SeaWorld(SEAS) - 2023 Q4 - Annual Report

Report Information FORM 10-K Filing Details This annual report for United Parks & Resorts Inc, as of December 31, 2023, confirms its status as a well-known seasoned issuer and large accelerated filer - The company name was changed from SeaWorld Entertainment, Inc to United Parks & Resorts Inc on February 12, 2024, with the stock ticker changing from “SEAS” to “PRKS”[30] - As of June 30, 2023, the aggregate market value of voting and non-voting common stock held by non-affiliates was approximately $2.016 billion[7] - As of February 23, 2024, the company had 63,970,068 shares of common stock outstanding[8] Company Filing Status | Indicator | Status | | :--- | :--- | | Well-Known Seasoned Issuer | ☑ | | Large Accelerated Filer | ☑ | | All Reports Filed | ☑ | | All Interactive Data Files Submitted | ☑ | SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Forward-Looking Statements Disclaimer This report contains forward-looking statements regarding future plans and performance, which are subject to significant uncertainties and risks - Forward-looking statements include representations of the company's plans, objectives, business strategies, future events, business conditions, operating results, financial position, and business outlook[15] - These statements are based on current expectations and projections but are inherently uncertain and beyond the company's control, meaning actual results may differ materially[15] Key Risks and Uncertainties The company faces numerous risks that could cause actual results to differ from forward-looking statements, including weather, labor shortages, and competition - Factors affecting park attendance and spending include weather, natural disasters, labor shortages, inflation, supply chain delays, consumer confidence, health concerns, and geopolitical events[17] - Other risks include rising labor costs, changes in animal welfare regulations, negative publicity, cybersecurity threats, and intense competition in the theme park industry[17][19] - A significant portion of revenue is generated in Florida, California, and Virginia, making the business susceptible to regional risks like natural disasters and adverse weather[17] PART I. Item 1. Business United Parks & Resorts Inc is a leading theme park and entertainment company operating 13 parks under brands like SeaWorld and Busch Gardens - The company owns or licenses well-known brands including SeaWorld, Busch Gardens, Aquatica, Discovery Cove, and Sesame Place, operating 13 theme parks with revenue primarily from admissions and in-park spending[23][24] - It is one of the world's foremost zoological organizations, committed to animal welfare, training, husbandry, veterinary care, and marine animal rescue[25] Company Overview United Parks & Resorts Inc is a leading theme park company with a 60-year history, operating 13 parks under renowned brands like SeaWorld and Busch Gardens - The company owns or licenses well-known brands including SeaWorld, Busch Gardens, Aquatica, Discovery Cove, and Sesame Place, operating 13 theme parks that offer zoological collections, rides, educational shows, and dining experiences[23] - Revenue is primarily generated from theme park admissions and in-park purchases of food, merchandise, and other items[24] Recent Developments The company has actively managed operational challenges, optimized its capital structure through a debt repricing, and rebranded to United Parks & Resorts Inc - The Board of Directors is actively involved in overseeing key operational activities and decisions to address challenges such as labor market tightness, high interest rates, and supply chain disruptions[26][27] - On January 22, 2024, the company completed a repricing amendment for its existing first lien term loans to improve its capital structure[29] - On February 12, 2024, the company changed its name from SeaWorld Entertainment, Inc to United Parks & Resorts Inc, and its stock ticker from “SEAS” to “PRKS”[30] Our Competitive Strengths The company's competitive advantages include well-known brands, a differentiated park portfolio, a world-class zoological collection, and a strong market position - The company possesses well-known consumer brands, leveraging brand recognition, intellectual property, and animal care efforts to enhance park visibility and offer out-of-park consumer products[33] - It operates 12 differentiated theme parks, including 3 of the top 20 theme parks and 4 of the top 10 water parks in North America per the 2019 TEA/AECOM report[33] - The company maintains one of the world's largest zoological collections, educating millions of guests annually through unique animal exhibits and interactions while being committed to animal rescue and conservation[33][35] - Its theme parks are geographically clustered, enabling revenue and operational efficiencies and facilitating bundled ticketing and vacation packages[33] Our Theme Parks The company operates 12 award-winning theme parks across five states, offering diverse animal interactions, rides, educational shows, and seasonal events - The company owns and operates theme parks under brands such as SeaWorld, Busch Gardens, Aquatica, Discovery Cove, Sesame Place, Water Country USA, and Adventure Island[37][38][39][42] - Parks feature animal interactions, thrilling and family-friendly rides, educational shows, and seasonal events like the Seven Seas Food Festival, Howl-O-Scream, and Christmas celebrations[36] - In 2023, SeaWorld Orlando opened Pipeline: The Surf Coaster, Busch Gardens Tampa Bay opened Serengeti Flyer, and Aquatica Orlando opened Turi's Kid Cove[39] 2023 Theme Park Portfolio Overview | Location | Theme Park | Year Opened | Animal Habitats | Rides | Shows | Other Attractions | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Orlando, Florida | SeaWorld Orlando | 1973 | 17 | 14 | 22 | 44 | | Orlando, Florida | Discovery Cove | 2000 | 5 | 3 | 0 | 10 | | Orlando, Florida | Aquatica Orlando | 2008 | 3 | 14 | 0 | 5 | | Tampa, Florida | Busch Gardens Tampa Bay | 1959 | 14 | 29 | 32 | 58 | | Tampa, Florida | Adventure Island | 1980 | 0 | 13 | 0 | 5 | | San Diego, California | SeaWorld San Diego | 1964 | 20 | 17 | 15 | 30 | | San Diego, California | Sesame Place San Diego | 1996 (a) | 0 | 15 | 0 | 16 | | San Antonio, Texas | SeaWorld San Antonio | 1988 | 8 | 13 | 25 | 49 | | San Antonio, Texas | Aquatica San Antonio | 2016 (b) | 1 | 14 | 0 | 7 | | Williamsburg, Virginia | Busch Gardens Williamsburg | 1975 | 5 | 36 | 35 | 38 | | Williamsburg, Virginia | Water Country USA | 1984 | 0 | 17 | 0 | 5 | | Langhorne, Pennsylvania | Sesame Place Philadelphia | 1980 | 0 | 24 | 20 | 55 | | Total | | | 73 | 209 | 149 | 322 | Capital Improvements The company makes targeted annual capital investments to maintain existing facilities and develop new attractions, with a strong emphasis on safety and maintenance - The company makes annual capital investments to support existing facilities and attractions and to develop new ones, aiming to remain competitive, increase revenue, and extend guest stays[47] - Several new rides opened in 2023, including 2 of the top 10 best new amusement park attractions for that year[48] - New rides and attractions planned for 2024 include Penguin Trek at SeaWorld Orlando, Jewels of the Sea at SeaWorld San Diego, and the Loch Ness Monster restoration at Busch Gardens Williamsburg[50] - Safety is a top priority, with all rides undergoing regular inspections by park maintenance experts and external consultants according to daily, weekly, monthly, and annual schedules[48][49] Environmental and Social Responsibility The company is committed to animal and environmental protection through world-class animal care, rescue programs, and sustainable operations - The company provides world-class animal care, maintains one of the largest zoological collections globally, and is accredited by professional organizations like AZA, AMMPA, IMATA, and Humane Conservation[53][54] - As a leader in animal rescue, the company is on call 24/7 to rescue injured or abandoned wildlife, having helped over 41,000 animals and operating one of the world's largest manatee rescue operations[58] - The company inspires guests to protect the natural world through animal interactions, educational exhibits, and "Inside Look" events, and partners with research and conservation organizations like the Florida Coral Rescue Center[60] - It is committed to sustainable operations by investing in renewable energy, implementing water conservation measures, and executing waste management programs[62][63][64][65] - The company has a responsible food sourcing policy, partnering with suppliers that meet sustainable, healthy, and humane standards, and is increasing its plant-based food options[66] Human Capital Management As of year-end 2023, the company employed approximately 3,300 full-time and 13,200 part-time staff, with a focus on diversity and competitive compensation - As of December 31, 2023, the company employed approximately 3,300 full-time and 13,200 part-time and seasonal employees[67] - The management and supervisory team is approximately 46% female and 32% minority, while the overall workforce is 50% female and 51% minority[68] - The company offers competitive compensation and benefits, including health, dental, vision, disability, life insurance, retirement plans, paid time off, and complimentary park tickets[69] Our Products and Services The company generates revenue primarily through theme park admissions, in-park sales, and brand licensing, utilizing dynamic pricing and diverse product offerings - The primary revenue source is theme park admissions, offering various options like single-day, multi-day, and annual passes, and using demand-based pricing and advance purchase discounts to manage attendance and maximize revenue[71][72] - In-park offerings include high-quality, creative culinary services with all-day dining plans and immersive dining experiences, emphasizing sustainable ingredient sourcing[74] - Merchandise sales include traditional retail, games, and custom photos, while convenience services like front-of-line access, reserved seating, and cabana rentals are also offered[75] - The company expands revenue streams through brand licensing and consumer product partnerships, such as collaborations with Sesame Street and Build-A-Bear, and hosts group events and corporate sponsorships[76][77][80] Seasonality The theme park industry is seasonal, with attendance and revenue peaking in the second and third quarters and a net loss typically occurring in the first quarter - The theme park industry is seasonal, with attendance and revenue typically peaking in the second and third quarters, which account for approximately two-thirds of total revenue[81] - The first quarter typically results in a net loss, and revenue can fluctuate between quarters due to the timing of holidays like Easter, spring break, Christmas, and New Year's[81] Our Markets, Guests and Customers The company's theme parks attract a broad audience of local, domestic, and international visitors, with locations near major U.S. metropolitan and tourist areas - The company's theme parks are located near major U.S. metropolitan areas and popular tourist destinations, attracting local, domestic non-local, and international visitors[82] - The COVID-19 pandemic impacted travel from international and/or domestic markets during parts of 2021, 2022, and 2023[82] Intellectual Property The company protects its intellectual property through trademarks and copyrights and holds key licensing agreements for the Busch Gardens and Sesame Street brands - The company protects its intellectual property, including names, logos, character likenesses, and theme park attractions, through trademark, copyright, patent, trade secret, and unfair competition laws[83] - A perpetual, exclusive, worldwide, royalty-free license agreement with Anheuser-Busch is in place for the Busch Gardens trademark[84] - The company has a license agreement with Sesame Workshop for the exclusive use of Sesame Street elements in theme parks and related products in the U.S., Puerto Rico, and the U.S. Virgin Islands, with an initial term through December 31, 2031, and automatic 15-year renewals[88][91] International Development Strategy The company is expanding its brand internationally, with the first SeaWorld park outside the U.S. opening in Abu Dhabi in 2023 through a licensing agreement - The company's brands have significant international appeal, and it continues to evaluate other international development opportunities[92][93] - In May 2023, the first international SeaWorld park, SeaWorld Abu Dhabi, opened in the UAE, generating sales-based