SEC Form 10-Q filed by United Parks & Resorts Inc.

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35883

 

United Parks & Resorts Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		27-1220297
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
6240 Sea Harbor Drive Orlando, Florida		32821
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (407) 226-5011

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	PRKS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐		Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had outstanding 57,951,580 shares of Common Stock, par value $0.01 per share as of August 2, 2024.

 

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UNITED PARKS & RESORTS INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

 

				Page No.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS				2
PART I.		FINANCIAL INFORMATION		5
Item 1.		Unaudited Condensed Consolidated Financial Statements		5
		Unaudited Condensed Consolidated Balance Sheets		5
		Unaudited Condensed Consolidated Statements of Operations		6
		Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit		7
		Unaudited Condensed Consolidated Statements of Cash Flows		8
		Notes to Unaudited Condensed Consolidated Financial Statements		9
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		32
Item 4.		Controls and Procedures		33
PART II.		OTHER INFORMATION
Item 1.		Legal Proceedings		34
Item 1A.		Risk Factors		34
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		34
Item 3.		Defaults Upon Senior Securities		34
Item 4.		Mine Safety Disclosures		35
Item 5.		Other Information		35
Item 6.		Exhibits		35
		Signatures		36

 

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” “targeted,” “goal” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ materially include, among others, the risks, uncertainties and factors set forth under “Part I, Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report on Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”), and under “Part II, Item 1A., Risk Factors” in this Quarterly Report on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the SEC, including this report, and are accessible on the SEC’s website at www.sec.gov, including the following:

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We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein and, except as required by applicable law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise.

All references to “we,” “us,” “our,” or “Company” in this Quarterly Report on Form 10-Q mean United Parks & Resorts Inc., its subsidiaries and affiliates.

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Website and Social Media Disclosure

We use our websites (www.unitedparks.com and www.unitedparksinvestors.com) and at times our park and brand specific social media channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about the Company when you enroll your e-mail address by visiting the “E-mail Alerts” section of our website at www.unitedparksinvestors.com. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

Trademarks, Service Marks and Trade Names

We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and in certain foreign jurisdictions, including United Parks & Resorts, SeaWorld Entertainment, SeaWorld Parks & Entertainment, SeaWorld®, Shamu®, Busch Gardens®, Aquatica®, Discovery Cove®, Sea Rescue® and other names and marks that identify our theme parks, characters, rides, attractions and other businesses. In addition, we have certain rights to use Sesame Street® marks, characters and related indicia through a license agreement with Sesame Workshop.

Solely for convenience, the trademarks, service marks, and trade names referred to hereafter in this Quarterly Report on Form 10-Q are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This Quarterly Report on Form 10-Q may contain additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are, to our knowledge, the property of their respective owners.

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PART I — FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

UNITED PARKS & RESORTS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

		June 30,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents		$	232,052			$	246,922
Accounts receivable, net			100,822				73,845
Inventories			52,533				49,236
Prepaid expenses and other current assets			45,280				20,179
Total current assets			430,687				390,182
Property and equipment, at cost			3,925,992				3,814,799
Accumulated depreciation			(2,011,094	)			(1,972,861	)
Property and equipment, net			1,914,898				1,841,938
Goodwill			66,278				66,278
Trade names/trademarks, net			157,849				157,771
Right of use assets-operating leases			131,238				127,379
Deferred tax assets, net			14,716				8,019
Other assets, net			41,279				33,479
Total assets		$	2,756,945			$	2,625,046
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses		$	183,978			$	160,611
Current maturities of long-term debt			15,540				12,000
Operating lease liabilities			3,750				3,380
Accrued salaries, wages and benefits			22,776				21,204
Deferred revenue			230,496				155,614
Other accrued liabilities			66,804				58,106
Total current liabilities			523,344				410,915
Long-term debt, net			2,239,846				2,093,190
Long-term operating lease liabilities			116,485				112,724
Deferred tax liabilities, net			188,082				164,949
Other liabilities			54,128				51,484
Total liabilities			3,121,885				2,833,262
Commitments and contingencies (Note 8)
Stockholders’ Deficit:
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at June 30, 2024 and December 31, 2023			—				—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 97,031,598 and 96,660,357 shares issued at June 30, 2024 and December 31, 2023, respectively			970				967
Additional paid-in capital			722,347				723,260
Retained earnings			490,022				410,099
Treasury stock, at cost (37,170,399 and 32,690,289 shares at June 30, 2024    and December 31, 2023, respectively)			(1,578,279	)			(1,342,542	)
Total stockholders’ deficit			(364,940	)			(208,216	)
Total liabilities and stockholders’ deficit		$	2,756,945			$	2,625,046

See accompanying notes to unaudited condensed consolidated financial statements.

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UNITED PARKS & RESORTS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

(In thousands, except per share amounts)

		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Net revenues:
Admissions		$	264,003			$	269,894			$	429,812			$	433,757
Food, merchandise and other			233,590				226,135				365,204				355,618
Total revenues			497,593				496,029				795,016				789,375
Costs and expenses:
Cost of food, merchandise and other revenues			38,645				38,210				61,692				61,431
Operating expenses (exclusive of depreciation and amortization shown separately below)			190,199				195,728				355,082				368,402
Selling, general and administrative expenses			63,788				68,166				111,665				116,447
Severance and other separation costs			296				656				589				660
Depreciation and amortization			40,281				37,831				79,463				75,225
Total costs and expenses			333,209				340,591				608,491				622,165
Operating income			164,384				155,438				186,525				167,210
Other (income) expense, net			(147	)			(5	)			33				41
Interest expense			39,386				36,954				78,163				73,355
Loss on early extinguishment of debt and write-off of debt issuance costs and discounts			2,452				—				2,452				—
Income before income taxes			122,693				118,489				105,877				93,814
Provision for income taxes			31,569				31,434				25,954				23,226
Net income		$	91,124			$	87,055			$	79,923			$	70,588
Earnings per share:
Earnings per share, basic		$	1.47			$	1.36			$	1.27			$	1.10
Earnings per share, diluted		$	1.46			$	1.35			$	1.26			$	1.09
Weighted average common shares outstanding:
Basic			61,890				63,932				62,953				63,955
Diluted			62,268				64,352				63,488				64,479

