SeaWorld Entertainment, Inc. [SEAS] Filings

10-Q 1 seas-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35883

SeaWorld Entertainment, Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-1220297
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
6240 Sea Harbor Drive Orlando, Florida		32821
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (407) 226-5011

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SEAS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had outstanding 63,944,033 shares of Common Stock, par value $0.01 per share as of November 3, 2023.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


		Page No.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I.	FINANCIAL INFORMATION	5

Item 1.	Unaudited Condensed Consolidated Financial Statements	5

	Unaudited Condensed Consolidated Balance Sheets	5

	Unaudited Condensed Consolidated Statements of Operations	6

	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit	7

	Unaudited Condensed Consolidated Statements of Cash Flows	9

	Notes to Unaudited Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	32

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 3.	Defaults Upon Senior Securities	34

Item 4.	Mine Safety Disclosures	34

Item 5.	Other Information	35

Item 6.	Exhibits	35
	Signatures	36

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” “targeted,” “goal” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ materially include, among others, the risks, uncertainties and factors set forth under “Part I, Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report on Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”), and under “Part II, Item 1A., Risk Factors” in this Quarterly Report on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the SEC, including this report, and are accessible on the SEC’s website at www.sec.gov, including the following:

•

a decline in discretionary consumer spending or consumer confidence, including any unfavorable impacts from Federal Reserve interest rate actions and inflation which may influence discretionary spending, unemployment or the overall economy;

•

various factors beyond our control adversely affecting attendance and guest spending at our theme parks, including, but not limited to, weather, natural disasters, labor shortages, inflationary pressures, supply chain delays or shortages, foreign exchange rates, consumer confidence, the potential spread of travel-related health concerns including pandemics and epidemics, travel related concerns, adverse general economic related factors including increasing interest rates, economic uncertainty, and recent geopolitical events outside of the United States, and governmental actions;

•

failure to hire and/or retain employees;

•

increased labor costs, including minimum wage increases, and employee health and welfare benefit costs;

•

complex federal and state regulations governing the treatment of animals, which can change, and claims and lawsuits by activist groups before government regulators and in the courts;

•

activist and other third-party groups and/or media can pressure governmental agencies, vendors, partners, guests and/or regulators, bring action in the courts or create negative publicity about us;

•

incidents or adverse publicity concerning our theme parks, the theme park industry and/or zoological facilities;

•

a significant portion of our revenues have historically been generated in the States of Florida, California and Virginia, and any risks affecting such markets, such as natural disasters, closures due to pandemics, severe weather and travel-related disruptions or incidents;

•

technology interruptions or failures that impair access to our websites and/or information technology systems;

•

cyber security risks to us or our third-party service providers, failure to maintain or protect the integrity of internal, employee or guest data, and/or failure to abide by the evolving cyber security regulatory environment;

•

inability to compete effectively in the highly competitive theme park industry;

•

interactions between animals and our employees and our guests at attractions at our theme parks;

•

animal exposure to infectious disease;

•

high fixed cost structure of theme park operations;

•

seasonal fluctuations in operating results;

•

changing consumer tastes and preferences;

•

inability to remediate an identified material weakness on a timely basis;

•

inability to grow our business or fund theme park capital expenditures;

•

inability to realize the benefits of developments, restructurings, acquisitions or other strategic initiatives, and the impact of the costs associated with such activities;

•

the effects of the global Coronavirus (“COVID-19”) pandemic, or any related mutations of the virus on our business and the economy in general;

•

adverse litigation judgments or settlements;

•

inability to protect our intellectual property or the infringement on intellectual property rights of others;

•

the loss of licenses and permits required to exhibit animals or the violation of laws and regulations;

•

unionization activities and/or labor disputes;

•

inability to maintain certain commercial licenses;

•

restrictions in our debt agreements limiting flexibility in operating our business;

•

inability to retain our current credit ratings;

•

our leverage and interest rate risk;

•

the ability of Hill Path Capital LP and its affiliates to significantly influence our decisions and their interests may conflict with ours or yours in the future;

•

inadequate insurance coverage;

•

inability to purchase or contract with third party manufacturers for rides and attractions, construction delays or impacts of supply chain disruptions on existing or new rides and attractions;

•

environmental regulations, expenditures and liabilities;

•

suspension or termination of any of our business licenses, including by legislation at federal, state or local levels;

•

delays, restrictions or inability to obtain or maintain permits;

•

financial distress of strategic partners or other counterparties;

•

tariffs or other trade restrictions;

•

actions of activist stockholders;

•

the policies of the U.S. President and his administration or any changes to tax laws;

•

changes or declines in our stock price, as well as the risk that securities analysts could downgrade our stock or our sector; and

•

risks associated with our capital allocation plans and share repurchases, including the risk that our share repurchase program could increase volatility and fail to enhance stockholder value.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein and, except as required by applicable law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise.

