News Quarterly Financial Results

[Jesy]

RE: Blackfish Backlash

As Zimmy intimated, a falling stock price will mostly effect your ability to borrow at a favorable rate in the future. To the extent that a falling stock price mirrors falling revenues there will be immediate repercussions in ability to meet day-to-day expenditures. However, the immediate issue is whether their debt is at a fixed-rate or variable and, if variable, whether that rate is dependent on SEAS bond rating or the market as whole. In the former case, we are in trouble right now as debt costs will rise. In the latter, our suffering is postponed for future borrowing.

There is historical evidence of a phenomena termed 'earnings surprise' in which the market overreacts to extreme negative or positive news of net income. In this case the stock usually rebounds for negative news (or regresses for positive) to a more realistic price. However, we have a different situation here with increased cultural sensitivity to perceived animal mistreatment so I'm not sure we fit the historical model for earnings surprise.

 

[Alf33]

Here are the highlights/figures from the company's 2nd Qtr SEC filing.

• Attendance of 6.6 million, a 0.3% increase versus the second quarter of 2013
• Revenue of $405.2 million versus $411.3 million in the second quarter of 2013
• Adjusted EBITDA (*) of $126.1 million versus $127.0 million in the second quarter of 2013
• Net income of $37.3 million versus a $15.9 million net loss in the second quarter of 2013
• The Company’s Board of Directors authorized a $250 million share repurchase program effective January 1, 2015
• Entered into a Letter of Intent with Village Roadshow Theme Parks, a division of Village Roadshow Limited, a leading international entertainment and media company, to co-develop theme parks in Pan-Asia, India and Russia
• Discovery Cove was rated the number one amusement park in the world for the second consecutive year by TripAdvisor, the world’s largest travel website

(*) Earnings Before Interest, Taxes, Depreciation, and Amortization. Basically it's their gross income.

As you can see the company turned a small profit, which is better than a loss. What wasn't listed in the highlights was this. "In-park per capita spending, calculated as food, merchandise and other revenue divided by total attendance, was essentially flat with a decline from $23.81 to $23.68." So even though it was a decline it was very small for what guests spent in the park(s).

Another item mentioned later was their long term debt dropped by about $5mil. However they still have a ton of long term debt. It went down to $1.622bil from $1.627B. Most likely when pieces of this come due they will just refinance it like most companies do.

Jesy, you wanted to know if the interest rate was fixed or variable on the debt. To me it looks like it's all fixed rate. Here some info from their filing on it. "The Term B-2 Loans were borrowed in an aggregate principal amount of $1,405,000. Borrowings under the Secured Credit Facilities bear interest, at SEA’s option, at a rate equal to a margin over either (a) a base rate determined by reference to the higher of (1) the Bank of America’s prime lending rate and (2) the federal funds effective rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the British Bankers Association (“BBA”) LIBOR rate, or the successor thereto if the BBA is no longer making a LIBOR rate available, for the interest period relevant to such borrowing. The applicable margin for the Term B-2 Loans is 1.25%, in the case of base rate loans, and 2.25%, in the case of LIBOR rate loans, subject to a base rate floor of 1.75% and a LIBOR floor of 0.75%. The applicable margin for the Term B-2 Loans (under either a base rate or LIBOR rate) is subject to one 25 basis point step-down upon achievement by SEA of a certain total leverage ratio. At June 30, 2014, the Company selected the LIBOR rate (interest rate of 3.00% at June 30, 2014).

For anyone who want to read more of this you can go to www.sec.gov and then click on the EDGAR ad block (right side of page) and on the next page enter in SEAWORLD and it will take you to all of their SEC filings.

 

[Zimmy]

Anyone catch where they opened this am?

Much of the future will depend on today and tomorrow's trading. They clearly do not have earnings to cover their debt.

 

[Party Rocker]

Opened today at 19.04 and are currently at 17.99 via Google Finance.

 

[David]

Yeah, still hasn't gotten close enough to my $15 mark

 

[David]

This article sums up my thoughts pretty well. A lot of investors sold off in a fury of missed expectations, AND the possibility of further shit returns due to the Blackfish saga. I personally think it will blow over eventually, but I think a lot of damage will be done before then.

