One of this week's big early winners is SeaWorld Entertainment (NYSE:SEAS). Shares of the theme-park operator shot higher on Monday morning after the company posted better-than-expected revenue growth and offered rosy guidance. The strong second quarter is sending the stock up to fresh 52-week highs; you have to go back nearly four years to find the last time that it was trading higher.
SeaWorld was able to grow its revenue and attendance for the period, no small feat given the headwinds it faced this time around. The timing of the Easter holiday -- something that saw all five of the country's leading amusement-park operators posting double-digit revenue growth in the first three months of this year at the expense of comparisons for the latest quarter -- and less-than-ideal weather at many of its parks could've made Monday's report a bucket of stinky fish. Thankfully for SeaWorld shareholders, the news didn't play out that way.
We're now entering the Splash Zone
Revenue rose 4.9%, to $391.9 million, mostly due to the handiwork of a 4.8% uptick in attendance, as SeaWorld parks greeted more than 6.4 million visitors during the springtime and early summer quarter. The balance of the top-line increase was the result of a 0.1% gain in total revenue per capita, as folks spending more once inside the park was just enough to offset the lower admission prices. These were a result of promotional pricing initiatives and a larger mix of annual-pass holders coming through the turnstiles. Analysts were bracing for a slight decline in revenue.
Things get even better on the bottom line, where SeaWorld reversed a year-ago loss to post a profit of $22.1 million, or $0.26 a share. Wall Street pros were holding out for net income of $0.27 a share, but SeaWorld's reported earnings included an $8.7 million pre-tax expense hit associated with separation-related costs and a legal settlement. If you back out those one-time hits, SeaWorld would've blown the market away on the bottom line, too.
SeaWorld Entertainment is setting a goal of hitting $475 million to $500 million in annual adjusted EBITDA by the end of 2020. Adjusted EBITDA clocked in at $300.8 million last year.
The operator of Busch Gardens, Aquatica water parks, Sesame Place, and its namesake marine life attractions has been turning things around as it continues to distance itself from the reputation hit that SeaWorld experienced following 2013's Blackfish documentary. It's been emphasizing new rides at its flagship parks, including the well-received addition of the Electric Eel coaster at its original park in San Diego.
SeaWorld's strong second quarter came despite the delayed opening of its new ride at its most visited park. The record-setting rafting ride Infinity Falls has yet to open at SeaWorld Orlando.
There were so many things that could've gone wrong following SeaWorld's blowout first quarter. It was a hard act to follow given the tailwinds that pushed revenue 16.5% higher, but SeaWorld has come through with another refreshingly strong showing.
SeaWorld is back, something that isn't going to sit well with orca-rights activists -- but it's a financial fact at this point.