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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UNITED PARKS & RESORTS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDERS' DEFICIT

(In thousands, except share amounts)

		Shares of Common Stock Issued				Common Stock				Additional Paid-In Capital				Retained Earnings				Treasury Stock, at Cost				Total Stockholders' Deficit
Balance at December 31, 2023			96,660,357			$	967			$	723,260			$	410,099			$	(1,342,542	)		$	(208,216	)
Equity-based compensation			—				—				3,520				—				—				3,520
Vesting of restricted shares			425,904				4				(4	)			—				—				—
Shares withheld for tax withholdings			(142,136	)			(1	)			(7,459	)			—				—				(7,460	)
Exercise of stock options			17,611				—				455				—				—				455
Repurchase of 375,000 shares of treasury stock, at cost			—				—				—				—				(20,162	)			(20,162	)
Net loss			—				—				—				(11,201	)			—				(11,201	)
Balance at March 31, 2024			96,961,736				970				719,772				398,898				(1,362,704	)			(243,064	)
Equity-based compensation			—				—				2,848				—				—				2,848
Vesting of restricted shares			69,257				1				(1	)			—				—				—
Shares withheld for tax withholdings			(17,627	)			(1	)			(936	)			—				—				(937	)
Exercise of stock options			18,232				—				664				—				—				664
Repurchase of 4,105,110 shares of treasury stock, at cost			—				—				—				—				(215,575	)			(215,575	)
Net income			—				—				—				91,124				—				91,124
Balance at June 30, 2024			97,031,598			$	970			$	722,347			$	490,022			$	(1,578,279	)		$	(364,940	)

 

		Shares of Common Stock Issued				Common Stock				Additional Paid-In Capital				Retained Earnings				Treasury Stock, at Cost				Total Stockholders' Deficit
Balance at December 31, 2022			96,287,771			$	963			$	710,151			$	175,903			$	(1,324,681	)		$	(437,664	)
Equity-based compensation			—				—				4,482				—				—				4,482
Vesting of restricted shares			273,134				3				(3	)			—				—				—
Shares withheld for tax withholdings			(86,914	)			(1	)			(5,568	)			—				—				(5,569	)
Exercise of stock options			22,793				—				565				—				—				565
Net loss			—				—				—				(16,467	)			—				(16,467	)
Balance at March 31, 2023			96,496,784				965				709,627				159,436				(1,324,681	)			(454,653	)
Equity-based compensation			—				—				3,725				—				—				3,725
Vesting of restricted shares			53,735				—				—				—				—				—
Shares withheld for tax withholdings			(13,118	)			—				(771	)			—				—				(771	)
Exercise of stock options			45,248				1				1,078				—				—				1,079
Repurchase of 235,000 shares of treasury stock, at cost			—				—				—				—				(13,947	)			(13,947	)
Net income			—				—				—				87,055				—				87,055
Balance at June 30, 2023			96,582,649			$	966			$	713,659			$	246,491			$	(1,338,628	)		$	(377,512	)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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UNITED PARKS & RESORTS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		For the Six Months Ended June 30,
			2024			2023
Cash Flows From Operating Activities:
Net income		$	79,923			$	70,588
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			79,463				75,225
Amortization of debt issuance costs and discounts			2,707				3,078
Loss on early extinguishment and modification of debt and write-off of debt issuance costs and discounts			3,406				—
Deferred income tax provision			16,436				17,397
Equity-based compensation			6,368				8,207
Other, including loss on sale or disposal of assets, net			7,893				13,425
Changes in assets and liabilities:
Accounts receivable			(36,059	)			(22,415	)
Inventories			(3,483	)			(4,881	)
Prepaid expenses and other current assets			(24,588	)			(5,372	)
Accounts payable and accrued expenses			28,212				13,925
Accrued salaries, wages and benefits			1,572				2,375
Deferred revenue			83,254				58,256
Other accrued liabilities			953				12,562
Right-of-use assets and operating lease liabilities			272				197
Other assets and liabilities			(1,656	)			(7,666	)
Net cash provided by operating activities			244,673				234,901
Cash Flows From Investing Activities:
Capital expenditures			(166,814	)			(145,587	)
Other investing activities, net			(78	)			—
Net cash used in investing activities			(166,892	)			(145,587	)
Cash Flows From Financing Activities:
Repayments of long-term debt			(234,317	)			(6,000	)
Proceeds from the issuance of debt, net			379,295				—
Proceeds from draws on revolving credit facility			—				20,000
Repayments of revolving credit facility			—				(20,000	)
Purchase of treasury stock			(228,890	)			(13,947	)
Payment of tax withholdings on equity-based compensation through shares withheld			(8,397	)			(6,340	)
Exercise of stock options			1,119				1,644
Debt issuance costs			(895	)			—
Other financing activities			(566	)			(245	)
Net cash used in financing activities			(92,651	)			(24,888	)
Change in Cash and Cash Equivalents, including Restricted Cash			(14,870	)			64,426
Cash and Cash Equivalents, including Restricted Cash—Beginning of period			246,922				82,320
Cash and Cash Equivalents, including Restricted Cash—End of period		$	232,052			$	146,746
Supplemental Disclosure of Noncash Investing and Financing Activities:
Capital expenditures in accounts payable		$	45,727			$	53,080
Right-of-use assets obtained in exchange for financing lease obligations		$	—			$	1,770
Treasury stock purchases not yet settled in other accrued liabilities		$	4,706			$	—

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References to our “theme parks” or “parks” in the discussion that follows includes all of our separately gated parks. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.

Introduction

The following discussion and analysis is intended to facilitate an understanding of our business and results of operations and should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion should also be read in conjunction with our consolidated financial statements and related notes thereto, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2023.