royalties, incentive fees, and other service fees for the company through a partnership with Miral Asset Management LLC[92] Our Industry The theme park industry is an attractive sector with a proven business model that generates significant cash flow and offers a strong consumer value proposition - The theme park industry is an attractive sector with a mature business model capable of generating significant long-term cash flow and growth potential[94] - Theme parks offer a strong consumer value proposition and compete effectively with other out-of-home entertainment forms like concerts, sporting events, cruises, and movies[94] Competition The company competes with other major theme parks and entertainment venues on factors like location, price, and attraction quality - The company's theme parks compete directly with entities like The Walt Disney Company, Universal Parks & Resorts, and Six Flags Entertainment, and indirectly with movies, home entertainment, and sporting attractions[95][154] - Key competitive factors include location, price, originality and perceived quality of rides, park atmosphere and cleanliness, food and entertainment quality, weather conditions, and ease of travel[96] - The company competes effectively through strong brand recognition, unique zoological collections and expertise, a diverse product portfolio, targeted capital investments, and its rescue and conservation efforts[97] Regulatory The company's operations are subject to extensive regulations governing animal care, ride safety, and environmental standards, with potential impacts from new legislation - Operations are subject to federal, state, and local laws, including the Endangered Species Act, Marine Mammal Protection Act, and Animal Welfare Act, which govern animal exhibition, care, ride safety, environmental standards, and labor[98] - The USDA's Animal and Plant Health Inspection Service (APHIS) had proposed rule changes for marine mammal handling, which are not currently listed as a priority[99][100] - In 2023, APHIS issued new regulations for birds covered under the Animal Welfare Act, with which the company complied by August 21, 2023[101] - The SWIMS Act, reintroduced in Congress in January 2024, would prohibit the capture, import, export, or breeding of certain marine mammals for public display[102] - The UK's Animals (Low-Welfare Activities Abroad) Act, passed in September 2023, prohibits the sale and advertisement of overseas activities involving low-welfare animal conditions, which could impact the business[103] Insurance The company maintains commercially reasonable insurance coverage, including up to $100 million in liability insurance, but faces uncertainty regarding future costs and adequacy - The company maintains primary and excess liability insurance coverage up to $100 million and is subject to deductibles/self-insured retentions for general liability, auto liability, and workers' compensation claims[105] - Insurance policies are renegotiated annually, and there is no guarantee that future premium costs, deductible levels, or coverage will be adequate to cover all actual risks[105] Corporate History The company's history dates to 1959, with key milestones including its acquisition by Blackstone, an IPO in 2013, and its 2024 rebranding - The company's history began with the opening of the first Busch Gardens theme park in 1959[106] - In 2009, investment funds affiliated with The Blackstone Group acquired the company through SeaWorld Entertainment, Inc[106] - The company completed its initial public offering in April 2013, listing its common stock on the NYSE under the ticker "SEAS"[106] - As of December 31, 2023, Hill Path Capital LP held approximately 42.5% of the company's outstanding common stock[107] - On February 12, 2024, the company was renamed United Parks & Resorts Inc, and its stock ticker changed to "PRKS"[108] Available Information Corporate filings, governance documents, and other key information are available to the public on the company's investor relations website - The company's websites (unitedparks.com and unitedparksinvestors.com) provide access to annual reports, quarterly reports, 8-K filings, codes of conduct, corporate governance guidelines, and committee charters[109] - Investors should monitor the company's websites and social media channels for information that may be deemed material[111] Item 1A. Risk Factors The company faces risks from external factors, operational challenges, competitive pressures, and financial leverage that could adversely affect its business - Factors impacting attendance and spending include adverse weather, natural disasters, labor shortages, inflation, supply chain delays, declining consumer confidence, health concerns, and geopolitical events[115][119] - Labor market challenges, including wage inflation and turnover, could impact operations and guest experience, leading to partial facility closures or longer wait times[122][123] - The company is subject to complex animal welfare regulations, and changes or litigation from activist groups could restrict animal exhibition or acquisition and generate negative publicity[115][136] - Cybersecurity risks and data breaches could harm the company's reputation, disrupt operations, and result in costs, fines, or litigation[115][151][152] - The company faces intense competition from major theme park operators with greater financial resources that may develop new attractions to draw visitors[115][154] - The company's high leverage, with total debt of approximately $2.126 billion as of December 31, 2023, could limit its ability to raise capital, respond to economic changes, and exposes it to interest rate risk[117][185] Risk Factor Summary This summary outlines key business, industry, and stock ownership risks, including attendance drivers, labor costs, competition, and debt covenants - Risk factors are categorized into risks related to the business and industry, and risks related to ownership of common stock[114][116] - Business and industry risks include factors affecting attendance and spending, employee recruitment, consumer spending, influence of Hill Path Capital LP, labor costs, animal welfare regulations, negative publicity, market concentration, technology disruptions, cybersecurity, competition, fixed costs, seasonality, and debt covenants[115] - Common stock ownership risks include potential stock price volatility, capital allocation plans, future stock sales, debt restrictions on repurchases and dividends, anti-takeover provisions, and concentrated ownership limiting shareholder influence[117] Item 1B. Unresolved Staff Comments As of the filing date of this report, the company has no unresolved staff comments - The company has no unresolved staff comments[223] Item 1C. Cybersecurity The company manages cybersecurity risk through a CIO-led process, utilizing the CIS framework, continuous monitoring, and board oversight - The company has established a cybersecurity risk management process led by the Chief Information Officer (CIO) to assess, respond to, and report on cybersecurity incidents and threats[224] - It employs the Center for Internet Security (CIS) framework for cybersecurity defense, which includes multi-layered defense, continuous monitoring, insider threat identification, employee training, and vendor engagement[225][228] - The Board of Directors and its Audit Committee oversee cybersecurity risk, with the CIO and their team possessing over 30 years of experience and including certified security professionals[231][232] - The company conducts regular third-party penetration testing and annual tabletop cyber exercises to ensure organizational preparedness for significant cyber events[228][229] - While past cybersecurity incidents have occurred, the company believes no threat to date has had a material impact on its financial condition, results of operations, and/or cash flows[230] Item 2. Properties The company owns and leases numerous properties, including theme parks and corporate facilities, with approximately 400 acres available for future development - As of December 31, 2023, the company had approximately 400 acres of land available for future development[235] - A subsidiary, Sea World LLC, leases approximately 190 acres from the City of San Diego for its marine park facilities under a 50-year lease, which restricts the operation of other marine park facilities within a 560-mile radius[238] - Annual rent is calculated as a percentage of gross income or a minimum annual rent, whichever is greater, with the minimum rent subject to triennial adjustments and standing at approximately $10.4 million as of December 31, 2023[239] - As of December 31, 2023, $8.3 million in minimum rent and related fees remained deferred due to the impact of the 2020 pandemic[240] Principal Properties Overview (as of December 31, 2023) | Location | Area | Use | | :--- | :--- | :--- | | San Diego, CA | 190 Acres | Leased Land (a) | | Chula Vista, CA | 66 Acres | (b) Owned Theme Park | | Orlando, FL | 279 Acres | Owned Theme Park and Corporate Headquarters | | Orlando, FL | 58 Acres | Owned All-Inclusive Interactive Park | | Orlando, FL | 81 Acres | Owned Water Park | | Tampa, FL | 56 Acres | Owned Water Park | | Tampa, FL | 306 Acres | Owned Theme Park | | Dade City, FL | 109 Acres | Owned Breeding and Rearing Facility | | Langhorne, PA | 55 Acres | Owned Theme Park | | San Antonio, TX | 397 Acres | Owned Theme Park | | San Antonio, TX | 18 Acres | Owned Water Park | | Williamsburg, VA | 222 Acres | Owned Water Park | | Williamsburg, VA | 422 Acres | Owned Theme Park | | Williamsburg, VA | 5 Acres | Owned Warehouse Space | | Williamsburg, VA | 5 Acres | Owned Seasonal Employee Housing | Item 3. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 14 to the consolidated financial statements - Information on legal proceedings is incorporated in Note 14, "Commitments and Contingencies," of the consolidated financial statements[242] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[243] PART II. Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE under "PRKS," with approximately 216 registered stockholders and no current dividend payments - The company's common stock is listed on the New York Stock Exchange under the ticker symbol "PRKS"[244] - As of February 23, 2024, there were approximately 216 registered stockholders[244] - The company does not currently pay dividends[245] - As of December 31, 2023, approximately $38.5 million remained available for repurchases under the $250 million stock repurchase program[255] Five-Year Cumulative Total Stockholder Return for Company Common Stock (as of December 31, 2023) | Index | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | United Parks & Resorts Inc | $100.00 | $143.55 | $143.01 | $293.62 | $242.21 | $239.13 | | S&P 500 - Total Return | $100.00 | $131.49 | $155.68 | $200.37 | $164.08 | $207.21 | | S&P Midcap 400 | $100.00 | $126.20 | $143.44 | $178.95 | $155.58 | $181.15 | | S&P 400 Movies & Entertainment | $100.00 | $117.47 | $73.80 | $73.27 | $102.50 | $127.05 | Issuer Purchases of Equity Securities (Q4 2023) | Period Start | Period End | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | :--- | | October 1, 2023 | October 31, 2023 | — | — | — | $38,510,748 | | November 1, 2023 | November 30, 2023 | 5,952 | $46.51 | — | $38,510,748 | | December 1, 2023 | December 31, 2023 | 399 | $52.38 | — | $38,510,748 | | Total | | 6,351 | | — | $38,510,748 | Item 6. [Reserved] This item has been reserved - This item has been reserved[254] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial performance for 2023, highlighting a slight revenue decrease offset by higher per capita spending - Total revenue for 2023 was $1.7266 billion, a slight decrease of 0.3% from $1.7312 billion in 2022[274] - Attendance in 2023 was 21.6 million guests, a 1.5% decrease from 21.9 million in 2022, primarily due to adverse weather[274][275] - Total revenue per capita in 2023 was $79.91, a 1.3% increase from $78.91 in 2022[274] - Operating income for 2023 was $459.8 million, a 9.4% decrease from $507.5 million in 2022[274] - Net income for 2023 was $234.2 million, a 19.6% decrease from $291.2 million in 2022[274] - As of December 31, 2023, total debt was approximately $2.1255 billion, consisting of Term B Loans, Senior Notes, and First-Priority Senior Secured Notes[297][300][301][476] - Cash flow from operating activities was $504.9 million in 2023, a decrease from $564.6 million in 2022, primarily due to higher interest expense and lower operating performance[288] - Cash used in investing activities was $305.6 million in 2023, mainly for capital expenditures, including $181.9 million in core and $123.0 million in expansion/ROI