SeaWorld Entertainment Flounders Following Negative Publicity and Poor 2Q Results

Remy Merritt |

SeaWorld stock, SeaWorld stock down, Blackfish, SeaWorld profitsFamilies aren’t flocking to SeaWorld this summer, and the effects of increasingly negative publicity are now explicit in the company’s 2Q earnings report.

The controversy sparked by the late-2013 documentary Blackfish has sent SeaWorld Entertainment Inc. (SEAS) sinking to the bottom of the amusement park tank. While SeaWorld has been trying to refute accusations of inhumane treatment directly on its “Truth about Blackfish” webpage and indirectly with feel-good television ads and its ongoing Sea Rescue series, the latest earnings report does not bode well for the park’s future. Shares have plummeted 32.5% since the opening bell, with no hint of a turnaround.

Poor Results Expected to Continue through 2014

The theme park operator missed analysts’ anticipated earnings of $0.59 per share by 27%, coming in at $0.43 per share and falling short of expected second-quarter revenue by $40.1 million. SeaWorld isn’t predicting improvement, either — for the full year, SeaWorld expects EBIDTA to decline 14-16% over last year. Analysts had estimated an increase of 3%, likely expecting that SeaWorld’s efforts against bad publicity would have better effects.

Shareholder Blackstone Group LP has continued to reduce its stake in the company. It purchased SeaWorld for $2.3 billion from Anheuser-Busch InBev (BUD) in December 2009 and has since entered repurchasing deals to thin its holdings down to about 25%.

Blackstone is not the only SeaWorld partner backing away. Southwest (LUV) recently ended its 26-year partnership with the company that offered incentivizing deals for flight and park ticket combos. The companies stated diverging priorities as the cause for the separation, with no mention of a Change.org petition that garnered more than 30,000 signatures requesting Southwest end its relationship with SeaWorld.

Forced Cost Cutting Following No Significant Improvements in Attendance

SeaWorld was quick to draw any positives available in the report, stating attendance has in fact increased 0.3% against last year’s second-quarter numbers.

However, that measurement is misleading; in the second quarter of 2013, attendance dropped 9% to 6.56 million from 7.2 million in 2Q12. This past quarter recorded attendance around 6.58 million, showing no significant improvement over last year. Year-to-date attendance is down 4.3% from last year.

As part of its capital return plans, SeaWorld Entertainment will repurchase $250 million in shares beginning Jan. 1. Additional efforts to aid growth include “a detailed review of our Company-wide cost structure with the goal of driving significant cash cost savings in 2014 and 2015,” CEO Jim Atchison reported.

SeaWorld’s current nosedive has put shares at their lowest level on record since the company’s IPO last year. From its all-time high of $39.65 on May 20, 2013, stock is down 50%.

 

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Companies

Symbol Name Price Change % Volume
SEAS SeaWorld Entertainment Inc. 18.66 0.06 0.32 775,175
LUV Southwest Airlines Company 49.79 0.19 0.38 6,700,895
BUD Anheuser-Busch Inbev SA Sponsored ADR (Belgium) 103.54 0.89 0.87 2,199,097
PPI.H:CX2 Passport Potash Inc. n/a n/a n/a n/a

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