Business Overview

We are a leading theme park and entertainment company providing experiences that matter and inspiring guests to protect animals and the wild wonders of our world. We own or license a portfolio of recognized brands, including SeaWorld, Busch Gardens, Aquatica, Discovery Cove and Sesame Place. Over our more than 60-year history, we have developed a diversified portfolio of 13 differentiated theme parks that are grouped in key markets across the United States and in the United Arab Emirates. Many of our theme parks showcase our one-of-a-kind zoological collection and feature a diverse array of both thrill and family-friendly rides, educational presentations, shows and/or other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests.

Recent Developments

Current Operating Environment

Our Board has formed a number of committees and holds certain meetings and operational review sessions on a frequent basis designed to provide further assistance from Board members with expertise in certain areas by providing enhanced oversight over the operations of the Company. As a result, in the current operating environment, certain members of our Board, including our Chairman of the Board, are actively involved in overseeing certain key operating activities and decisions.

While conditions have improved in some markets and for various positions, the current condition of the overall labor market and the challenging current operating environment have led to turnover and hiring challenges for some positions and/or markets which could impact operations and the guest experience. We have also been impacted by higher interest rates and supply chain disruptions (which has, at times, impacted ride and/or in-park facility availability).

Stockholders Agreement and Share Repurchase Program

On March 25, 2024, the Company held a Special Meeting of Stockholders to: (1) approve the amendment, entered into on February 27, 2024, to the Stockholders Agreement, dated May 27, 2019, by and between Hill Path Capital LP ("Hill Path") and the Company (the “Amendment Proposal”); and (2) if the Amendment Proposal was approved, to approve and authorize a new $500.0 million share repurchase program of the Company's common stock, subject to the qualification that the Company will not repurchase additional shares if Hill Path's common stock ownership interest percentage would, as a result of any such repurchase, equal or exceed 50% (the “Share Repurchase Proposal”). Each of the Amendment Proposal and the Share Repurchase Proposal required approval by the holders of a majority of the shares of the Company's common stock outstanding and entitled to vote as of the record date other than shares beneficially owned by Hill Path and its affiliates (collectively, the “Disinterested Stockholders”). A majority of the Disinterested Stockholders approved both proposals.

For further discussion relating to strategic measures we have taken to operate in the current environment, see the “Results of Operations” section which follows.

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Principal Factors and Trends Affecting Our Results of Operations

Revenues

Our revenues are driven primarily by attendance in our theme parks and the level of per capita spending for admission and per capita spending for food and beverage, merchandise and other in-park products. We define attendance as the number of guest visits. Attendance drives admissions revenue as well as total in-park spending. Admissions revenue primarily consists of single-day tickets, annual passes (which generally expire after a 12-month term), season passes (including our fun card products and, collectively with annual passes, referred to as “passes” or “season passes”) or other multi-day or multi-park admission products. Revenue from these admissions products are generally recognized based on attendance. Certain pass products are purchased through monthly installment arrangements which allow guests to pay over the product’s initial commitment period. Once the initial commitment period is reached, some of these products transition to a month-to-month basis providing these guests access to specific parks on a monthly basis with related revenue recognized monthly, while others can renew for a full commitment period.

Total revenue per capita, defined as total revenue divided by total attendance, consists of admission per capita and in-park per capita spending:

Total revenue per capita, admissions per capita and in-park per capita spending are key performance metrics that we use to assess the operating performance of our parks on a per attendee basis and to make strategic operating decisions. We believe the presentation of these performance metrics is useful and relevant for investors as it provides investors the ability to review operating performance in the same manner as our management and provides investors with a consistent methodology to analyze revenue between periods on a per attendee basis. In addition, investors, lenders, financial analysts and rating agencies have historically used similar per-capita related performance metrics to evaluate companies in the industry.

See further discussion in the “Results of Operations” section which follows and in Note 1–Description of the Business and Basis of Presentation to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. For other factors affecting our revenues, see the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC.

Attendance

The level of attendance in our theme parks is generally a function of many factors, including affordability, the opening of new attractions and shows, competitive offerings, weather, marketing and sales efforts, awareness and type of ticket and park offerings, travel patterns of both our domestic and international guests, fluctuations in foreign exchange rates and global and regional economic conditions, consumer confidence, the external perceptions of our brands and reputation, industry best practices and perceptions as to safety. The external perceptions of our brands and reputation have at times impacted relationships with some of our business partners, including certain ticket resellers that have terminated relationships with us and other zoological-themed attractions.

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Costs and Expenses

Historically, the principal costs of our operations are employee wages and benefits, driven partly by staffing levels, advertising, maintenance, animal care, utilities, property taxes and insurance. Factors that affect our costs and expenses include fixed operating costs, competitive wage pressures including minimum wage legislation, commodity prices, costs for construction, repairs and maintenance, park operating hours, new parks and/or incremental operating days, new and/or enhanced events, attendance levels, supply chain issues, and inflationary pressures, among other factors. The mix of products sold compared to the prior year period can also impact our costs as retail products generally have a higher cost of sales component than our food and beverage or other in-park offerings.

We have a dedicated team of employees and consultants focused on reducing costs and improving operating margins and streamlining our labor structure to better align with our strategic business objectives. We have spent significant time reviewing our operations and have identified meaningful cost savings opportunities, including technology initiatives, which we believe will further strengthen our business and, in some instances, improve guest experiences.

See the “Current Operating Environment” section for further details. For other factors affecting our costs and expenses, see the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC.

Seasonality

The theme park industry is seasonal in nature. Historically, we generate the highest revenues in the second and third quarters of each year, in part because four of our theme parks were historically only open for a portion of the year. As a result, approximately two-thirds of our attendance and revenues were historically generated in the second and third quarters of the year and we generally incurred a net loss in the first quarter. The percent mix of revenues by quarter is relatively constant each year, but revenues can shift between the first and second quarters due to the timing of Easter and spring break holidays and between the first and fourth quarters due to the timing of holiday breaks around Christmas and New Year. Even for our eight theme parks which have historically been open year-round, attendance patterns have significant seasonality, driven by holidays, school vacations and weather conditions. Changes in school calendars that impact traditional school vacation breaks and/or start dates could also impact attendance patterns. Any changes to the operating schedule of a park such as increasing operating days for our historically seasonal parks, could change the impact of seasonality in the future.

