United Parks & Resorts Inc.

Good morning and welcome to the United Parks and Resorts second quarter 2025 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 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 of 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 .unitedparksinvestors.com. Replay information from 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 Michalichek, Chief Financial Officer and Treasurer. This morning we will review our second quarter financial results and then we will open the call for 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 factor section of our annual report on Form 10K and quarterly reports on Form 10Q 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 have grown attendance in the second quarter, despite experiencing amongst the worst weather we have ever experienced in the second quarter. Despite those headwinds, we saw an increase in international and group visitation compared to the prior year in the second quarter. Additionally, we saw an increase in attendance at all of our Orlando parks, including SeaWorld Orlando, Aquatica Orlando, and Discovery Cove. Looking forward, we continue to be encouraged by the forward-booking trends we are seeing in our group business and at our Discovery Cove property, both of which are up mid to high single digits for the remainder of the year. While it's early, the 2026 bookings are also showing very strong trends in both areas as well. We are excited about the remaining lineup of events as we wrap up the summer, including Bands Brew and Barbecue at SeaWorld Orlando, Summer Spectacular at SeaWorld San Diego, Red, White, and Barbecue at SeaWorld San Antonio, and Beer Fest Brews and Barbecue at both Busch Gardens Tampa Bay and Busch Gardens Williamsburg over the next few weeks. Later in September, we'll start our popular Halloween events which will run through October and be followed by our Christmas events in November and December. These special events continue to grow in popularity and we expect this year's events to be among our biggest ever. Early forward booking ticket sales for our Hollis-Cream events across our parks are running ahead of prior year. I want to thank all of our ambassadors for their hard work and dedicated efforts to make these things happen. I'm also happy to announce that our board has approved a new $500 million share repurchase program subject to approval by a majority of the non-HillPath stockholders. We intend to file preliminary proxy materials for a special meeting of stockholders within the coming days and expect to have the vote within the next 30 days. With our strong balance sheet and significant free cash flow generation, we are excited to be able to take advantage of what we believe to be a very attractive opportunity to invest in the shares of our own company via a share repurchase and return capital to our stockholders. The board and the company strongly believe our shares are materially undervalued. As we have expressed in the past, we have significant confidence in our business, our prospects and the value of our assets and we believe any reasonable way you look at it, we feel we are materially undervalued and that there's meaningful upside opportunity in our current share price. Our balance sheet continues to be strong. Our June 30th, 2025 net total leverage ratio is 3.0 times and we had approximately $883 million of total available liquidity, including approximately $194 million of cash on the balance sheet. As a reminder, we generate a majority of our cash flow in our peak summer season, stretching over the second and third quarters. The strong balance sheet gives us the 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. On cost, we're a little disappointed and probably could have and should have done a better job of proactively managing some of our park labor and operating expenses in the face of poor weather that impacted demand. We have tightened and improved our processes and added additional resources to help manage these areas better in the future. There are other areas of the P&L that we have opportunities to manage better also. In light of this, we are implementing an additional cost reduction plan that we expect will reduce up to $15 million of cost in the second half of the year. On Orlando, there has been considerable interest from you all on the opening of Universal's new EPIC, Universe Theme Park this year in Orlando and a potential impact on demand at our SeaWorld Park in Orlando. As we and some of our other competitors have consistently communicated, we welcome investment in the Orlando market and we believe more high quality investment is good for the overall market and good for our business. As you know, over the past 50 years since we arrived in Orlando, there has been significant investment in the market which has driven more and more visitors and residents to this highly attractive market. Today, Orlando is the most visited city in America and amongst the top most visited cities in the world. We benefit substantially from the strategic position in this market. As you know, for competitive and other reasons, we do not normally share individual park performance information. However, in the spirit of hopefully giving clarity and some conclusion to this open question, I will share with you all that as expected, our attendance at our SeaWorld Orlando Park has been up in attendance since EPIC opened on May 22nd. It was up for the full second quarter and it was up if you measured from the date EPIC opened through the end of the second quarter. It continues to be up quarter to day in the third quarter through August 6th on a day to day basis. And we expect attendance for the remainder of the year at this park to be up as well. We hope this provides helpful context for you all. We have great respect for our competitors in Orlando. We welcome increased investment from them and we are very happy to be a major operator in this market benefiting from its growth and vibrancy. We hope we really don't have to discuss this topic again and we do not plan to make it a normal practice to discuss individual park performance information in the future. I'd also like to take a minute to highlight our early forward insights into 2026. As I mentioned earlier, our early group booking transfer 2026 are up, our early Discovery Cove property booking transfer 2026 are up and are very early and recently launched at select parks 2026 pass sales are up. We have another exciting lineup of new rides, attractions, events and activations we're planning for 2026. In addition to certain food and beverage, retail and technology improvements which we look forward to implementing. We are in the midst of 2026 planning right now and the team is working hard on putting a good plan in place for next year. Moving on to some of our strategic initiatives. On the sponsorship front, we have been actively working over the past several months on various sponsorship opportunities that leverage our valuable assets and customer database. As a reminder, we have over 21 million annual visitors across our park portfolio and the average length of stay is over six hours. We have secured agreements with a number of partners across our parks and continue to do so. We continue to work through a pipeline of other potential opportunities. We are projecting approximately up to mid single digit million dollars in sponsorship revenue for this year with an annual outlook of approximately $20 million in the coming years. On our international opportunities, we are in active discussions with multiple potential partners and expect to have two signed MOUs by the end of the year. More to share in the coming quarters. On the digital transformation front, we continue to make investments and build out our CRM capabilities and our mobile app. 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. 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 impact performance. The app has now been downloaded by more than 15.6 million. The app has now been downloaded more than 15.6 million times up from 14.3 million at the end of Q1. 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 purchases 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 impact guest experience, drive increases in revenue and decreases in cost. On the hotel front, our work and discussions continue with various potential partners on a variety of structures. As we have discussed previously, we continue to be excited about opportunities to monetize a portion of our substantial and valuable unused land, holdings and half hotels integrated into our properties. On real estate more generally, as we have discussed, we own over 2,000 acres of valuable real estate in desirable locations, including approximately 400 acres of undeveloped land adjacent to our parks, including significant developable land in Orlando. We do not believe that the public markets have or are appropriately giving credit to these attractive and valuable 100% owned real estate assets. On IP partnerships, we continue our discussions with various partners to bring globally recognized IP to our parks via new rides, attractions and our other exciting activations. I am excited about the significant investments we are making and the many initiatives we have underway across our business that we will expect will improve guest experience, allow us to generate more revenue, and make it a more efficient and more profitable enterprise. We are building an even stronger and more resilient business that we are confident over time will deliver improved operational and financial results and meaningful increases in value for stakeholders. With that, Jim will discuss our financial results in more detail. Jim? Jim Cooke Thank you, Mark,