projects[290][292] - Cash used in financing activities was $34.7 million in 2023, primarily for stock repurchases ($17.9 million) and long-term debt repayments ($12.0 million)[293] Introduction This discussion and analysis provides insight into the company's business and operating results and should be read with the historical financial statements - This discussion and analysis is intended to help understand the company's business and operating results and should be read in conjunction with the historical consolidated financial statements and their notes[257] - This section covers a business overview, recent developments, principal factors affecting results, results of operations, liquidity, capital resources, and critical accounting policies[260] Business Overview The company is a leading theme park operator with a portfolio of well-known brands, offering unique experiences to inspire guest conservation efforts - The company is a leading theme park and entertainment company, owning brands such as SeaWorld, Busch Gardens, Aquatica, Discovery Cove, and Sesame Place[258] - It operates 13 theme parks featuring zoological collections, rides, educational shows, and attractions designed to provide meaningful experiences and inspire guests to protect animals and the natural world[258] Recent Developments Recent developments, including the operating environment, debt repricing, and corporate name change, are discussed in detail in the "Business" section - Recent developments include the current operating environment, a debt repricing transaction, and the company's name change[259] Regulatory Developments Relevant regulatory developments, including risks associated with animal handling regulations, are discussed in the "Business" section of this report - Relevant regulatory developments are discussed in the "Recent Regulatory Developments" subsection of the "Business" section[260] - Risks related to federal and state animal handling regulations are further discussed in the "Risk Factors" section[260] Principal Factors and Trends Affecting Our Results of Operations Revenue is driven by attendance and per capita spending, while costs are influenced by labor, maintenance, and inflation, with operations subject to seasonality - Revenue is primarily driven by theme park attendance and per capita spending levels, which include per capita admission revenue and per capita in-park spending[261][262] - Attendance is influenced by factors such as affordability, new attractions, competition, weather, marketing, brand reputation, travel patterns, exchange rates, and economic conditions[264] - Key costs and expenses include employee wages, advertising, maintenance, animal care, utilities, property taxes, and insurance, and are affected by fixed operating costs, wage pressures, commodity prices, and inflation[266] - The theme park industry is seasonal, with approximately two-thirds of attendance and revenue generated in the second and third quarters, while the first quarter typically results in a net loss[270] Results of Operations In 2023, total revenue decreased slightly by 0.3% to $1.7266 billion due to a 1.5% drop in attendance, though per capita spending increased Comparison of Fiscal 2023 to Fiscal 2022 | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Admissions revenue | $954,083 | $965,232 | (1.2%) | | Food, merchandise and other revenue | $772,504 | $766,005 | 0.8% | | Total revenues | $1,726,587 | $1,731,237 | (0.3%) | | Cost of sales | $131,697 | $135,217 | (2.6%) | | Operating expenses | $758,874 | $735,687 | 3.2% | | Selling, general and administrative | $221,237 | $200,074 | 10.6% | | Severance and other separation costs | $816 | $108 | NM | | Depreciation and amortization | $154,208 | $152,620 | 1.0% | | Total costs and expenses | $1,266,832 | $1,223,706 | 3.5% | | Income from operations | $459,755 | $507,531 | (9.4%) | | Interest expense | $146,666 | $117,501 | 24.8% | | Provision for income taxes | $78,911 | $98,883 | (20.2%) | | Net income | $234,196 | $291,190 | (19.6%) | | Attendance (in thousands) | 21,606 | 21,939 | (1.5%) | | Total revenue per capita ($) | $79.91 | $78.91 | 1.3% | | Admissions per capita ($) | $44.16 | $44.00 | 0.4% | | In-park per capita spending ($) | $35.75 | $34.91 | 2.4% | - Admissions revenue decreased by 1.2%, primarily due to a 1.5% decline in attendance driven by adverse weather, partially offset by a 0.4% increase in admissions per capita from strategic pricing[275] - Food, merchandise, and other revenue grew by 0.8%, driven by a 2.4% increase in in-park per capita spending due to pricing strategies and increased revenue from an international agreement[276] - Operating expenses increased by 3.2%, mainly due to non-cash asset write-offs, adjustments to self-insurance reserves, and costs related to an international services agreement[278] - Selling, general, and administrative expenses rose by 10.6%, primarily from increased third-party consulting and legal fees, including non-recurring costs for strategic initiatives, and higher labor-related costs[279] - Interest expense increased by 24.8%, largely due to higher interest rates on variable-rate debt[281] Liquidity and Capital Resources The company maintains adequate liquidity through operating cash flow and borrowings to fund operations, capital investments, and debt service - The company's primary sources of liquidity are cash flow from operations, borrowings, and existing cash, which are used for working capital, debt service, capital investments, and stock repurchases[283] - As of December 31, 2023, the company had a working capital ratio of 0.9 and cash and cash equivalents of $246.9 million[283][404] - Operating cash flow decreased in 2023, primarily due to higher interest expense and a decline in operating performance[288] - Investing activities in 2023 primarily consisted of $304.8 million in capital expenditures, including $181.9 million for core projects and $123.0 million for expansion/ROI projects[290][292] - Financing activities in 2023 were mainly for $17.9 million in stock repurchases and $12.0 million in long-term debt repayments[293] - As of December 31, 2023, total debt was $2.1255 billion, including Term B Loans, Senior Notes, and First-Priority Senior Secured Notes[297][300][301][476] - The company was in compliance with all covenants in its debt agreements as of December 31, 