See “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC.

Results of Operations

The following discussion provides an analysis of our operating results for the three months ended June 30, 2024 and 2023. The following data should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

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Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

The following table presents key operating and financial information for the three months ended June 30, 2024 and 2023:

		For the Three Months Ended
		June 30,								Variance
		2024				2023				#				%
Summary Financial Data:		(In thousands, except per capita data)
Net revenues:
Admissions		$	264,003			$	269,894			$	(5,891	)			(2.2	%)
Food, merchandise and other			233,590				226,135				7,455				3.3	%
Total revenues			497,593				496,029				1,564				0.3	%
Costs and expenses:
Cost of food, merchandise and other revenues			38,645				38,210				435				1.1	%
Operating expenses (exclusive of depreciation and amortization shown separately below)			190,199				195,728				(5,529	)			(2.8	%)
Selling, general and administrative expenses			63,788				68,166				(4,378	)			(6.4	%)
Severance and other separation costs			296				656				(360	)			(54.9	%)
Depreciation and amortization			40,281				37,831				2,450				6.5	%
Total costs and expenses			333,209				340,591				(7,382	)			(2.2	%)
Operating income			164,384				155,438				8,946				5.8	%
Other income, net			(147	)			(5	)			(142	)		NM
Interest expense			39,386				36,954				2,432				6.6	%
Loss on early extinguishment of debt and write-off of debt issuance costs and discounts			2,452				—				2,452			NM
Income before income taxes			122,693				118,489				4,204				3.5	%
Provision for income taxes			31,569				31,434				135				0.4	%
Net income		$	91,124			$	87,055			$	4,069				4.7	%
Other data:
Attendance			6,186				6,139				47				0.8	%
Total revenue per capita		$	80.44			$	80.80			$	(0.36	)			(0.4	%)
Admission per capita		$	42.68			$	43.96			$	(1.28	)			(2.9	%)
In-park per capita spending		$	37.76			$	36.84			$	0.92				2.5	%

NM-Not Meaningful.

Admissions revenue. Admissions revenue for the three months ended June 30, 2024 decreased $5.9 million, or 2.2%, to $264.0 million as compared to $269.9 million for the three months ended June 30, 2023. The decline was a result of a decrease in admission per capita, partially offset by an increase in attendance. Total attendance for the second quarter of 2024 increased by approximately 47 thousand guests, or 0.8%, when compared to the prior year quarter. The increase in attendance was primarily due to increased demand. Admission per capita decreased by $1.28 to $42.68 for the second quarter of 2024 compared to $43.96 in the prior year quarter, primarily due to lower pricing on certain promotional admission products and the net impact of the admissions product and park mix when compared to the prior year quarter.

Food, merchandise and other revenue. Food, merchandise and other revenue for the three months ended June 30, 2024 increased $7.5 million, or 3.3%, to $233.6 million as compared to $226.1 million for the three months ended June 30, 2023, as a result of an increase in in-park per capita spending and an increase in attendance, as discussed above. In-park per capita spending increased by 2.5% to $37.76 in the second quarter of 2024 compared to $36.84 in the second quarter of 2023. In park per capita spending improved primarily due to pricing initiatives when compared to the second quarter of 2023.

Costs of food, merchandise and other revenues. Costs of food, merchandise and other revenues for the three months ended June 30, 2024 increased $0.4 million, or 1.1%, to $38.6 million as compared to $38.2 million for the three months ended June 30, 2023.

Operating expenses. Operating expenses for the three months ended June 30, 2024 decreased $5.5 million, or 2.8%, to $190.2 million as compared to $195.7 million for the three months ended June 30, 2023. The decrease in operating expenses is primarily due to decreased non-cash self-insurance reserve adjustments, a decrease in non-cash asset write-offs, and a decrease in nonrecurring contractual liabilities and legal costs resulting from the previously disclosed temporary COVID-19 park closures when compared to the second quarter of 2023.

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Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended June 30, 2024 decreased $4.4 million, or 6.4%, to $63.8 million as compared to $68.2 million for the three months ended June 30, 2023. The decrease in selling, general and administrative expenses is primarily due to a $8.6 million decrease in third-party consulting costs, including approximately $8.3 million of nonrecurring costs for strategic initiatives when compared to the second quarter of 2023.

Depreciation and amortization. Depreciation and amortization expense for the three months ended June 30, 2024 increased $2.5 million, or 6.5%, to $40.3 million as compared to $37.8 million for the three months ended June 30, 2023. The increase primarily relates to new asset additions, partially offset by the impact of asset retirements and fully depreciated assets.

Interest expense. Interest expense for the three months ended June 30, 2024 increased $2.4 million, or 6.6%, to $39.4 million as compared to $37.0 million for the three months ended June 30, 2023. The increase primarily relates to the net impact of a higher average outstanding balance on our variable debt, partially offset by a lower average outstanding balance on our fixed debt, as a result of the Refinancing Transactions. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Loss on early extinguishment of debt and write-off of debt issuance costs and discounts. Loss on early extinguishment of debt and write-off of debt issuance costs and discounts for the three months ended June 30, 2024 primarily relate to a write-off of debt issuance costs and discounts resulting from the Refinancing Transactions during the three months ended June 30, 2024. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Provision for income taxes. Provision for income taxes in the three months ended June 30, 2024 was $31.6 million compared to $31.4 million for the three months ended June 30, 2023. Our consolidated effective tax rate was 25.7% for the three months ended June 30, 2024 compared to 26.5% for the three months ended June 30, 2023. The effective tax rate for the three months ended June 30, 2024 and 2023 was primarily impacted due to state income taxes and limits on certain compensation deductibility.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table presents key operating and financial information for the six months ended June 30, 2024 and 2023:

