Good day, and welcome to the United Parks & Resorts First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Matthew Stroud, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to United Parks & Resorts first quarter earnings conference call. Today's call is being webcast and recorded. A press release was issued this morning and is available on our Investor Relations website at wwwunitedparksinvestors.com. Replay information for this call can be found in the press release and will be available on our website following the call. Joining me this morning are Marc Swanson, Chief Executive Officer; and Jim Forrester Interim Chief Financial Officer and Treasurer. This morning we will review our first quarter financial results and then we will open the call to your questions. Before we begin I would like to remind everyone that our comments today will contain forward-looking statements within the meaning of Federal Securities Laws. These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward-looking statements including those identified in the Risk Factors section of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. These risk factors may be updated from time to time and will be included in our filings with the SEC that are available on our website. We undertake no obligation to update any forward-looking statements. In addition on the call we may reference non-GAAP financial measures and other financial metrics such as adjusted EBITDA and free cash flow. More information regarding our forward-looking statements and reconciliations of non-GAAP measures to the most comparable GAAP measure is included in our earnings release available on our website and can also be found in our filings with the SEC. Now I would like to turn the call over to our Chief Executive Officer, Marc Swanson. Marc?

Thank you, Matthew. Good morning everyone and thank you for joining us. We are pleased to report record financial results this quarter including record revenue and adjusted EBITDA. While attendance in the quarter benefited from a positive calendar shift including the shift of the Easter holiday into the last day of the first quarter from the second quarter and prior year. This benefit was almost entirely offset by unusually wet and cold weather during the quarter particularly on certain peak attendance days and mainly in our Florida parks. In-park per capita revenue excluding the impact of certain onetime revenue increased 4% during the quarter representing the 16th consecutive quarter of growth. Looking ahead, we are excited about our plans for 2024 with an exceptional lineup of new one-of-a-kind rides, attractions and events, improved in-park venues and offerings across our parks some of which are already live and others that are anticipated to debut later this spring and summer. We are excited to have launched SeaWorld Park's 60th anniversary celebration featuring special events, shows and attractions that will continue throughout the year. We hope many will come celebrate with us at SeaWorld's 60-year history of conservation, education and fun for all agents. We're also encouraged by the booking trends at our Discovery Cove property, along with our group bookings, which are running well ahead of 2023. In addition, in the first quarter of 2024, international visitation, while still down compared to 2019, improved meaningfully compared to 2023. We strongly believe we have a clear opportunity to drive meaningfully more attendance and total per capita spending, and we have high confidence in our ability to continue to deliver operational and financial improvements that will lead to meaningful increases in shareholder value. We continue to expect to deliver new records in revenue and…

Thank you, Mark. Our team is looking forward to sharing our quarter's strong performance with our audience this morning. During the first quarter, we generated record total revenue of $297.4 million, an increase of $4.1 million or 1.4% when compared to the first quarter of 2023. The increase in total revenue was primarily a result of an increase in attendance, partially offset by decreases in admissions per capita and in-park per capita spending. Attendance for the first quarter of 2024 increased by approximately 72,000 guests or 2.1% when compared to the prior year quarter. Attendance was positively impacted by a favorable calendar shift, including the earlier timing of Easter and certain school spring breaks and was negatively impacted by adverse weather, particularly at our Florida parks including during peak visitation periods. Excluding the impact of certain onetime revenue associated with the opening of SeaWorld Abu Dhabi in 2023, total revenue per capita increased 1.2% and in-park per capita spending increased 4%, including the impact of certain onetime revenue associated with the opening of SeaWorld Abu Dhabi in 2023, total revenue per capita decreased 0.7% to $86.21 and in-park per capita spending decreased 0.5% to $38.15 from the first quarter of 2023. Admission per capita decreased 0.9% to $48.06. Admission per capita decreased primarily due to the net impact of the admissions product mix when compared to the prior year quarter. In-park per capita spending decreased, primarily due to a decrease in onetime revenue related to our international services agreements partially offset by the impact of pricing initiatives when compared to the first quarter of 2023. Operating expenses decreased $7.8 million or 4.5% when compared to the first quarter of 2023. The decrease in operating expenses was primarily due to a decrease in costs associated with our international services agreements, and…

