Central Florida's theme parks have come a long way since reopening months into the pandemic, and the first one to post financial results this earnings season is surprisingly back in the black. Universal Orlando parent Comcast (CMCSA 1.29%) announced on Thursday that its theme parks business turned a profit in its latest quarter, a welcome feat for an industry that has faced a slew of challenges to get going again.
Comcast's theme park segment posted revenue of nearly $1.1 billion for the three months ending in June, understandably higher than the $136 million it rang up a year earlier when its parks were largely closed. Universal Orlando didn't reopen until a few days into June of last year, and even then it was mostly locals heading over with a lot of social distancing safeguards and travel restrictions in place.
The real surprise for the segment is the $221 million in positive adjusted EBITDA for the quarter, and that includes Comcast shelling out $150 million on pre-opening costs for Universal Beijing. It's an encouraging sign, and it bodes well for theme park rivals Disney (DIS 2.46%) and SeaWorld Entertainment (SEAS 4.10%) that will be be discussing the same three-month period in a few days. SeaWorld Entertainment reports on Thursday morning. Disney follows six days later.
Image source: Comcast.
Buckle up for the ride
Year-over-year comparisons are easy right now, but Comcast's theme parks are back to pre-pandemic levels. Attendance in June exceeded the same month in 2019, and that's with a dramatic drop in international visitors. Per capita spending is also on the rise, another surprise since locals tend to spend less than out-of-towners.
Comcast's strong showing should be even better news for Disney with theme parks making up a larger chunk of its revenue mix. SeaWorld Entertainment is a pure play on the theme park market.
We're not out of the aromatic E.T. Adventure woods just yet. With COVID-19 cases in the Sunshine State nearly back to peak January levels, safeguards are starting to tighten up after months of easing. Disney World began requiring that all guests regardless of vaccination status wear masks in indoor areas again on Friday.
There's a lot of uncertainty in the industry's recovery until the latest Delta variant spike eases. Even Comcast struck a cautionary tone after singing its own praises.
"Obviously, with COVID, you just don't know," NBCUniversal CEO Jeff Shell warned during Thursday's earnings call. "Things could be lumpy. Things could be nonlinear."
Wearing masks indoors may not be a deal breaker to most visitors, but the grim reality is that this could be just the beginning of the rollbacks if case counts, hospitalization rates, and fatalities keep climbing.
Comcast theme parks turning a profit again is a great sign for travel and tourism stocks, but the Mummy coaster doesn't end at the first station. Consumer confidence and the economy are riding high, but with Florida falling short in the vaccination battle -- and breakthrough cases to even vaccinated locals on the rise -- things could get lumpy indeed.