All references to “we,” “us,” “our,” “Company” or “SeaWorld” in this Quarterly Report on Form 10-Q mean SeaWorld Entertainment, Inc., its subsidiaries and affiliates.

Website and Social Media Disclosure

We use our websites (www.seaworldentertainment.com and www.seaworldinvestors.com) and our corporate Twitter account (@SeaWorld) as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about SeaWorld when you enroll your e-mail address by visiting the “E-mail Alerts” section of our website at www.seaworldinvestors.com. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

Trademarks, Service Marks and Trade Names

We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and in certain foreign jurisdictions, including SeaWorld Entertainment, SeaWorld Parks & Entertainment, SeaWorld®, Shamu®, Busch Gardens®, Aquatica®, Discovery Cove®, Sea Rescue® and other names and marks that identify our theme parks, characters, rides, attractions and other businesses. In addition, we have certain rights to use Sesame Street® marks, characters and related indicia through a license agreement with Sesame Workshop.

Solely for convenience, the trademarks, service marks, and trade names referred to hereafter in this Quarterly Report on Form 10-Q are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This Quarterly Report on Form 10-Q may contain additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are, to our knowledge, the property of their respective owners.

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	September 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	215,226		$	79,196
Accounts receivable, net		80,098			71,050
Inventories		54,623			55,190
Prepaid expenses and other current assets		25,888			28,260
Total current assets		375,835			233,696
Property and equipment, at cost		3,766,620			3,576,092
Accumulated depreciation		(1,958,429	)		(1,869,413	)
Property and equipment, net		1,808,191			1,706,679
Goodwill		66,278			66,278
Trade names/trademarks, net		157,000			157,000
Right of use assets-operating leases		127,814			130,479
Deferred tax assets, net		11,274			12,332
Other assets, net		29,150			19,323
Total assets	$	2,575,542		$	2,325,787
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses	$	146,719		$	159,947
Current maturities of long-term debt		12,000			12,000
Operating lease liabilities		3,371			3,387
Accrued salaries, wages and benefits		24,412			17,423
Deferred revenue		161,082			169,535
Other accrued liabilities		58,892			46,914
Total current liabilities		406,476			409,206
Long-term debt, net		2,094,667			2,099,059
Long-term operating lease liabilities		113,057			115,396
Deferred tax liabilities, net		157,708			96,627
Other liabilities		56,030			43,163
Total liabilities		2,827,938			2,763,451
Commitments and contingencies (Note 8)
Stockholders’ Deficit:
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at September 30, 2023 and December 31, 2022		—			—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 96,634,322 and 96,287,771 shares issued at September 30, 2023 and December 31, 2022, respectively		966			963
Additional paid-in capital		719,134			710,151
Retained earnings		370,046			175,903
Treasury stock, at cost (32,690,289 and 32,376,539 shares at September 30, 2023 and December 31, 2022, respectively)		(1,342,542	)		(1,324,681	)
Total stockholders’ deficit		(252,396	)		(437,664	)
Total liabilities and stockholders’ deficit	$	2,575,542		$	2,325,787

See accompanying notes to unaudited condensed consolidated financial statements.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

(In thousands, except per share amounts)


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2023			2022			2023		2022
Net revenues:
Admissions	$	299,785		$	313,574		$	733,542	$	739,941
Food, merchandise and other		248,462			251,633			604,080		600,776
Total revenues		548,247			565,207			1,337,622		1,340,717
Costs and expenses:
Cost of food, merchandise and other revenues		40,431			41,385			101,862		105,943
Operating expenses (exclusive of depreciation and amortization shown separately below)		205,808			215,899			574,210		559,320
Selling, general and administrative expenses		59,705			53,082			176,152		155,299
Severance and other separation costs		(139	)		—			521		113
Depreciation and amortization		39,171			37,216			114,396		114,379
Total costs and expenses		344,976			347,582			967,141		935,054
Operating income		203,271			217,625			370,481		405,663
Other (income) expense, net		(21	)		(66	)		20		(110	)
Interest expense		37,052			30,556			110,407		82,736
Income before income taxes		166,240			187,135			260,054		323,037
Provision for income taxes		42,685			52,578			65,911		80,857
Net income	$	123,555		$	134,557		$	194,143	$	242,180
Earnings per share:
Earnings per share, basic	$	1.93		$	2.00		$	3.04	$	3.39
Earnings per share, diluted	$	1.92		$	1.99		$	3.01	$	3.36
Weighted average common shares outstanding:
Basic		63,954			67,176			63,955		71,450
Diluted		64,319			67,569			64,425		72,130

See accompanying notes to unaudited condensed consolidated financial statements.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDERS' DEFICIT

(In thousands, except share amounts)


	Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			Retained Earnings			Treasury Stock, at Cost			Total Stockholders' Deficit
Balance at December 31, 2022		96,287,771		$	963		$	710,151		$	175,903		$	(1,324,681	)	$	(437,664	)
Equity-based compensation		—			—			4,482			—			—			4,482
Vesting of restricted shares		273,134			3			(3	)		—			—			—
Shares withheld for tax withholdings		(86,914	)		(1	)		(5,568	)		—			—			(5,569	)
Exercise of stock options		22,793			—			565			—			—			565
Net loss		—			—			—			(16,467	)		—			(16,467	)
Balance at March 31, 2023		96,496,784			965			709,627			159,436			(1,324,681	)		(454,653	)
Equity-based compensation		—			—			3,725			—			—			3,725
Vesting of restricted shares		53,735			—			—			—			—			—
Shares withheld for tax withholdings		(13,118	)		—			(771	)		—			—			(771	)
Exercise of stock options		45,248			1			1,078			—			—			1,079
Repurchase of 235,000 shares of treasury stock, at cost		—			—			—			—			(13,947	)		(13,947	)
Net income		—			—			—			87,055			—			87,055
Balance at June 30, 2023		96,582,649			966			713,659			246,491			(1,338,628	)		(377,512	)
Equity-based compensation		—			—			4,602			—			—			4,602
Vesting of restricted shares		20,986			—			—			—			—			—
Shares withheld for tax withholdings		(4,289	)		—			(221	)		—			—			(221	)
Exercise of stock options		34,976			—			1,094			—			—			1,094
Repurchase of 78,750 shares of treasury stock, at cost		—			—			—			—			(3,914	)		(3,914	)
Net income		—			—			—			123,555			—			123,555
Balance at September 30, 2023		96,634,322		$	966		$	719,134		$	370,046		$	(1,342,542	)	$	(252,396	)


	Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			(Accumulated Deficit) Retained Earnings			Treasury Stock, at Cost			Total Stockholders' Deficit
Balance at December 31, 2021		95,541,992		$	955		$	711,474		$	(115,287	)	$	(631,058	)	$	(33,916	)
Equity-based compensation		—			—			6,982			—			—			6,982
Vesting of restricted shares		361,403			4			(4	)		—			—			—
Shares withheld for tax withholdings		(111,865	)		(1	)		(7,737	)		—			—			(7,738	)
Exercise of stock options		46,503			—			1,127			—			—			1,127
Repurchase of 1,535,427 shares of treasury stock, at cost		—			—			—			—			(109,905	)		(109,905	)
Net loss		—			—			—			(8,987	)		—			(8,987	)
Balance at March 31, 2022		95,838,033			958			711,842			(124,274	)		(740,963	)		(152,437	)
Equity-based compensation		—			—			2,549			—			—			2,549
Vesting of restricted shares		545,819			6			(6	)		—			—			—
Shares withheld for tax withholdings		(201,442	)		(2	)		(14,327	)		—			—			(14,329	)
Exercise of stock options		29,783			—			808			—			—			808
Repurchase of 6,341,755 shares of treasury stock, at cost		—			—			—			—			(354,652	)		(354,652	)
Net income		—			—			—			116,610			—			116,610
Balance at June 30, 2022		96,212,193			962			700,866			(7,664	)		(1,095,615	)		(401,451	)
Equity-based compensation		—			—			4,444			—			—			4,444
Vesting of restricted shares		13,432			—			—			—			—			—
Shares withheld for tax withholdings		(2,183	)		—			(115	)		—			—			(115	)
Exercise of stock options		32,401			1			759			—			—			760
Repurchase of 3,163,547 shares of treasury stock, at cost		—			—			—			—			(158,497	)		(158,497	)
Net income		—			—			—			134,557			—			134,557
Balance at September 30, 2022		96,255,843		$	963		$	705,954		$	126,893		$	(1,254,112	)	$	(

SeaWorld Entertainment, Inc. [SEAS] Filings
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-01]
10-Q	[2022-11-09]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-02-28]
10-Q	[2021-11-15]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-10]
10-Q	[2020-05-08]
10-K	[2020-02-27]
10-Q	[2019-11-07]
10-Q	[2019-08-07]
10-Q	[2019-05-08]
10-K	[2019-03-01]
10-Q	[2018-11-06]
10-Q	[2018-08-07]
10-Q	[2018-05-09]
10-K	[2018-02-28]
10-Q	[2017-11-08]
10-Q	[2017-08-09]
10-Q	[2017-05-09]
10-K	[2017-03-01]
10-Q	[2016-11-09]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-02-27]
10-Q	[2014-11-13]
10-Q	[2014-08-14]
10-Q	[2014-05-15]
S-1	[2014-03-24]
10-K	[2014-03-21]
S-1	[2013-11-20]
10-Q	[2013-11-14]
10-Q	[2013-08-14]
10-Q	[2013-05-23]
S-1	[2012-12-27]