity. More to come in future quarters. 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 our operations and 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, and we are confident we 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?