 

		For the Six Months Ended
		June 30,								Variance
		2024				2023				#				%
Summary Financial Data:		(In thousands, except per capita data)
Net revenues:
Admissions		$	429,812			$	433,757			$	(3,945	)			(0.9	%)
Food, merchandise and other			365,204				355,618				9,586				2.7	%
Total revenues			795,016				789,375				5,641				0.7	%
Costs and expenses:
Cost of food, merchandise and other revenues			61,692				61,431				261				0.4	%
Operating expenses (exclusive of depreciation and amortization shown separately below)			355,082				368,402				(13,320	)			(3.6	%)
Selling, general and administrative expenses			111,665				116,447				(4,782	)			(4.1	%)
Severance and other separation costs			589				660				(71	)			(10.8	%)
Depreciation and amortization			79,463				75,225				4,238				5.6	%
Total costs and expenses			608,491				622,165				(13,674	)			(2.2	%)
Operating income			186,525				167,210				19,315				11.6	%
Other expense (income), net			33				41				(8	)			(19.5	%)
Interest expense			78,163				73,355				4,808				6.6	%
Loss on early extinguishment of debt and write-off of debt issuance costs and discounts			2,452				—				2,452			NM
Income before income taxes			105,877				93,814				12,063				12.9	%
Provision for income taxes			25,954				23,226				2,728				11.7	%
Net income		$	79,923			$	70,588			$	9,335				13.2	%
Other data:
Attendance			9,636				9,517				119				1.3	%
Total revenue per capita		$	82.50			$	82.94			$	(0.44	)			(0.5	%)
Admission per capita		$	44.60			$	45.57			$	(0.97	)			(2.1	%)
In-park per capita spending		$	37.90			$	37.37			$	0.53				1.4	%

 

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NM-Not Meaningful.

Admissions revenue. Admissions revenue for the six months ended June 30, 2024 decreased $3.9 million, or 0.9%, to $429.8 million as compared to $433.8 million for the six months ended June 30, 2023. The decline was a result of a decrease in admissions per capita, partially offset by an increase in attendance. Total attendance for the first six months of 2024 increased by approximately 119 thousand guests, or 1.3%, when compared to the first six months of 2023. The increase in attendance was primarily due to an increase in demand, partially offset by the impact of adverse weather, particularly at our Florida parks, including during peak visitation periods. Admission per capita decreased by 2.1% to $44.60 for the six months ended June 30, 2024 compared to $45.57 for the six months ended June 30, 2023, primarily due to the net impact of the admissions product mix and lower pricing on certain promotional admission products when compared to the first six months of 2023.

Food, merchandise and other revenue. Food, merchandise and other revenue for the six months ended June 30, 2024 increased $9.6 million, or 2.7%, to $365.2 million as compared to $355.6 million for the six months ended June 30, 2023 as a result of an increase in in-park per capita spending and an increase in attendance, as discussed above. In-park per capita spending increased by 1.4% to $37.90 for the six months ended June 30, 2024 compared to $37.37 for the six months ended June 30, 2023. In park per capita spending improved primarily due to pricing initiatives, partially offset by a decrease in revenue related to our international services agreements when compared to the first six months of 2023. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information on our international agreements.

Costs of food, merchandise and other revenues. Costs of food, merchandise and other revenues for the six months ended June 30, 2024 increased $0.3 million, or 0.4%, to $61.7 million as compared to $61.4 million for the six months ended June 30, 2023.

Operating expenses. Operating expenses for the six months ended June 30, 2024 decreased by $13.3 million, or 3.6%, to $355.1 million as compared to $368.4 million for the six months ended June 30, 2023. The decrease in operating expenses is primarily due to a decrease in nonrecurring legal costs and contractual liabilities resulting from the previously disclosed temporary COVID-19 park closures and a decrease in costs associated with our international services agreements when compared to the first six months of 2023. See Note 1–Description of the Business and Basis of Presentation in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information on our international agreements.

Selling, general and administrative expenses. Selling, general and administrative expenses for the six months ended June 30, 2024 decreased $4.8 million, or 4.1%, to $111.7 million as compared to $116.4 million for the six months ended June 30, 2023. The decrease in selling, general and administrative expenses is primarily due to an $11.3 million decrease in third-party consulting costs, including approximately $10.2 million of nonrecurring costs for strategic initiatives, partially offset by an increase in marketing related costs when compared to the first six months of 2023.

Depreciation and amortization. Depreciation and amortization expense for the six months ended June 30, 2024 increased $4.2 million, or 5.6%, to $79.5 million as compared to $75.2 million for the six months ended June 30, 2023. The increase primarily relates to new asset additions, partially offset by the impact of asset retirements and fully depreciated assets.

Interest expense. Interest expense for the six months ended June 30, 2024 increased $4.8 million, or 6.6%, to $78.2 million as compared to $73.4 million for the six months ended June 30, 2023. The increase primarily relates to write-offs of debt issuance costs and discounts and the net impact of a higher average outstanding balance on our variable debt as a result of the Refinancing Transactions. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Loss on early extinguishment of debt and write-off of debt issuance costs and discounts. Loss on early extinguishment of debt and write-off of debt issuance costs and discounts for the six months ended June 30, 2024 primarily relate to a write-off of debt issuance costs and discounts resulting from the Refinancing Transactions during the six months ended June 30, 2024. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Provision for income taxes. Provision for income taxes for the six months ended June 30, 2024 was $26.0 million compared to $23.2 million for the six months ended June 30, 2023. Our consolidated effective tax rate was 24.5% for the six months ended June 30, 2024 compared to 24.8% for the six months ended June 30, 2023. The effective tax rate in the six months ended June 30, 2024 and 2023 was primarily impacted by state income taxes and limits on certain compensation deductibility, partially offset by a tax benefit related to equity-based compensation which vested during the period. See Note 4–Income Taxes in our notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

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Liquidity and Capital Resources

Overview

Generally, our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash typically include the funding of working capital obligations, debt service, investments in theme parks (including capital projects), share repurchases and/or other return of capital to stockholders, when permitted. As of June 30, 2024, we had a working capital ratio (defined as current assets divided by current liabilities) of 0.8. We typically have operated with a working capital ratio of near 1.0 due to a significant deferred revenue balance from revenues paid in advance for our theme park admissions products and high turnover of in-park products that result in limited inventory balances. Our cash flow from operations, along with our revolving credit facilities, have historically allowed us to meet our liquidity needs.

