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After a Weak Spring, SeaWorld Forecasts a Dry Summer

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CB057847| RF| ¿ Royalty-Free/Corbis Dolphins Swimming   A bottlenosed dolphin (l) swims beside a pacific white-sided dolphin
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SeaWorld Entertainment (SEAS) can't seem to shake the ghosts of "Blackfish." The operator of marine life theme parks posted disappointing quarterly results on Wednesday afternoon. Revenue declined 11 percent to $212.3 million, dragged down by a sharp decline in attendance at its gated attractions.

SeaWorld had a different excuse. It argued that the timing of Easter -- in April this year, March last year -- pushed seasonally potent spring break holidays at many schools out of the quarter that ended in March. That's fair, but Disney (DIS), the family entertainment giant that shares SeaWorld's concentration in Southern California and Central Florida, saw its theme parks and resorts subsidiary come through with an 8 percent increase during the same three months.

Universal Studios theme park operator Comcast (CMCSA), which also relies heavily on its presence in Southern California and Central Florida, posted a 5 percent uptick in theme park revenue. Disney and Comcast joined SeaWorld in claiming that the Easter shift held back its performance, but both companies kept growing. SeaWorld played up the rain in Central Florida as slowing results, but Disney and Comcast didn't bring that up at all.

Out of the Blue

We already knew that SeaWorld had a hard time attracting guests to its parks during the first three months of 2014. It warned the market in early April that attendance plunged 13 percent to 3.05 million guests during the first quarter. Guests were willing to spend a little more to enter the parks, explaining why revenue declined by the more modest 11 percent.

SeaWorld also posted a larger deficit than analysts were expecting. SeaWorld's adjusted net loss of 56 cents a share was wider than the 49 cents a share that Wall Street was forecasting. It missed analyst estimates on both ends of the income statement.

The loss isn't a big deal. This is a seasonal niche, and even though most of its parks are open all year, this is still a business that feasts when school is out during the summer and Christmas holidays.

However, SeaWorld continues to suffer from the negative publicity arising from last year's "Blackfish" documentary, which took its practice of keeping killer whales in captivity to task. Once again, no one mentioned "Blackfish" during SeaWorld's conference call.

SeaWorld did have some encouraging news. If we include April in the mix -- eliminating the impact of the Easter shift -- revenue declined just 3 percent through the first four months of 2014. However, this still implies that attendance has fallen by roughly 5 percent this year.

Cruel Summer

It's going to be a big summer for Orlando's tourism industry. Disney will open a new Snow White-themed mine coaster later this month. Next month it will be Universal attracting the spotlight with its ambitious Harry Potter expansion.

SeaWorld doesn't have much of a response outside of a 50th anniversary celebration across its parks and a drop ride at Busch Gardens Tampa. Historically that hasn't really mattered. If a nearby rival is adding a major attraction, SeaWorld will get a lift from the uptick in local tourism.

It could be different this time. We're seeing Universal and Disney introducing major additions this summer. Will there really be time left over to visit SeaWorld's five parks nearby?

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends and owns shares of Walt Disney. Try any of our newsletter services free for 30 days. ​


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