Yes. Thanks, Jim. Look before we open the call to your questions I have some closing comments. In the first quarter of 2024, we came to the aid of 173 animals in need. Over our history we have helped over 41,000 animals including autonomous dolphins, manatees, sea lions, seals, sea turtles, sharks, birds and more. I'm really proud of the team's hard work and their continued dedication to these important rescue efforts. We are certainly excited about 2024 and I want to thank our ambassadors for their dedication and commitment as we prepare for what we believe will be an exciting and busy summer season. We continue to believe there are significant additional opportunities to improve our execution take advantage of clear growth opportunities and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA. We continue to have high confidence in our long-term strategy and our ability to deliver significantly improved operating and financial results that we expect will lead to meaningfully increased value for stakeholders. So now we can open it up for your questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Steven Wieczynski of Stifel. Go ahead please.

Yes. Hey, guys, good morning. So Marc as we think about the remainder of this year is there any way you can help us out with maybe how you guys are thinking about per caps both on the admissions and the in-park side. We're just trying to understand a little bit better if there are going to be any more potential headwinds out there on both sides of the per cap or if there's anything we need to think about over the second half of the year. And then as you think about the ability to take price on the admission side of things any updated thoughts on how you guys are thinking about taking more price? I know Jim talked about mid-single-digit price increases on past products. But any other color there would be helpful. Thanks.

Yes. Steve, I can help you with that question. So first on pricing, look, obviously, you heard Jim talk about the price increases we’ve seen on past pricing. So we're going to continue to execute on pricing, that's a tenet of our strategy that we've talked about growing pricing on a year-over-year basis, and so we'll continue to do that. I think as far as the remainder of the year on the per caps, there's a couple of things. I think you've got to focus on a little bit. One, we're taking the pricing. But what is impacting per cap a little bit on the admission side, obviously, is the mix, and Jim called that out. So, you have group business being up more this year. And while that's great to see group typically has a lower overall per cap than some of our other products, multi-day tickets are up. So that spread that revenue over multiple visits, which would be a drag on per cap of times. So there's the pricing we're taking and then there's the mix of the products that are being used, which is going to ebb and flow. But I think overall, we have confidence in the overall pricing strategy on the admission side on a go-forward basis. And I can tell you in April with the admissions per cap, was just flat to very slightly positive. So that might give you some context on that. Even with some of that mix, we got to where we are there in April. And then Jim mentioned the deferred revenue at the end of April being up 1.4%. And certainly, I think that's another indication that we're getting pricing as well. As far as the in-park, we normalized the Q1 number for the one-time benefit from the Abu Dhabi last year. That should normalize here going forward. And then really what we should have is the cadence of our new things coming online, some of our new venues and whatnot. So again, we're excited about the opportunities there. I think we have some exciting things going on in in-park. We've got certainly some areas that we've got to do a better job of as well. But I think overall, the anomaly you saw here in Q1 with the international that will normalize going forward. And I can also tell you that in-park per cap was positive in April as well.

Okay. Thanks Marc. That's really good color. And then, I want to ask about the potential hotel investments. We continue to get asked about when we'll hear more about those hotel projects. And I feel like we've heard about these investments now for a while. But based on your commentary in your prepared remarks, it still seems like you're still quarters away. Maybe I'm reading a little bit too much into that before we hear anything. So just wondering why -- maybe why it's taking so long to get any more color around those projects. And if you do those potential projects, then how do you think about the way you go about those projects versus using your free cash flow for repurchasing shares and things like that. Thanks.

Yes, sure. So Steve, we talked a lot about this last quarter. I think one of the things we had heard from our investors is they want to -- they wanted more color on hotels and how we're thinking about everything from the structure to the ROI. So, I think we did a pretty good job last quarter of laying that out. And really, it's focused on finding that right structure, right way to set this up, whether that's with a partner or however, you want to think about it, that achieves that unlevered cash and cash return that we talked about of 20%. And we've committed to being laser-focused on that ROI and we're going to take the appropriate time to make sure we get that right. And certainly to your point that's what we're in the process of doing, so more to come on the coming quarters. As far as how we finance that I certainly don't think it needs to be out of -- entirely out of cash. There's multiple ways you could do this. And certainly one option would be financing some portion of it. So again, I think, what you're going to see us do is focus on the structure and the financing that makes the most sense for us and we'll work with the Board on that.

Okay. Thanks Marc. Appreciate the color.

