Please ensure Javascript is enabled for purposes of website accessibility

SeaWorld Entertainment Inc. Needs More Than a New CEO

By Rick Munarriz - Mar 20, 2015 at 12:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The marine life theme park operator brings on a new CEO and a fresh marketing strategy.

Source: SeaWorld 

SeaWorld Entertainment (SEAS 3.21%) embraced a new marketing strategy on Monday, and three days later it attracted a new CEO. All that the troubled theme park operator needs is to embrace and attract guests and it will be back in business.

Thursday afternoon's announcement that Joel Manby will be stepping up as CEO come April 7 is the right call. Manby was CEO at Herschend Enterprises, the country's largest family owned theme park operator. It's the company behind Dollywood, Silver Dollar City, and various water parks, attractions, and lodging establishments.

Herschend thrived under Manby's watch. Herschend grew from six properties to 26 since his arrival in 2003, doubling annual EBITDA and net free cash flow along the way.

Manby spent 20 years in the automotive sector before leading the way at Herschend, serving in executive roles at Saturn and Saab. The car industry experience should come in handy: SeaWorld is a bit of a lemon at the moment.

Splash zone
SeaWorld is coming off of back-to-back years of 4% declines in attendance. Things get uglier as we work our way down the chain's income statement. Net income has plunged 33% over the past two years, according to S&P Capital IQ data.

Things were fine when SeaWorld went public at $27 a share 23 months ago. The park's brand began to disintegrate a few months later when the Blackfish documentary slammed the park for its treatment of killer whales. The one-sided skewering wasn't a box office draw at first, but subsequent airings on CNN and streaming availability exposed the anti-SeaWorld message to a broader audience. 

It's now cool to hate on SeaWorld, and it comes at a time when the amusement park industry is booming. We saw that on display during the holiday quarter. SeaWorld's revenue slipped 3% relative to the prior year's holiday quarter, just as the four other publicly traded park operators saw revenue climb between 9% and 30% higher. An improving economy and cheap gas are making a day trip out to a regional amusement park a popular choice for anyone that isn't flying the SeaWorld banner. 

Ad it up
It's been a busy week for SeaWorld. It debuted a new ad on Monday, starring Leon one of its sea lions. The new ad is part of a "Meet the Animals" campaign that will single out some of the park's marine life in the coming months, making a more personal connection.

Casting SeaWorld's animals in a softer light won't silence the most passionate activists, but it could sway the mainstream of lightweight critics. The more important catalyst will be Manby, bringing an outsider's perspective to a problem that hasn't been able to be tackled effectively from the inside. The pedigree's right. The payoff could be substantial, and not just for shareholders since most of Manby's compensation is coming in the form of performance bonuses. 

It's not just Shamu that needs to make a big splash.

Rick Munarriz owns shares of SeaWorld Entertainment. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
$52.71 (3.21%) $1.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.