By Michael Calia
SeaWorld Entertainment Inc. reported disappointing
second-quarter results and slashed its revenue guidance for the
year, saying the recent media debate about its treatment of captive
orcas has hurt attendance.
Shares of SeaWorld--down 22% over the past year through
Tuesday--lost about a third of their value Wednesday.
"The company believes attendance in the quarter was impacted by
demand pressures related to recent media attention surrounding
proposed legislation in the state of California," SeaWorld said in
its earnings release.
Two members of the U.S. House from California are proposing a
federal study on the impact of captivity on large marine animals,
citing "serious concerns about the psychological and physical harm"
to orcas in captivity.
The proposal comes as SeaWorld faces increased pressure and
protests over the company's treatment of its captive orcas, also
known as killer whales. The growing call to discontinue the orca
attractions was spurred by the 2013 documentary "Blackfish," an
expose of SeaWorld's practices that inspired debate throughout
national media.
SeaWorld, for its part, has continued to defend its practices,
saying it considers the welfare of the animals a top priority.
Nonetheless, the debate appears to be affecting SeaWorld's
results. The company, which owns three of its namesake parks as
well as two Busch Gardens, said it expected its full-year revenue
to fall by 6% to 7%. The low end of its previous guidance range of
$1.49 billion to $1.52 billion would have represented revenue
growth of 2.1%.
SeaWorld shares ended the day down 32.9%, or $9.25, at
$18.90.
Blackstone Group LP, the company's biggest shareholder, was
particularly hard hit. The New York private-equity firm controls
about 20.2 million SeaWorld shares, according to securities
filings, which lost more than $187 million in value on the day.
Some of the shares Blackstone controls are owned by parties that
invested in the buyout alongside the firm.
It could have been worse for Blackstone, which has been an
aggressive seller of SeaWorld shares since taking the company
public in an April 2013 stock offering, less than four years after
buying it from theme-park operator Anheuser-Busch InBev NV. Sales
before Wednesday's swoon have ensured that Blackstone will more
than double its money on its SeaWorld investment no matter what
happens to the stock.
SeaWorld on Wednesday said it would pursue cost cuts in a bid to
trigger growth as it expects sluggish revenue trends to continue.
The company said it intends to reinvest savings generated by the
cuts into new attractions at its destination parks. Overall
attendance for the year fell 4.3% through June 30, SeaWorld
said.
The company also announced a new $250 million share-buyback
program,
Late last month, Southwest Airlines Co. and SeaWorld ended their
26-year-old marketing relationship because of "shifting priorities"
after animal-rights groups had accused the airline of supporting
animal cruelty. Southwest, however, called the move "strictly a
business decision."
The company said attendance at its parks grew 0.3% in the second
quarter compared with the year-before period. Typically, the
company's revenue for the year is driven by its results in the
second and third quarters. Chief Executive Jim Atchison said that
lower attendance at destination parks partially offset the benefits
of a shift in Easter's timing and favorable weather conditions.
"We were pleased to report attendance growth in the quarter
despite a challenging industry and competitive environment and a
tough comparison to the prior year quarter, which included the
attendance benefit from opening our largest expansion ever at
SeaWorld Orlando," he added.
Overall, SeaWorld reported a second-quarter profit of $37.3
million, or 43 cents a share, compared with a year-earlier loss of
$15.9 million, or 18 cents a share. Revenue declined 1.5% to $405.2
million.
Analysts had projected 59 cents a share in earnings and $445
million in revenue, according to Thomson Reuters.
Revenue generated per theme-park visitor fell 1.8% to
$61.54.
Ryan Dezember contributed to this article.
Write to Michael Calia at michael.calia@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires