08 Aug 2017
SeaWorld to cut further costs following poor first half of 2017
BY Tom Anstey
SeaWorld president and CEO Joel Manby has said the company is not happy with its results for the quarter as the operator plans to further slash costs while attempting to reshape itself following several years of turmoil.
Attendance year-on-year for the quarter for SeaWorld was up by 138,000 guests, though this was as a result of the late occurring Easter break, which happened in the second quarter rather than the first.
Combined results for the first half of the year show visitor numbers down 353,000 visitors compared to the same period in 2016, which SeaWorld said was primarily concentrated at the company's SeaWorld parks in Orlando and San Diego.
"While we are making progress in key areas of our plan, we are not satisfied with our results for the quarter," said Manby. "This quarter provided us with an understanding of what is working and where we need to make adjustments.
"We are increasing our investment in national advertising to generate sufficient awareness of our brand attributes and strong new rides and attractions, developing a new national marketing campaign emphasising our distinct experiences, and reinvesting in our reputation messaging to target perceptions in key markets, particularly California. We will offset this increased advertising with additional cost reductions.”
The company says it is still on target to achieve its US$40m (€33.8m, £30.6m) net saving goal by the end of next year, with the operator “identifying additional areas for cost reduction”.
“We are committed to our capital investment strategy and will continue to invest in new rides, attractions, and festivals across our parks,” said Manby.
“At the same time, we are maintaining our rigorous cost discipline, and while we are on schedule to achieve our targeted savings by the end of 2018, we are identifying an additional US$25m (€21.2m, £19.2m) in potential savings, which we believe could be saved outright or reinvested in our marketing efforts.
In a statement, the company said the declines were driven by “the combined impact of reduced national advertising and competitive pressures”. It added that SeaWorld San Diego was further impacted by public perception issues which “resurfaced since the company reduced marketing spend on its reputation campaign”.
For the first half of the year, SeaWorld reported net losses of US$237m (€200.6m, £181.6m), though this figure includes a non-cash goodwill impairment charge – caused by a decline in the the value of its non-identifiable assets based on future earnings at SeaWorld Orlando.
Earnings before interest, tax, depreciation and amortisation (EBITDA), were US$104.2m (€88.2m, £79.9m) for the quarter, an increase of US$20.4m (€17.3m, £15.6m) on the previous year, with attendance benefiting from the shift in the timing of Easter. For the first half of the year, the company generated revenues of US$560.1m (€474m, £429.3m) – down by 5 per cent or US$31.3m (€28m, £25.4m) year-on-year, with net losses of US$66.3m (€56.2m, £50.8m).
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