The next question comes from Matthew Boss of JPMorgan. Go ahead, please.

Great. Thanks. So Marc, I think it would be helpful if it would be possible to speak to underlying demand trends that you're seeing at your parks maybe if any way to parse through the best you can weather and some of the timing shifts during the quarter. And from a traffic perspective what you've seen in April and early May maybe regionally?

Yeah. Matthew, I'll – look, I'm not going to give you a ton of individual color on parks just for competitive reasons but I can try to help you out on some of the shifting and weather impacts on that. So obviously in the quarter we have the benefit of Easter moving from April of last year into March of this year. And then you also had some incremental weekend days in March as well. That kind of shift that we called it that normalized in April. So when you get to April you have the reversal of the Easter shift and then you have the reversal of those weekend days as well and so really on a combined basis March and April on a combined basis if you just look at attendance for the two months which would normalize for those attendance was slightly positive. What was the drag earlier in the year really was on the weather. And the weather really in Q1 was mainly in Florida and that offset most of the benefit that we got from Easter and calendar shift in Q1. And especially if you happen to be in Florida over President's Day weekend which is one of the bigger weekends obviously in Q1 we had quite a bit of rain in our markets in Orlando, and Tampa on that Saturday and Sunday. In fact like the Daytona 500 get postponed until that Monday. So the weather really offset that benefit that we saw in Q1 for the most part a good portion of it. And then I already gave you kind of the March April combined.

Great. And then maybe Jim as a follow-up any customer pushback to price that you is seeing across your offerings? Or any changes to note in the promotional or competitive landscape to call out?

Yeah. This is Marc. I can take that. So look on the pricing look we continue to focus on pricing. Like I said it's a key tenet of our strategy. And look there's going to be times that we run different offers different things to try to pulse to fuse certain demand. So we're always focused on driving total revenue and at times maybe that's through some offers and things like that. But overall, I think over the long run over time we believe pricing is something we can still get -- and I kind of gave you a little more color the mix and things like that that impacts per cap as well.

Great. Best of luck.

Thank you.

The next question comes from Chris Woronka of Deutsche Bank. Go ahead please.

Hey, good morning, guys. Nice quarter. Marc, you kind of reiterated the commitment to $50 million in cost saves in 2024. Curious a can we find out how much of that was maybe realized in Q1 or the cadence of through the year? And then once you hit that target is there more to do behind that as the revenue base grows?

What I can say Chris is obviously we have a tremendous focus on cost. I think you can see that demonstrated in our Q1 numbers with the margin expansion. We've done a good job of growing revenue and managing our costs which led to that margin expansion. So we're confident that we can continue to execute on our plans. And certainly part of those plans would be to try to identify additional savings beyond what I talked about. I don't have anything specific to share with you today, but I can tell you there's efforts around exactly that. And when we have more to share we will on that.

Okay. I appreciate that Marc. And a follow-up is might be difficult to answer specifically but from where you guys sit and you look at the -- take the Orlando market since it's your largest do you feel like you're kind of gaining share as a percentage of the total market entertainment wallet if that makes sense. Is there any way you guys measure that?

Yes. So Chris I don't want to go into a ton of commentary about individual parts other than to say I mean we're pleased with our performance in Orlando. Now I'll leave it at that. This part and I'm sitting I'm looking at the park right now. In-park is a wonderful park. It's got a number of new events and things coming to the park this year. And I can tell you that we're pleased with the performance in that part relative to obviously some of our others. So feel good about Orlando and all we have to offer here.

Okay. Thanks Marc.

Our next question comes from James Hardiman of Wedbush Securities. Go ahead please.

Hi good morning. So I don't know if you answered this but just to sort of close the loop on Matt's question earlier. If we cut through all the noise of the shift through April are you still up on a year-to-date basis in terms of attendance?

No, we're not up on a year-to-date basis. What I was trying to say is March and April combined we're up slightly in attendance. And then you have the kind of hangover from the January-February weather that's what I was trying to get at. So most of the -- most of the weather impact occurred in January-February there were some in March as well. But that's the way to think about it. The January, February early March weather really negated the benefit of Easter and the other shifts. So that's what I was trying to say. And then when you combine March and April which gets rid of some of that shifting noise we're up a slight amount in attendance.

