United Parks & Resorts Inc. 2026 Q2 Earnings Call

Good morning, everyone. Welcome to United Parks & Resorts second 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 unitedparks.com/investors. 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 second quarter financial results. 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 the 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.

I'd 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 with the continued progress we are making across certain initiatives. Results in the second quarter were impacted, as expected, by the shift in the timing of Easter. The earlier holiday meant fewer holiday days in Q2 compared to the prior year quarter, and a continued decline in international visitation. Adjusting for these impacts, attendance would have been flat for the quarter. We delivered another quarter of growth in total revenue per capita, driven by continued strong in-park execution. During the quarter, we again grew in-park per capita spending to a record for the quarter. Looking ahead, we continue to see strength in our forward indicators for Discovery Cove and our group business, with advanced bookings revenue for both up double digits versus prior year.

We continued to repurchase shares in the second quarter, buying approximately 3.3 million shares for nearly $125 million. These buybacks emphasize our strong cash flow generation, our long-standing commitment to returning excess cash to our shareholders, and our belief that our shares are materially undervalued. While we faced first half headwinds across international visitation, weather impacts, and holiday shifts, we are fully focused on executing against our strategic priorities and driving growth in revenue, adjusted EBITDA, and total shareholder value. Our exciting summer event lineup continues for the next several weeks as we close out the season with Red, White & BBQ at SeaWorld Orlando and SeaWorld San Antonio, Summer Spectacular at SeaWorld San Diego, and Bier Fest Brews, Barbecue at both Busch Gardens Tampa Bay and Busch Gardens Williamsburg.

In September, we will kick off our award-winning Halloween events, which will run through October, followed by our Christmas celebrations in November and December. These seasonal offerings continue to resonate with our guests, and we are excited to introduce new intellectual property elements to our Howl-O-Scream event, something we have done very little of historically, but believe represents a significant opportunity for the business. This year, we have partnered with Sony Pictures to introduce popular horror films, "I Know What You Did Last Summer" and "Anaconda," to our Howl-O-Scream lineup at our SeaWorld and Busch Gardens parks, respectively. Early forward booking ticket sales for our Howl-O-Scream events are already running ahead of last year's across our parks. I want to thank all of our ambassadors for their hard work and dedicated efforts to produce these events and deliver memorable guest experiences.

Before I move to some updates on strategic initiatives, let me briefly provide an update on July performance. As you all likely know, the weather in July was pretty tough across the country, including in some of our markets, including wildfires and related air quality issues, excessive heat, untimely and extended rain. We had a little bit of everything. This poor weather, not surprisingly, impacted our attendance in the month. Fortunately, though, we saw good admissions and in-park per capita growth during the month. Our preliminary view has revenue being down approximately 2% in the month of July. We have a little more than half the quarter ahead of ourselves, and amongst other things, are looking forward to hopefully more normalized weather. Now, let me give a brief update on just some of our strategic initiatives.

On real estate, we are happy to have received significant interest from serious parties to acquire some or most of our real estate. We have been actively engaged with these parties over the past months to clarify and negotiate terms that can meet our requirements. While we don't want to share too much, as we are in current discussions, I can tell you that the valuation being offered for our real estate compares very favorably to the valuation the public equity markets assign to our enterprise. When and if we transact with one or more of these counterparties will be determined by the ultimate terms we negotiate. Our view of the future value of the business as currently situated, general market conditions, and other relevant factors.

A key takeaway from this exercise to date is that multiple, highly credible third parties assign significant value to our real estate that we do not believe is currently reflected in the public market price of our common equity. On sponsorships, based on our current pipeline, we still expect to realize over $15 million in sponsorship revenue in 2026. As previously discussed, we expect this business to be at least a $30 million line of business in the coming years. We are very excited for this opportunity. On international, we have continued discussions with multiple partners, and we expect to be able to share more in the coming quarters. On IP partnerships, we recently announced a partnership with Sony Pictures to bring two of their horror IPs to our Halloween events across our parks.

We are in multiple active discussions to bring additional compelling and well-recognized IP into our parks in innovative and exciting ways. We expect to have more to share related to these opportunities in 2027 and beyond. On marketing, as we've previously communicated, we have had less than stellar execution in our marketing activities this year. It's an area that has been, frankly, quite frustrating. We are evolving our strategy, our partners, and our teams. We are making investments to reach new and incremental audiences, and to provide more compelling visuals and messaging and related awareness. There's more work to do, but we are confident the changes we are making will help strengthen how we communicate and position us to engage a broader audience more effectively.

On cost, we continue to be on pace to achieve our $50 million gross cost savings target for 2026, and we are actively working on our 2027 objectives. Regarding capital allocation, as we've discussed in the past, our strong balance sheet provides us with the flexibility to allocate capital to maximize the long-term value of our enterprise. Our board is focused on maximizing long-term value for shareholders and will act dynamically with that objective as opportunities are presented. Let me briefly comment on our balance sheet. As of June 30th, 2026, we had approximately $658 million of total available liquidity, including approximately $19 million of cash on the balance sheet as we head into the peak of our summer season, where we generate a significant amount of our cash flow.

This strong balance sheet gives us flexibility to continue to invest in and grow our business, and to opportunistically allocate capital with the goal to maximize long-term value for shareholders. During the second quarter, we repurchased 3.3 million shares for an aggregate total of approximately $125 million. I'm excited about the opportunities we see ahead, the significant investments we are making, and the many initiatives we have underway across our business that we expect will improve the guest experience, allow us to generate more revenue, and make us a more efficient and more profitable enterprise. We are building an even stronger and more resilient business that we are confident will deliver improved operational and financial results and increases in value for our stakeholders. With that, Jim will discuss our financial results in more detail.