SeaWorld Entertainment, Inc.

Good day and welcome to the SeaWorld Parks and Entertainment first quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists 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 touchtone phone. And to withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. And if you have further questions, you may re-enter the question queue. Please note this event is being recorded. I would now like to turn the conference over to Mr. Matthew Stroud. Please go ahead, sir.

Thank you, Chuck, and good morning, everyone. Welcome to SeaWorld's 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.seaworldinvestors.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 Elizabeth Galaxi, Chief Financial Officer and Treasurer. This morning we will review our first quarter financial results, and then we will open up the call to your questions. Before we begin, I'd 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 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 another quarter of record financial results. while our first quarter performance was strong and continued our momentum from 2021. We have scope for further recovery as it still does not yet reflect a normalized operating environment. In particular, international and group-related visitation is improving but was not back yet to pre-COVID levels, and we have opportunities to improve staffing levels to capture even more in-park spending demand. Looking ahead, forward demand indicators are encouraging. Our past base, as of April 30, 2022, is at a record high for this point in the season and 21.9% higher than at this point in 2019, which was the previous high. International and group business is returning, and we expect our pricing power and efficiency initiatives to continue to offset cost pressures and allow us to continue to expand margins. We are also thrilled by our guests' reception to the new rides and attractions we've opened to date, and we are particularly encouraged by the early reviews and results from our new Sesame Place San Diego Park, which is our first new park since 2013. As we have demonstrated, we have systematically improved our business model starting before and during the pandemic period, and we expect these improvements to continue to be reflected in our operating and financial results. While we still have opportunities to take advantage of areas where we can certainly improve, based on the work we have done to date, the work we are currently undergoing, and the specific plans we have for the future, we are confident we can continue to deliver additional operational and financial improvements that we expect will lead to meaningful increases in shareholder value. Before moving to Elizabeth and her update on financial performance, let me comment on a few more items. First, let me comment on our balance sheet. Thanks to important decisions we made over the last two years and the hard work of our entire team, we are in the fortunate position to have an extremely strong balance sheet. Our LTM net total leverage ratio is below 2.5 times, and we have over $745 million of total available liquidity, including $380 million of cash. And we expect to generate significant additional cash as we are entering the high cash flow generation part of the year. This strong balance sheet provides a great advantage and gives us flexibility to continue to invest in and grow our business make opportunistic investments, and to thoughtfully return capital to our shareholders. Second, let me update you on the new rides and attractions for 2022. In February, we opened the Icebreaker Roller Coaster at SeaWorld Orlando. In March, we opened the Tidal Surge Screaming Swing at SeaWorld San Antonio, the Iron Gwazi Roller Coaster at Busch Gardens Tampa Bay, the Reef Plunge Waterslide at Aquatica Orlando, the Emperor Rollercoaster at SeaWorld San Diego, the Pantheon Rollercoaster at Busch Gardens Williamsburg, and the Riptide Race Waterslide at Aquatica San Antonio. In April, we open Big Bird's Tour Bus Ride at Sesame Place, Philadelphia. And later this month, we will open Water Country USA in Virginia for its traditional operating season featuring its all-new Aquazoid Amped waterslide, and at Adventure Island Tampa, we will open the Rapids Racer and Wahoo Remix waterslides. As I've said before, we believe this is one of our best lineups ever for rides, attractions, and park enhancements, and we are excited as we head into our busy summer season with our new attractions and great events planned, including guest favorites, Electric Ocean at all SeaWorld parks, and summer celebration at all Busch Gardens parks. We invite everyone to come and enjoy what we have to offer this summer. Third, we continue to realize double-digit pricing increases in our admissions and in-park products. Our admissions per capita grew 2.5% in the quarter. Higher realized prices were partially offset by a higher mix of past visitation, which comes at a lower relative per capita. and the impact of park mix. We had normal operations in Q1 of 2022, including parks operating that generate lower relative per caps compared to Q1 of 2021, where some of our parks that would normally be operating were closed or only partially operating. In-park per caps grew 2.4 percent in the quarter. Higher realized prices were offset by less than optimal staffing levels which impacted our ability to fully capture strong consumer demand as well as pass and park mix. Going forward, we expect to continue to grow admissions and in-park per caps by taking advantage of the pricing environment and continuing to enhance and execute on our pricing and product strategies and capabilities. Fourth, like many other companies, the current labor market continues to present challenges. But we are working hard to find new and better ways to attract, motivate, and retain talent, including expanding our use of international workers at our parks, something that we didn't take advantage of as much as our competitors may have in the past. We are optimistic these initiatives will better position us going forward as we answer to and respond to the expected demands of the busy summer season. Fifth, we continue to work on cost reduction and efficiency opportunities. including continuing to eliminate unnecessary and redundant costs, optimizing our staffing and spend levels, and investing in and leveraging technology. These efforts will allow us to reduce our labor requirements, increase throughput and speed of service, and improve overall guest experience. Sixth, we continue to make progress on our new mobile app, which guests are utilizing to improve their in-park experience. So far, there have been approximately 1.4 million downloads of the app, and a growing percentage of our guests are using and engaging with the app. We are seeing an increase in average transaction value for food and beverage purchases made through the app compared to point-of-sale orders, and we are seeing double-digit percentage revenue penetration across other in-park products that guests are purchasing through the app. We are in the very early innings with our app, and we are looking forward to sharing more of the progress we make in this area in the coming quarters. We now have our CRM system up and running and are in the early stages of harnessing the power of the system. We have already benefited from increased engagement with our guests, and we have begun early piloting and testing of personalized communications. We expect value-enhancing contributions from this new powerful tool, that we were admittedly behind the curve in implementing. We also very much look forward to sharing more about our CRM and its expected value-creating impacts over the coming quarters. Finally, we continue to make progress on our inorganic growth initiatives related to hotels, new parks, and international expansion, and expect to have more to share later in the year. We repurchased approximately 1.5 million shares of common stock at a total cost of approximately $109.9 million during the first quarter of 2022, and we completed our previously authorized share repurchase program by purchasing an additional $140.1 million in the second quarter of 2022. Overall, we are proud to report record net income on a trailing 12-month basis of $292 million and record adjusted EBITDA on a trailing 12-month basis of over $702 million, which was achieved with attendance of only 21.4 million guests, well below our historical high of over 25 million guests that we achieved in 2008. These achievements reflect the extraordinary efforts of our teams to operate our parks despite the challenging environment we faced and continue to position this company for revenue growth and increased profitability. As we have demonstrated in the first quarter and throughout last year, we believe the strategies we have developed and refined over the past few years, along with the actions we have taken since the beginning of the COVID-19 pandemic, will continue to lead to significantly improved financial results for the company. With that, I would like to turn the call over to Elizabeth to discuss our financial results in more detail. Elizabeth.