Got it. And then – and maybe I'm parsing words a little bit too much here. But I think the previous language in terms of how to think about 2024 was for meaningful increases in revenue and EBITDA. And now we're talking about increases in revenue and EBITDA or record revenue and EBITDA. I guess speak to if that's a meaningful change, do you still expect meaningful growth this year? And as I think about the first quarter, where revenues were pretty flat but margins were up significantly. Is that where you see the biggest opportunity this year in terms of sort of the ability to grow margins? Or as we think about the algorithms through the year should we expect a little bit more balance in terms of revenue growth versus per cap growth versus margin growth?

Yes. Thanks, James. I mean first I mean we're still certainly very excited about 2024. So we're sitting here today I mean really from May on if you will May 1 on you still have got roughly 75% of the year ahead of you from an attendance standpoint based on historical trends. So we're still really excited about 2024. I think the opportunity for the growth can come from multiple areas. So you mentioned margins. I think another big one obviously is if you kind of think about what has been an issue for some quarters now, it's really been the weather. So if we get some tailwinds on the weather I think that could certainly have a nice benefit to us as well. But we'll have to see how that plays out. The whether wasn't good to start the year obviously but we'll see if that reverses course here going forward.

Got it. That's helpful. Thank you.

The next question comes from Thomas Yeh of Morgan Stanley. Go ahead please.

Thanks. Yes. Just kind of an extension on the consumer price sensitivity question and more about just broader consumer health trends. I think you're a bit of a mix of regional attendance maybe more so certainly than some of the destination parks that have voiced some consumer softening. Is there any evidence just in terms of your footprint more broadly around lower income versus higher income cohorts and how they've behaved over the last few months?

Well, as far as thinking about the health of the consumer. I mean one of the things – there's a couple of things we look at but one of them would be certainly the in-park spending, right? So when you normalize for the impact of the Abu Dhabi revenue, we were up roughly 4% or 4% in the quarter. I think that's an indication that people are coming out to the parks and spending. And then I mentioned that in-park per cap is up in April, as well. So to me that's a good indication. People are spending. Jim mentioned, the deferred revenue being up at the end of April and the price increases we've been seeing on our past products. Again I think that's another indication that at least the consumers coming to our parks are spending. Beyond that we have some other indicators Discovery Cove bookings are up. Group bookings are up meaningfully. So I think if we were seen – I'm not suggesting there's consumers who are impacted with economic issues. But based on where we sit the folks coming to our park when we look at the aggregate numbers we see positive trends there in most cases.

Okay. That's helpful color. On the cost front, do you have any incremental color on just the broader labor wage rate outlook? I think certain of your peers have flagged incremental pressure in certain areas or states. I don't know across your footprint if that's something that you're trying to offset and certainly there are these cost efficiencies that you talked about. But from a broader macro perspective is that something that you're kind of fighting against this year?

Thomas, its Jim, I think as we've said in previous quarters, we are very pleased with the way we've been able to handle our labor expense. This quarter was no different than the previous quarters where we're actually down year-over-year in our labor rate. I think we've had a very successful focus on managing that labor expense through reductions in overtime uses of technology ensuring the right mix of support to our guests were actually improved overall from 2019 and 2023, by better metrics in our labor hours per guest required. So I think overall we've shown an ability to control that cost pretty effectively.

Okay. Appreciate it. Thank you so much.

The next question comes from Paul Golding of Macquarie. Go ahead, please.

Thanks so much. Just a couple on the group and international progress, first just to clarify in terms of mix progression it sounds like group is ahead of 2023 and international also ahead of '23 but still behind 2019. Should we take away from that that group is further ahead and ahead of 2019 as well and then, a follow-up to that, please. Thanks.

Yeah. Thanks, Paul. So what you can -- what I was trying to say there is group is up not only to last year but also up to 2019. So group is outpacing kind of international. International got better in Q1 of 2024 and -- but still is down since 2019. So yes group is outpatient and international.

So as we see international come back it sounds like, there's more room to go in international than there is potentially to go in group. How should we think about the per cap premium that you used to see maybe in 2019 on international relative to what we're seeing today just as we think through the potential uplift or room to go and per cap strength on that mix left to go in international? Thanks so much.