As market conditions warrant and subject to our contractual restrictions and liquidity position, we or our affiliates, may from time to time purchase our outstanding equity and/or debt securities, including our outstanding bank loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such purchases may be funded by incurring new debt, including additional borrowings under our Senior Secured Credit Facilities. Any new debt may also be secured debt. We may also use available cash on our balance sheet. The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, since some of our debt may trade at a discount to the face amount among current or future syndicate members, any such purchases may result in our acquiring and retiring a substantial amount of any particular series, with the attendant reduction in the trading liquidity of any such series. Depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness or for other purposes.

Share Repurchases

See Note 10–Stockholders’ Deficit in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further information on our share repurchase programs.

Other

We believe that existing cash and cash equivalents, cash flow from operations, and available borrowings under our revolving credit facility will be adequate to meet the capital expenditures, debt service obligations and working capital requirements of our operations for at least the next 12 months.

The following table presents a summary of our cash flows provided by (used in) operating, investing, and financing activities for the periods indicated:

		For the Six Months Ended June 30,
		2024				2023
		(Unaudited, in thousands)
Net cash provided by operating activities		$	244,673			$	234,901
Net cash used in investing activities			(166,892	)			(145,587	)
Net cash used in financing activities			(92,651	)			(24,888	)
Net (decrease) increase in cash and cash equivalents, including restricted cash		$	(14,870	)		$	64,426

Cash Flows from Operating Activities

Net cash provided by operating activities was $244.7 million during the six months ended June 30, 2024 as compared to $234.9 million during the six months ended June 30, 2023. The change in net cash provided by operating activities was primarily impacted by improved operating performance.

Cash Flows from Investing Activities

Investing activities consist principally of capital investments we make in our theme parks for future attractions and infrastructure. Net cash used in investing activities during the six months ended June 30, 2024 consisted of capital expenditures of $166.8 million largely related to future attractions. Net cash used in investing activities during the six months ended June 30, 2023 consisted of $145.6 million of capital expenditures.

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The following table presents detail of our capital expenditures for the periods indicated. Certain amounts relating to prior period results were reclassified to conform to current period presentation. These reclassifications have not changed the results of operations of the prior period.

		For the Six Months Ended June 30,
		2024				2023
Capital Expenditures:		(Unaudited, in thousands)
Core(a)		$	120,275			$	118,686
Expansion/ROI projects(b)			46,539				26,901
Capital expenditures, total		$	166,814			$	145,587

(a) Reflects capital expenditures for park rides, attractions and maintenance activities.

(b) Reflects capital expenditures for park expansion, new properties, and revenue and/or expense return on investment (“ROI”) projects.

The amount of our capital expenditures may be affected by general economic and financial conditions, among other things, including restrictions imposed by our borrowing arrangements. Historically, we generally expect to fund our capital expenditures through our operating cash flow.

Cash Flows from Financing Activities

Net cash used in financing activities during the six months ended June 30, 2024 primarily results from repayments of $234.3 million on long-term debt, $228.9 million used to repurchase shares and $8.4 million for payments of tax withholdings on equity-based compensation through shares withheld, partially offset by $379.3 million of net proceeds from the issuance of debt . Net cash used in financing activities during the six months ended June 30, 2023 results primarily from share repurchases of $13.9 million and payment of tax withholdings on equity-based compensation through shares withheld of $6.3 million. See Note 10–Stockholders’ Deficit in our notes to the unaudited condensed consolidated financial statements for further details.

Our Indebtedness

We are a holding company and conduct our operations through our subsidiaries, which have incurred or guaranteed indebtedness as described below. As of June 30, 2024, our indebtedness consisted of senior secured credit facilities and 5.25% senior notes (the “Senior Notes”).

See discussion which follows and Note 6–Long-Term Debt in our notes to the unaudited condensed consolidated financial statements for further details related to our long-term debt.

Senior Secured Credit Facilities

SeaWorld Parks & Entertainment, Inc. (“SEA”) is the borrower under the senior secured credit facilities, as amended and restated pursuant to a credit agreement (the “Amended and Restated Credit Agreement”) dated August 25, 2021 (the “Senior Secured Credit Facilities”).

As of June 30, 2024, our Senior Secured Credit Facilities consisted of $1.546 billion in Term B-2 Loans which will mature in August 2028, along with a $390.0 million Revolving Credit Facility, which had no amounts outstanding as of June 30, 2024 and will mature in August 2026. As of June 30, 2024, SEA had approximately $17.5 million of outstanding letters of credit, leaving approximately $372.5 million available for borrowing under the Revolving Credit Facility.

Senior Notes

As of June 30, 2024, SEA had outstanding $725.0 million in aggregate principal amount of Senior Notes due on August 15, 2029.

Covenant Compliance

As of June 30, 2024, we were in compliance with all covenants in the credit agreement governing the Senior Secured Credit Facilities and the indentures governing our Senior Notes. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements for further details relating to our restrictive covenants.

Adjusted EBITDA

We define Adjusted EBITDA as net income plus (i) income tax provision, (ii) loss on extinguishment of debt, (iii) interest expense, consent fees and similar financing costs, (iv) depreciation and amortization, (v) equity-based compensation expense, (vi) certain non-cash charges/credits including those related to asset disposals and self-insurance reserve adjustments, (vii) certain business optimization, development and strategic initiative costs, (viii) merger, acquisition, integration and certain investment costs, and (ix) other nonrecurring costs including incremental costs associated with the COVID-19 pandemic or similar unusual events.

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Under the credit agreement governing the Senior Secured Credit Facilities and the indentures governing our Senior Notes and First-Priority Senior Secured Notes (collectively, the “Debt Agreements”), our ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Covenant Adjusted EBITDA as defined in the Debt Agreements (“Covenant Adjusted EBITDA”).

Covenant Adjusted EBITDA is defined as Adjusted EBITDA plus certain other items as defined in the Debt Agreements, including estimated cost savings among other adjustments. Cost savings represent annualized estimated savings expected to be realized over the following 24 month period related to certain specified actions including restructurings and cost savings initiatives, net of actual benefits realized during the last twelve months. Other adjustments include (i) recruiting and retention costs, (ii) public company compliance costs, (iii) litigation and arbitration costs, and (iv) other costs and adjustments as permitted by the Debt Agreements.

We believe that the presentation of Adjusted EBITDA is appropriate as it eliminates the effect of certain non-cash and other items not necessarily indicative of a company’s underlying operating performance. We use Adjusted EBITDA in connection with certain components of our executive compensation program. In addition, investors, lenders, financial analysts and rating agencies have historically used EBITDA related measures in our industry, along with other measures, to estimate the value of a company, to make informed investment decisions and to evaluate companies in the industry. In addition, we believe the presentation of Covenant Adjusted EBITDA for the last twelve months is appropriate as it provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Debt Agreements. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements for further details relating to our restrictive covenants.

Adjusted EBITDA and Covenant Adjusted EBITDA are not recognized terms under U.S. generally accepted accounting principles (“GAAP”), should not be considered in isolation or as a substitute for a measure of our financial performance prepared in accordance with GAAP and are not indicative of income or loss from operations as determined under GAAP. Adjusted EBITDA, Covenant Adjusted EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate our financial performance. Adjusted EBITDA and Covenant Adjusted EBITDA as presented by us, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.

The following table reconciles Adjusted EBITDA and Covenant Adjusted EBITDA to net income for the periods indicated:

		For the Three Months Ended June 30,								For the Six Months Ended June 30,								Last Twelve Months Ended June 30,
		2024				2023				2024				2023				2024
		(Unaudited, in thousands)
Net income		$	91,124			$	87,055			$	79,923			$	70,588			$	243,531
Provision for income taxes			31,569				31,434				25,954				23,226				81,639
Interest expense			39,386				36,954				78,163				73,355				151,474
Loss on early extinguishment of debt and write-off of debt issuance costs and discounts (a)			2,452				—				2,452				—				2,452
Depreciation and amortization			40,281				37,831				79,463				75,225				158,446
Equity-based compensation expense (b)			2,979				3,866				7,270				9,071				16,160
Loss on impairment or disposal of assets and certain non-cash expenses (c)			2,279				10,595				7,883				14,262				25,257
Business optimization, development and strategic initiative costs (d)			4,120				12,104				7,654				21,529				20,028
Certain investment costs and other taxes (e)			1,019				114				4,139				162				5,688
COVID-19 related incremental costs (f)			1,355				4,085				1,861				7,668				3,269
Other adjusting items (g)			1,589				209				2,545				1,573				6,195
Adjusted EBITDA (h)		$	218,153			$	224,247			$	297,307			$	296,659			$	714,139
Items added back to Covenant Adjusted EBITDA as defined in the Debt Agreements:
Estimated cost savings (i)																			18,000
Other adjustments as defined in the Debt Agreements  (j)																			7,567
Covenant Adjusted EBITDA (k)																		$	739,706

 

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(a) Reflects a loss on early extinguishment of debt and write-off of debt issuance costs and discounts associated with the Refinancing Transactions. See Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

(b) Reflects non-cash equity compensation expenses and related payroll taxes associated with the grants of equity-based compensation. See Note 9–Equity-Based Compensation in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

(c) Reflects primarily non-cash expenses related to miscellaneous fixed asset disposals including asset write-offs and costs related to certain rides and equipment which were removed from service. Includes non-cash self-insurance reserve adjustments of: (i) approximately $4.6 million for the six months ended June 30, 2024; (ii) approximately $9.4 million for the twelve months ended June 30, 2024; and (iii) approximately $4.7 million and $7.0 million for the three and six months ended June 30, 2023, respectively.

(d) For the three, six, and twelve months ended June 30, 2024, reflects business optimization, development and other strategic initiative costs primarily related to: (i) $2.2 million, $4.0 million, and $13.0 million, respectively, of other business optimization costs and strategic initiative costs and (ii) $1.5 million, $3.0 million, and $5.9 million, respectively, of third-party consulting costs. Reflects business optimization, development and other strategic initiative costs primarily related to: (i) $11.2 million and $14.0 million of third-party consulting costs for the three and six months ended June 30, 2023, respectively, and (ii) $6.2 million of other business optimization costs and strategic initiative costs for the six months ended June 30, 2023.

(e) For the three, six and twelve months ended June 30, 2024, primarily relates to expenses associated with the Amendment Proposal and the Share Repurchase Proposal.

(f) Primarily reflects costs associated with certain legal matters and nonrecurring contractual liabilities related to the previously disclosed temporary COVID-19 park closures.

(g) Reflects the impact of expenses, net of insurance recoveries and adjustments, incurred primarily related to certain matters, which we are permitted to exclude under the credit agreement governing our Senior Secured Credit Facilities due to the unusual nature of the items.

(h) Adjusted EBITDA is defined as net income (loss) before income tax expense, interest expense, depreciation and amortization, as further adjusted to exclude certain non-cash, and other items as described above.

(i) Our Debt Agreements permit the calculation of certain covenants to be based on Covenant Adjusted EBITDA, as defined above, for the last twelve-month period further adjusted for net annualized estimated savings we expect to realize over the following 24-month period related to certain specified actions, including restructurings and cost savings initiatives. These estimated savings are calculated net of the amount of actual benefits realized during such period. These estimated savings are a non-GAAP Adjusted EBITDA add-back item only as defined in the Debt Agreements and does not impact our reported GAAP net income.