2023[302] Summary of Cash Flows (in thousands) | Cash Flow Category | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $504,916 | $564,588 | $503,012 | | Net cash used in investing activities | $(305,607) | $(200,705) | $(128,854) | | Net cash used in financing activities | $(34,707) | $(726,049) | $(364,897) | | Net increase (decrease) in cash and cash equivalents | $164,602 | $(362,166) | $9,261 | Adjusted EBITDA and Covenant Adjusted EBITDA (in thousands) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net income | $234,196 | $291,190 | $256,513 | | Provision (benefit) for income taxes | 78,911 | 98,883 | (164) | | Interest expense | 146,666 | 117,501 | 116,642 | | Depreciation and amortization | 154,208 | 152,620 | 148,660 | | Equity-based compensation expense | 17,961 | 19,757 | 41,018 | | Loss on impairment or disposition of assets and other non-cash expenses | 31,636 | 14,218 | 7,099 | | Business optimization, development and strategic initiatives | 33,903 | 19,846 | 8,759 | | COVID-19 related incremental costs | 9,076 | 6,689 | 22,562 | | Adjusted EBITDA | $713,491 | $728,245 | $662,048 | | Covenant Adjusted EBITDA | $743,941 | $740,722 | $689,138 | Summary of Contractual Obligations (as of December 31, 2023, in thousands) | Obligation Type | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt, including current portion | $2,125,500 | $12,000 | $251,500 | $1,137,000 | $725,000 | | Interest on long-term debt | 684,190 | 155,180 | 275,110 | 228,525 | 25,375 | | Operating and finance leases | 280,353 | 27,804 | 25,656 | 21,651 | 205,242 | | Purchase obligations, license commitments and other | 262,252 | 173,032 | 84,053 | 2,067 | 3,100 | | Total Contractual Obligations | $3,352,295 | $368,016 | $636,319 | $1,389,243 | $958,717 | Critical Accounting Policies and Estimates The company's financial statements rely on significant management estimates, particularly for asset impairment, income taxes, and revenue recognition - Critical accounting policies and estimates include long-lived asset impairment, income tax accounting, self-insurance reserves, and revenue recognition[319][320] - Long-lived asset impairment is assessed when impairment indicators are present, with losses recognized based on the difference between the asset's estimated fair value and its carrying value[321] - Income tax accounting uses the asset and liability method, recognizing deferred tax assets and liabilities and assessing their recoverability, with a valuation allowance recorded when necessary[322] - Self-insurance reserves are accrued based on estimates for identified claims and incurred but not reported claims, using historical claim experience and actuarial factors[329] - Revenue is recognized under ASC 606, with admissions revenue recognized upon park entry or amortized over the product term, and bundled product revenue allocated based on standalone selling prices[330][331] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from inflation, which affects operating costs, and interest rate fluctuations on its variable-rate debt - Inflation significantly impacts company operations by increasing costs for food, merchandise, fuel, construction, labor, and utilities[333] - The company faces market risk from interest rate fluctuations, with approximately $1.2 billion of its long-term debt being variable-rate as of December 31, 2023[334][335] - A hypothetical 100 basis point increase in the adjusted Term SOFR rate would increase annual interest expense by approximately $11.7 million, excluding borrowings under the revolving credit facility[335] Item 8. Financial Statements and Supplementary Data The company's consolidated financial statements and related notes are included in Part IV, Item 15 of this annual report - The consolidated financial statements and their notes are included in Part IV, Item 15 of this Annual Report[336] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company has had no changes in or disagreements with its accountants on accounting and financial disclosure - The company has had no changes in or disagreements with its accountants on accounting and financial disclosure[337] Item 9A. Controls and Procedures Management has evaluated and concluded that the company's disclosure controls and procedures were effective as of December 31, 2023 - As of December 31, 2023, the company's management evaluated and concluded that its disclosure controls and procedures were effective in their design and operation[340] - The company has successfully remediated a previously disclosed material weakness in internal control over financial reporting, which stemmed from insufficient policies regarding board and management interaction[341][343] - Remedial actions included appointing a Lead Director, engaging independent expert advisors, enhancing control environment assessments, increasing control testing, and implementing regular meetings and training for the board and management[342] - As of December 31, 2023, management believes the company maintained effective internal control over financial reporting[347] Item 9B. Other Information The company's Chief Parks Operations Officer entered into a Rule 10b5-1 trading plan in June 2023 for the potential sale of company stock - The company's Chief Parks Operations Officer, Kyle R. Miller, entered into a Rule 10b5-1 trading plan on June 12, 2023[348] - The plan permits the sale of up to 12,000 shares of company common stock between July 14, 2023, and July 12, 2024, subject to specific stock price conditions[348] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - This item is not applicable[349] PART III. Item 10. Directors, Executive Officers and Corporate Governance Required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days of the fiscal year-end - The required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days after the end of the fiscal year covered by this Annual Report[350] Item 11. Executive Compensation Required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days of the fiscal year-end - The required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days after the end of the fiscal year covered by this Annual Report[351] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of year-end 2023, over 6.9 million securities remained available for future issuance under the company's equity compensation plans - Other required