Someone should tell UNI SEAS might need some cash...

 

[Jrbgwfan06]

It's getting pretty close. It's currently at $18.

 

[Ghost of Pretzel Kaiser]

So, umm, this is an interesting rumor....

If this is true, then the parks will be in an interesting situation. On one hand, this could give the parks the investment they need. On the other, Comcast is literally the most hated company in the country the now between their terrible customer service, awful corporate culture, and efforts to destroy net neutrality.

 

[Jrbgwfan06]

It could very well be true, with stocks so low, it'd be a cheap time to buy them. I don't know what to think about this if it is true.

 

[Griffon]

This is from today's wsj...
http://online.wsj.com/articles/seaworld-to-upgrade-killer-whale-habitats-1408089841

 

[Alf33]

Here's another, slightly older (from 7/16) article that reinforces PK's posted article (Link) from the Orlando Informer Blog that talks about the distinct posibility of this happening.

If this does happen then even though Comcast would be the real owner the parks would fall under Universal Parks control/management.  At least this would give them deep pockets to draw from for all kinds of improvements as they have been (per the article) dumping money in their other parks big time.

This would help explain the big price drop in the stock and also back up this tidbit that was in their SEC filing as a highlight: "Entered into a Letter of Intent with Village Roadshow Theme Parks, a division of Village Roadshow Limited, a leading international entertainment and media company, to co-develop theme parks in Pan-Asia, India and Russia."

 

[Bill]

The sale to Comcast is all just rumor from everything I've seen. The announcement this morning is about the huge habitat expansion for killer whales at all three SeaWorld Parks. OI and the link posted by PK above are the only two sites who have made any major posting on the Comcast rumor (and the OI post basically says Comcast is buying out Blackstone, which wouldn't make Comcast the owner as Blackstone doesn't own a majority of stock in SEAS anymore).

 

[Shane]

There is no way that Comcast would buy Blackstone, they would end up owning a bunch of other stuff totally unrelated to Entertainment and Communications.

 

[Zimmy]

I would not expect the stock to rebound if it hit 15. It is more likely on the way out.

 

[David]

MarketWatch overview

Basic Overview
- "Attendance of 8.4 million versus 8.9 million in the third quarter of 2013"
- "Revenue of $495.8 million versus $538.4 million in the third quarter of 2013"
- "Adjusted EBITDA[1] of $209.1 million versus $254.4 million in the third quarter of 2013"
- "Net income of $87.2 million versus $120.7 million in the third quarter of 2013"
And the one that scares me the most....
- Implementing a cost savings plan that is expected to deliver approximately $50 million of annual cost savings by  the end of 2015

I found it interesting that they were reporting Q3 earnings at market open, compared to after closing like they normal do. This is usually a sign of a merger/sale/etc, but I guess they knew the stock would tank regardless of when they reported....

Either way, everything is clearly going well. And it looks like it's going to go even better in 2015! /s

---

Oh BTW, stock is down almost 10% already....

 

[Ghost of Pretzel Kaiser]

If you thought the cutbacks wrlere bad already...

 

[UncleDuncan]

Clearly, this is the GP's fault. IF ONLY THEY UNDERSTOOD THE GENIUS THAT IS LONDON ROCKS! Silly peasants.

 

[David]

Another interesting note...

"Attendance declined when compared to the prior year quarter, as trends the Company began to experience in the second quarter of 2014, primarily at its destination parks, extended into the Company's peak operating quarter. The Company believes the decline results from a combination of factors including negative media attention in California along with a challenging competitive environment, particularly in Florida. The competitive challenges in Florida relate to significant new attraction offerings at competitor destination parks, along with a delay in the scheduled opening of one of the Company's new rides at its Busch Gardens®Tampa park."

Is this the first time they haven't blamed the weather?!

 

[Jrbgwfan06]

Wow, if the destination parks are doing bad, we're doomed. They ain't getting much help from BGW and Sesame Place.

 

[Jonquil]

The most exciting roller coaster in the SEAS collection is their earnings reports: all drops and no lift hills.

I can't wait to hit the brake run...