SeaWorld CEO Blames Weather, Wage Hikes for Weak 3Q Sales

SeaWorld Entertainment's (SEAS)  CEO Joel Manby, during the 2016 third-quarter earnings call, attributed the company's depressed revenue and earnings on weather, wage and labor hikes and a decreasing wave of foreign tourism into Orlando, particularly from Latin America.

Before Tuesday's market open, Orlando-based SeaWorld reported third-quarter earnings of 77 cents per diluted share on $485.3 million in revenue, compared year-over-year to earnings of $1.14 per diluted share on revenue of $497 million.

Analysts surveyed by FactSet were looking for earnings of $1.06 per share on revenue of $486 million.

SeaWorld lowered its guidance for 2016 adjusted earnings before interest, taxes, depreciation and amortization to $310 million to $330 million from $310 million to $340 million. Its stock rose nearly 5% to $14.96 in recent trading.

A major event that negatively impacted revenue at SeaWorld's Orlando park in the third quarter was Hurricane Matthew, which shut down operations for a few days when the October hurricane hit the country's east coast, Manby said early Tuesday morning in the call.

The company's Virginia park, Busch Gardens Williamsburg, was shut down for one day due to the hurricane, which devastated parts of Haiti and killed 546 people. Hurricane Matthew cost SeaWorld $4 million, according to Manby.

"We know where we got hit," Manby said. "We know where we got punched and we know exactly where we need to address it."

Although tourism continues to decline due to various global concerns such as the threat of terrorism, Manby said he expects to see positive trends in September and October at the company's California and Texas parks.

Manby said in the fourth quarter, the company will continue to drive its five-year strategic plan, which includes creating new rides and attractions while increasing its commitment to park customers and animal welfare.

On Nov. 4, the California Coastal Commission approved SeaWorld to construct a natural orca encounter exhibit, where guests can view the whales in their natural habitat. This came after, in March, the company was forced to end orca breeding and theatrical shows by the end of the 2017 summer due to concerns surrounding the health of the captive animals.

In March, SeaWorld announced it partnered with animal protection and advocacy organization The Humane Society of the U.S. to help orphan and rehabilitate distressed oceanic animals.

Manby said SeaWorld will stick to its $175 million annual budget for new projects in constructing the orca encounter exhibit and other additional rides such as the Kraken Virtual Reality. The Kraken will be introduced to the company's Orlando theme park in 2017 and is the first virtual reality ride to hit Florida.

SeaWorld also plans to launch park holiday events in the fourth quarter and "aggressively" drive cost cuts equal to $65 million in savings by the end of 2018, according to Manby.

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