information will be included in the company's definitive proxy statement, to be filed within 120 days after the end of the fiscal year covered by this Annual Report[352] Equity Compensation Plan Information (as of December 31, 2023) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 428,514 | $46.14 | 6,920,454 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 428,514 | $46.14 | 6,920,454 | Item 13. Certain Relationships and Related Transactions, and Director Independence Required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days of the fiscal year-end - The required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days after the end of the fiscal year covered by this Annual Report[353] Item 14. Principal Accountant Fees and Services Required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days of the fiscal year-end - The required information for this item will be included in the company's definitive proxy statement, to be filed within 120 days after the end of the fiscal year covered by this Annual Report[354] PART IV. Item 15. Exhibits, Financial Statement Schedules This item lists the consolidated financial statements, schedules, and exhibits filed as part of this report, including key corporate and operational agreements - This item lists the consolidated financial statements, financial statement schedules, and exhibits filed as part of this report[355] - Exhibits include the company's articles of incorporation, credit agreements, license agreements, and equity incentive plan documents[358][360][362][364][366] - The agreements and documents included as exhibits are intended to provide information regarding their terms and should not be relied upon for other factual information[369] Item 16. Form 10-K Summary This report does not include a Form 10-K summary - This report does not include a Form 10-K summary[370] Signatures Signatures of Officers and Directors This report was signed on February 29, 2024, by the company's CEO, interim CFO, Chief Accounting Officer, and multiple directors - This report was signed by the company's Chief Executive Officer, Marc G. Swanson, on February 29, 2024[375] - Other signatories on the same date include the Interim Chief Financial Officer, James W. Forrester, Jr., the Chief Accounting Officer, Shekufeh Shirazi Boyle, and multiple directors[376][377] Index to Consolidated Financial Statements Financial Statement Components This index lists the components of the consolidated financial statements, including the independent auditor's report, balance sheets, and statements of operations - The index includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Deficit, Consolidated Statements of Cash Flows, Notes to Consolidated Financial Statements, and Schedule I[379] Reports of Independent Registered Public Accounting Firms Deloitte & Touche LLP Report Deloitte & Touche LLP issued an unqualified opinion on the company's consolidated financial statements as of December 31, 2022 - Deloitte & Touche LLP issued an unqualified opinion on the company's consolidated financial statements as of December 31, 2022[382] - Deloitte served as the company's auditor since 2009 and became the predecessor auditor in 2023[385] KPMG LLP Report on Consolidated Financial Statements KPMG LLP issued an unqualified opinion on the company's consolidated financial statements as of December 31, 2023, identifying deferred revenue as a key audit matter - KPMG LLP issued an unqualified opinion on the company's consolidated financial statements as of December 31, 2023[387] - KPMG has served as the company's auditor since 2023[394] - The key audit matter identified was the evaluation of deferred revenue related to annual and season pass products due to its complexity and reliance on estimated redemption rate models[391][392] KPMG LLP Report on Internal Control over Financial Reporting KPMG LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2023 - KPMG LLP issued an unqualified opinion on the company's internal control over financial reporting as of December 31, 2023[396] - The company maintained effective internal control, which is designed to provide reasonable assurance but may not prevent or detect all misstatements due to inherent limitations[396][400][401] Consolidated Financial Statements Consolidated Balance Sheets As of December 31, 2023, total assets were $2.625 billion, total liabilities were $2.833 billion, and the stockholders' deficit improved to $208.2 million - As of December 31, 2023, cash and cash equivalents were $246.9 million, a significant increase from $79.2 million as of December 31, 2022[404] - Total assets as of December 31, 2023, were $2.625 billion, an increase of approximately 12.8% from $2.326 billion as of December 31, 2022[404] - The stockholders' deficit as of December 31, 2023, was $208.2 million, an improvement from $437.7 million as of December 31, 2022[404] Consolidated Balance Sheets Summary (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $246,922 | $79,196 | | Total current assets | $390,182 | $233,696 | | Property and equipment, net | $1,841,938 | $1,706,679 | | Goodwill | $66,278 | $66,278 | | Trade names/trademarks, net | $157,771 | $157,000 | | Total assets | $2,625,046 | $2,325,787 | | Liabilities and Stockholders' Deficit | | | | Total current liabilities | $410,915 | $409,206 | | Long-term debt, net | $2,093,190 | $2,099,059 | | Total liabilities | $2,833,262 | $2,763,451 | | Total stockholders' deficit | $(208,216) | $(437,664) | Consolidated Statements of Operations For 2023, the company reported total revenues of $1.7266 billion and net income of $234.2 million, with diluted earnings per share of $3.63 - Total revenues for 2023 were $1.7266 billion, a 0.3% decrease from 2022[406] - Net income for 2023 was $234.2 million, a 19.6% decrease from 2022[406] - Basic earnings per share for 2023 were $3.66, and diluted earnings per share were $3.63[406] Consolidated Statements of Operations Summary (in thousands, except per share amounts) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Admissions revenue | $954,083 | $965,232 | $851,891 | | Food, merchandise and other revenue | $772,504 | $766,005 | $651,839 | | Total revenues | $1,726,587 | $1,731,237 | $1,503,730 | | Total costs and expenses | $1,266,832 | $1,223,706 | $1,071,768 | | Income from operations | $459,755 | $507,531 | $431,962 | | Interest