(j) The Debt Agreements permit our calculation of certain covenants to be based on Covenant Adjusted EBITDA as defined above, for the last twelve-month period further adjusted for certain costs as permitted by the Debt Agreements including recruiting and retention expenses, public company compliance costs and litigation and arbitration costs, if any.

(k) Covenant Adjusted EBITDA is defined in the Debt Agreements as Adjusted EBITDA for the last twelve-month period further adjusted for net annualized estimated savings among other adjustments as described in footnotes (i) and (j) above.

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Contractual Obligations

There have been no material changes to our contractual obligations as of June 30, 2024 from those previously disclosed in our Annual Report on Form 10-K other than the debt and interest obligations pursuant to the Refinancing Transactions (see Note 6–Long-Term Debt to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details). As a result, our total long-term debt obligations as of June 30, 2024, not including any possible prepayments, are as follows for the remainder of 2024, 2025-2026, 2027-2028, and thereafter, respectively (in thousands): $7,770; $31,079; $1,507,334; and $725,000. Our estimated future interest payments based on interest rates in effect at June 30, 2024 are as follows for the remainder of 2024, 2025-2026, 2027-2028, and thereafter, respectively (in thousands): $135,506; $323,282; $274,992; and $25,375. Includes amounts attributable to the Senior Secured Credit Facilities and Senior Notes calculated as of June 30, 2024 using certain assumptions and excluding any possible principal prepayments.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, revenues and expenses, and disclosure of contingencies during the reporting period. Significant estimates and assumptions include the valuation and useful lives of long-lived assets, the accounting for income taxes, the accounting for self-insurance and revenue recognition. Actual results could differ from those estimates. The critical accounting estimates associated with these policies are described in our Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K, filed on February 29, 2024.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of June 30, 2024.

Recently Issued Financial Accounting Standards

Refer to Note 2–Recent Accounting Pronouncements in our notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Inflation

The impact of inflation has affected, and will continue to affect, our operations significantly. The costs of food, merchandise and other revenues are influenced by inflation and fluctuations in global commodity prices. In addition, other costs, such as the costs of fuel, construction, repairs and maintenance, labor, freight, utilities and insurance are all subject to inflationary pressures. For further discussion, see the “Risk Factors” section of our Annual Report on Form 10-K, as such risk factors may be updated from time to time in our periodic filings with the SEC.

Interest Rate Risk

We are exposed to market risks from fluctuations in interest rates, and to a lesser extent on currency exchange rates, from time to time, on imported rides and equipment. The objective of our financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not acquire market risk sensitive instruments for trading purposes.

Prior to 2021, we previously managed interest rate risk through the use of a combination of fixed-rate long-term debt and interest rate swaps that fixed a portion of our variable-rate long-term debt. We have no interest rate swap agreements outstanding as of June 30, 2024. We presently manage interest rate risk primarily by managing the amount, sources and duration of our debt funding. At June 30, 2024, approximately $1.5 billion of our outstanding long-term debt represents variable-rate debt. Assuming an average balance on our revolving credit borrowings of approximately $390.0 million, a hypothetical 100 bps increase in Adjusted Term SOFR would increase our annual interest expense by approximately $19.4 million. Assuming no revolving credit borrowings, a hypothetical 100 bps increase in Adjusted Term SOFR would increase our annual interest expense by approximately $15.5 million.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Our principal executive officer and principal financial officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management as of the end of the fiscal quarter covered by this Quarterly Report, that our disclosure controls and procedures were effective to accomplish their objectives at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

Regulations under the Exchange Act require public companies, including our Company, to evaluate any change in our “internal control over financial reporting” as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act. There have been no changes in our internal control over financial reporting that occurred during the most recent quarter ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

See Note 8–Commitments and Contingencies under the caption “Legal Proceedings” in our notes to the unaudited condensed consolidated financial statements for further details concerning our other legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Item 1A.to Part I of our Annual Report on Form 10-K, as filed on February 29, 2024, except to the extent factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors, which is incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities during the second quarter of 2024. The following table sets forth information with respect to shares of our common stock purchased by the Company during the periods indicated:

Period Beginning		Period Ended		Total Number of Shares Purchased(1)(2)				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)				Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(2)
April 1, 2024		April 30, 2024			1,230,327			$	53.62				1,223,237			$	452,749,665
May 1, 2024		May 31, 2024			1,505,676			$	51.19				1,495,164				376,234,279
June 1, 2024		June 30, 2024			1,386,753			$	51.43				1,386,709				304,914,364
					4,122,756								4,105,110			$	304,914,364

 

In March 2024, we announced that our Stockholders and Board of Directors approved a new $500.0 million share repurchase program (the "Share Repurchase Program"). During the six months ended June 30, 2024, the Company repurchased 4,105,110 shares for an aggregate total of approximately $213.4 million. Subsequent to June 30, 2024 through August 5, 2024, the Company repurchased 2,170,247 shares for an aggregate total of approximately $116.1 million, leaving approximately $170.5 million remaining under the Share Repurchase Program as of August 5, 2024.

Collectively, under the 2022 Former Share Repurchase Program and 2024 Share Repurchase Program, the Company repurchased 4,480,110 shares for an aggregate total of approximately $233.6 million during the six months ended June 30, 2024.

Under the Former Share Repurchase Program and Share Repurchase Program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. All of the common stock is held as treasury shares as of June 30, 2024. The number of shares to be purchased and the timing of purchases will be based on our trading windows and available liquidity, general business and market conditions and other factors, including legal requirements and alternative opportunities. See Note 10–Stockholders’ Deficit in the notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Item 6. Exhibits

The following is a list of all exhibits filed or furnished as part of this report:

Exhibit No.		Description
31.1*		Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL

 

* Filed herewith

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		UNITED PARKS & RESORTS INC.
		(Registrant)
Date: August 8, 2024		By: /s/ James W. Forrester, Jr.
		James W. Forrester, Jr.
		Interim Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

 

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