Core Viewpoint - The near-term performance of United Parks & Resorts (PRKS) is expected to remain weak due to a poor discretionary spending environment, declining foot traffic data, and negative comments from peers [2][5][13] Company Overview - PRKS operates theme parks in the United States under various brands, including SeaWorld and Busch Gardens, and generates revenue from ticket sales and food, merchandise, and other sources [3] Earnings Results Update - In 2Q24, PRKS reported total revenue of $498 million, with admissions revenue at $264 million and food, merchandise, and other revenue at $233.6 million; attendance grew by 80 basis points year-over-year, but admissions revenue per capita fell by 2.9% [4] - The gross margin remained flat, while the adjusted EBITDA margin decreased by approximately 140 basis points [4] Attendance Outlook - The outlook for PRKS's attendance is bleak, influenced by weak discretionary spending and negative indicators from both the company and leisure peers [5][6] - Season pass unit sales declined by 2% in 2Q24, indicating weak demand, and comments from Disney's management highlighted similar concerns about park demand [6] Foot Traffic Data - Foot traffic data for 3Q24 shows a negative trend compared to the previous year, suggesting continued pressure on demand and poor performance expectations for PRKS [8] Revenue and EBITDA Estimates - Consensus estimates for FY24 project revenues of $1.75 billion and EBITDA of $727 million, but achieving these targets may be challenging due to declining foot traffic and a difficult discretionary spending environment [9] Share Buyback Program - PRKS has been actively buying back shares, with approximately 6.7 million shares repurchased year-to-date, valued at around $350 million, which is about 10% of the FY23 market cap [10] Valuation - PRKS's valuation is expected to remain pressured, trading around 7x forward EBITDA, with comparisons to Six Flags Entertainment Corp. (FUN) being more appropriate than to Disney [12] Conclusion - The combination of a challenging discretionary spending environment, declining foot traffic, and negative peer comments leads to a neutral outlook for PRKS, despite the positive share buyback activity [13]
United Parks & Resorts: Near-Term Performance Seems Bleak