The most challenging quarter in SeaWorld Entertainment's (NYSE:SEAS) brief tenure as a public company splashes down on Thursday. The theme park operator has been facing an uphill battle of negative publicity since shortly after going public at $27 in the springtime of 2013.
The release of Blackfish a few months later cast SeaWorld trainers and the practice of keeping killer whales in captivity for entertainment in an unflattering light. Protests were followed by attendance declines, sinking the stock's prospects.
There was a brief spark of optimism three months ago. After back-to-back years of 4% declines in attendance, SeaWorld managed to grow its turnstiles clicks by 5.6% in this year's first quarter when pitted against the prior year's showing. It was only the second time since going public that SeaWorld posted positive quarterly attendance growth. That was enough to get some to wonder if the negative attention was a thing of the past, but there were a couple of reasons to believe that the turnaround wasn't entirely in place.
For starters, SeaWorld relied on heavy discounting to get folks into its parks. Guests paid an average of 5.6% less in admissions than a year earlier, and even with the markdowns guests held back on overall spending. The average patron spent an average of 1.7% less in food, merchandise, and other in-park experiences than they did a year earlier. The end result is that revenue barely inched higher, dulling the impact of the spike in attendance.
The other thing that weighed on the surge in admissions is that the figure was inflated by the Easter holiday. The seasonal school break fell in March this year, unlike April the year before. In fact, the only other quarter in which SeaWorld posted a year-over-year gain in admission -- the 0.3% uptick it posted during the second quarter of last year -- was the result of the attendance-juicing Easter holiday.
So, yes, SeaWorld's quarterly report on Thursday will compare last year's Easter-spiked report to this year's Easter-less financials. It probably won't be pretty. Analysts see a 2% decline in year-over-year revenue growth. They also see a profit of $0.40 a share, shy of the $0.43 a share it recorded a year earlier.
The good news is that if SeaWorld lands near where Wall Street pros have perched it will mean that attendance likely inched higher for the first half of 2015, and that would be a first for SeaWorld as a public company. Folks may not be paying as much as they used to in getting in -- something that isn't the case at other theme parks -- but at least they are coming back to SeaWorld.
This will also be the first quarter for SeaWorld with Joel Manby as its new CEO. The seasoned amusement park CEO has now had a few months to assess the situation, and it will be interesting to see if hiring an outsider to lead the company into the future was the right call. SeaWorld reports on Thursday morning. With a potential turnaround in the balance, this will be the out-of-favor theme park operator's most pivotal financial release.