Sure. I can help you with that question. It's a good one. So remember back in 2018 we did about $2.3 million in international attendance. It was roughly 10% of our attendance back in 2019 as a company. So the -- there's a lot of runway still to get back to that. So in Q1 of 2024, we were still down roughly 35% to 2019 on international attendants. Now that's better than what we were down last year. Last year we were down for the full year about 44%. And so it's moving in the right direction but it gives you some sense of still being down third of international attendance on -- when we used to do $2.3 million. It gives you a good sense of the size of potential that's ahead if we can recover international attendance and certainly that's our goal and we're putting efforts behind that. So I think that is an upside down the road whenever that does recover. As far as your question on per cap, I mean, I would think international people oftentimes on a total visit basis have more spend in total. It really depends on what kind of ticket they buy. But if they buy, a multi-day ticket, which some of them do obviously that per cap is going to be spread over multiple visits and would be less than like a single-day ticket. So it can have a mix impact, as I was talking about earlier. I think in general, we're pleased International is moving in the right direction. We need to get it back to 2019 levels but it gives you some sense of the opportunity there which is meaningful.

Thanks so much Marc.

Our next question comes from Lizzie Dove of Goldman Sachs. Go ahead please.

Hi there. Good morning. Congrats on a nice set of results. There's been more and more focus on Epic Universe coming next year. They've put more and more marketing out there about it. I'm curious kind of what your base case is and how you feel about the setup there whether it's from a pricing standpoint whether you feel the need to maybe kind of invest more in the Orlando parks? Anything on those lines would be helpful.

Yeah. Thanks Lizzie, I can help you with that. Look on Epic, look, I don't have a crystal ball and we think about Epic. But generally we view things -- new things in the market that we expect will bring people to the market. That's good for us and the industry as a whole. And here's why. You got to remember we've been -- SeaWorld Orlando has been here for 50 years. It opened in the early 1970s. And if you think about the number of parks that have opened since SeaWorld opened 50 years ago you've got more Disney parks you've got more universal parks. You've got LEGOLAND. You've got -- we added two parks Aquatica and Discovery Cove. And over that time SeaWorld over that long term grew to EBITDA and participated in that growth of EBITDA to the market. So we like when more people come here we have a differentiated product. We -- I think have a better value proposition for visiting our part relative to some of the competitors in town. And we have our own unique rides and events and things to do that people do find a lot of enjoyment in. We also get I would guess more of our tenants than they do. I'm not for certain, but we get a lot of our tenants obviously from the state of Florida into SeaWorld Orlando Park and Aquatica. So those are setups that we like that setup going forward. We've competed here for certainly a long time. I'm not suggesting Epic won't have an impact or anything like that. I'm sure, there's going to be days, where they're going to be very crowded and we might feel that -- we like the setup of -- we've been competing here for a long time. We like our product. We like our value proposition. We like what we have to offer. And so I think we've demonstrated over a long history that we've competed well with a lot of new things coming into the market during that time.

Perfect. That's helpful. And then just one follow-up. On the buyback, you made very solid progress there. I guess, like in dairy if I look at the numbers, it feels like with the cash you have and the revolver you could potentially finish that by the end of this year. So how do you evaluate kind of the pacing and capital allocation priorities of that versus deleveraging or capital investments or anything else hotels, I guess, too?

Yes. Thanks. Look, I mean, we'll work with -- like we we'll work with the Board on the use of cash. I mean certainly, I think to the extent the stock remains undervalued, like we believe it is, that would lean towards doing -- probably trying to do more of those buybacks, obviously, right? And that -- we saw that with the shareholders that was overwhelmingly approved. So I think a lot of people recognize investors recognize that the stock is undervalued. So -- the pacing will really just come down to does it stay undervalued and then how do we work with our team and the Board to kind of navigate, like you said, the cash. But keep in mind that the business overall generates strong free cash flow. So you can model that out. It sounds like you kind of did. And we do have -- we are entering kind of the peak season here where we would generate more of our cash. So we'll keep you posted each quarter. But certainly, we're -- we recognize the stock is undervalued and certainly believe in the buybacks.

Great. Thanks so much.

This concludes our question-and-answer session. I would like to turn the conference back over to Marc Swanson, CEO, for any closing remarks.

Yes. Thank you, Cindy. On behalf of Jim and the rest of the management team at United Parks Resorts, we want to thank you for joining us this morning. As you heard today, we are confident in our long-term strategy, which we believe will drive improved operating and financial results and long-term value for stakeholders. So thank you for joining. We look forward to speaking with you next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.