expense | $146,666 | $117,501 | $116,642 | | Provision (benefit) for income taxes | $78,911 | $98,883 | $(164) | | Net income | $234,196 | $291,190 | $256,513 | | Basic earnings per share | $3.66 | $4.18 | $3.28 | | Diluted earnings per share | $3.63 | $4.14 | $3.22 | Consolidated Statements of Changes in Stockholders' Deficit The company's stockholders' deficit improved to $208.2 million at year-end 2023, primarily due to net income of $234.2 million - As of December 31, 2023, the total stockholders' deficit was $208.2 million, an improvement from $437.7 million at year-end 2022[409] - Net income for 2023 was $234.2 million, equity-based compensation expense was $17.0 million, and stock repurchases totaled $17.9 million[409] Consolidated Statements of Changes in Stockholders' Deficit Summary (in thousands, except share data) | Metric | Balance as of Jan 1, 2021 | Balance as of Dec 31, 2021 | Balance as of Dec 31, 2022 | Balance as of Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Common stock | $946 | $955 | $963 | $967 | | Additional paid-in capital | $680,360 | $711,474 | $710,151 | $723,260 | | Retained earnings | $(371,800) | $(115,287) | $175,903 | $410,099 | | Treasury stock, at cost | $(415,309) | $(631,058) | $(1,324,681) | $(1,342,542) | | Total stockholders' deficit | $(105,803) | $(33,916) | $(437,664) | $(208,216) | Consolidated Statements of Cash Flows In 2023, the company generated $504.9 million in operating cash flow and ended the year with a cash balance of $246.9 million - Net cash provided by operating activities in 2023 was $504.9 million, a decrease from 2022 primarily due to higher interest expense and lower operating performance[288][411] - Net cash used in investing activities in 2023 was $305.6 million, mainly for capital expenditures[290][411] - Net cash used in financing activities in 2023 was $34.7 million, primarily for stock repurchases and long-term debt repayments[293][411] - The ending balance of cash and cash equivalents as of December 31, 2023, was $246.9 million[411] Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Category | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $504,916 | $564,588 | $503,012 | | Net cash used in investing activities | $(305,607) | $(200,705) | $(128,854) | | Net cash used in financing activities | $(34,707) | $(726,049) | $(364,897) | | Net increase (decrease) in cash and cash equivalents | $164,602 | $(362,166) | $9,261 | | Cash and cash equivalents, end of period | $246,922 | $82,320 | $444,486 | Notes to Consolidated Financial Statements 1. DESCRIPTION OF THE BUSINESS United Parks & Resorts Inc operates twelve theme parks in the U.S. and one licensed park in the UAE, with a significant concentration of its business in Florida - The company operates twelve theme parks in the United States through its wholly-owned subsidiary, SeaWorld Parks & Entertainment, Inc (SEA)[413] - It operates and/or licenses SeaWorld parks in Orlando, San Antonio, San Diego, and Abu Dhabi; Busch Gardens parks in Tampa and Williamsburg; water parks in multiple locations; and Discovery Cove and Sesame Place parks[414] - In 2023, 2022, and 2021, approximately 59%, 57%, and 58% of revenue, respectively, was generated in Florida, exposing the company to risks specific to that market[415] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The company's financial statements are prepared under U.S. GAAP and involve significant estimates for areas like revenue recognition and asset impairment - The financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and include significant estimates and assumptions for areas like self-insurance reserves, income taxes, revenue recognition, and long-lived asset impairment[416][417] - Cash and cash equivalents include bank deposits and receivables from third-party credit card companies with settlement periods of less than four days[418] - Inventories are valued at the lower of weighted-average cost or net realizable value[423] - Property and equipment are recorded at cost and depreciated using the straight-line method, with animal-related costs amortized over 1-50 years; construction-in-progress is not depreciated[424] - Goodwill and indefinite-lived intangible assets are tested for impairment at least annually using either a qualitative or quantitative assessment[426][427][429] - Self-insurance reserves are accrued based on historical claim experience and actuarial factors for medical, auto, general liability, and workers' compensation claims[432] - Revenue is recognized under ASC 606, with admissions revenue recognized upon park entry or amortized over the product term, and bundled product revenue allocated based on standalone selling prices[435][436][439] - Equity-based compensation expense is measured at fair value on the grant date and recognized over the service period[442] - Leases are classified as operating or finance leases under ASC 842, with right-of-use assets and lease liabilities recognized on the balance sheet[444] - Income taxes are accounted for using the asset and liability method, recognizing deferred tax assets and liabilities and assessing their recoverability[451] - The company aggregates all its theme parks into a single reportable segment[457] 3. RECENT ACCOUNTING PRONOUNCEMENTS The company is currently evaluating the impact of newly issued accounting standards related to income tax and segment reporting disclosures - In December 2023, the FASB issued ASU 2023-09, which requires disclosure of income taxes paid disaggregated by jurisdiction and standardizes categories for the effective tax rate reconciliation[459] - In November 2023, the FASB issued ASU 2023-07, which aims to enhance disclosures about significant segment expenses[460] - The company is currently evaluating the impact of adopting these new accounting standards[459][460] 4. REVENUES Deferred revenue, primarily from pass products and international agreements, totaled $169.9 million as of December 31, 2023 - Deferred revenue primarily consists of contract liabilities related to pass products, tickets for future dates, in-park products, and licensing and international agreements[461] - In May 2023, the first international SeaWorld park, SeaWorld Abu Dhabi, opened in the UAE, and the company began recognizing sales-based royalties, incentive fees, and other service fees from the international agreement[463]