UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to            

Commission File Number: 001-35883

SeaWorld Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Delaware	27-1220297
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6240 Sea Harbor Drive   Orlando, Florida	32821
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (407) 226-5011

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SEAS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The registrant had outstanding 77,272,923 shares of Common Stock, par value $0.01 per share as of November 9, 2021.

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page No.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		1
PART I.	FINANCIAL INFORMATION	3
Item 1.	Unaudited Condensed Consolidated Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity	5
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION	40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
	Signatures	43

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information, may be forward-looking statements. Words such as “might,” “will,” “may,” “should,” “estimates,” “expects,” “continues,” “contemplates,” “anticipates,” “projects,” “plans,” “potential,” “predicts,” “intends,” “believes,” “forecasts,” “future,” “targeted,” “goal” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ materially include, among others, the risks, uncertainties and factors set forth under “Item 1A.  Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report on Form 10-K”), filed with the Securities and Exchange Commission (the “SEC”), and under “Part II, Item 1A., Risk Factors” in this Quarterly Report on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the SEC, including this report, and are accessible on the SEC’s website at www.sec.gov, including the following:

• the effects of the global Coronavirus (“COVID-19”) pandemic, or any related mutations of the virus on our business and the economy in general;

• complex federal and state regulations governing the treatment of animals, which can change, and claims and lawsuits by activist groups before government regulators and in the courts;

• activist and other third-party groups and/or media can pressure governmental agencies, vendors, partners, and/or regulators, bring action in the courts or create negative publicity about us;

• various factors beyond our control adversely affecting attendance and guest spending at our theme parks, including, but not limited to, weather, natural disasters, foreign exchange rates, consumer confidence, the potential spread of travel-related health concerns including pandemics and epidemics, travel related concerns, and governmental actions;

• incidents or adverse publicity concerning our theme parks, the theme park industry and/or zoological facilities;

• a decline in discretionary consumer spending or consumer confidence;

• a significant portion of our revenues have historically been generated in the States of Florida, California and Virginia, and any risks affecting such markets, such as natural disasters, closures due to pandemics, severe weather and travel-related disruptions or incidents;

• seasonal fluctuations in operating results;

• inability to compete effectively in the highly competitive theme park industry;

• interactions between animals and our employees and our guests at attractions at our theme parks;

• animal exposure to infectious disease;

• high fixed cost structure of theme park operations;

• changing consumer tastes and preferences;

• cyber security risks and failure to maintain the integrity of internal or guest data;

• technology interruptions or failures that impair access to our websites and/or information technology systems;

• increased labor costs, including minimum wage increases, and employee health and welfare benefits;

• inability to grow our business or fund theme park capital expenditures;

• adverse litigation judgments or settlements;

• inability to protect our intellectual property or the infringement on intellectual property rights of others;

• the loss of licenses and permits required to exhibit animals or the violation of laws and regulations;

• loss of key personnel;

• unionization activities and/or labor disputes;

• inability to meet workforce needs, including our ability to attract and retain employees as well as potential incremental costs that may be associated with U.S. government vaccine mandates and related testing protocols;

• inability to realize the benefits of developments, restructurings, acquisitions or other strategic initiatives, and the impact of the costs associated with such activities;

1

• inability to maintain certain commercial licenses;

• restrictions in our debt agreements limiting flexibility in operating our business;

• changes in the method for determining LIBOR and the potential replacement of LIBOR may affect our cost of capital;

• inability to retain our current credit ratings;

• our substantial leverage;

• inadequate insurance coverage;

• inability to purchase or contract with third party manufacturers for rides and attractions or construction delays;

• environmental regulations, expenditures and liabilities;

• suspension or termination of any of our business licenses, including by legislation at federal, state or local levels;

• delays, restrictions or inability to obtain or maintain permits;

• financial distress of strategic partners or other counterparties;

• changes to immigration, foreign trade, investments and/or other policies;

• inability to realize the full value of our intangible assets;

• changes in tax laws;

• tariffs or other trade restrictions;

• actions of activist stockholders;

• the ability of Hill Path Capital LP to significantly influence our decisions;

• changes or declines in our stock price, as well as the risk that securities analysts could downgrade our stock or our sector; and

• risks associated with our capital allocation plans and share repurchases, including the risk that our share repurchase program could increase volatility and fail to enhance stockholder value.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein and, except as required by applicable law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise.

All references to “we,” “us,” “our,” “Company” or “SeaWorld” in this Quarterly Report on Form 10-Q mean SeaWorld Entertainment, Inc., its subsidiaries and affiliates. 

Website and Social Media Disclosure

We use our websites (www.seaworldentertainment.com and www.seaworldinvestors.com) and our corporate Twitter account (@SeaWorld) as channels of distribution of Company information.  The information we post through these channels may be deemed material.  Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts.  In addition, you may automatically receive e-mail alerts and other information about SeaWorld when you enroll your e-mail address by visiting the “E-mail Alerts” section of our website at www.seaworldinvestors.com. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.

Trademarks, Service Marks and Trade Names

We own or have rights to use a number of registered and common law trademarks, service marks and trade names in connection with our business in the United States and in certain foreign jurisdictions, including SeaWorld Entertainment, SeaWorld Parks & Entertainment, SeaWorld^®, Shamu^®, Busch Gardens^®, Aquatica^®, Discovery Cove^®, Sea Rescue^® and other names and marks that identify our theme parks, characters, rides, attractions and other businesses. In addition, we have certain rights to use Sesame Street^® marks, characters and related indicia through our license agreement with Sesame Workshop.

Solely for convenience, the trademarks, service marks, and trade names referred to hereafter in this Quarterly Report on Form 10-Q are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This Quarterly Report on Form 10-Q may contain additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are, to our knowledge, the property of their respective owners.

2

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	September 30,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	553,570		$	433,909
Accounts receivable, net		86,513			30,410
Inventories		25,870			30,700
Prepaid expenses and other current assets		15,056			12,418
Total current assets		681,009			507,437
Property and equipment, at cost		3,344,208			3,272,705
Accumulated depreciation		(1,710,939	)		(1,611,745	)
Property and equipment, net		1,633,269			1,660,960
Goodwill		66,278			66,278
Trade names/trademarks, net		157,000			157,000
Right of use assets-operating leases		132,977			136,572
Deferred tax assets, net		24,565			22,847
Other assets, net		16,123			15,264
Total assets	$	2,711,221		$	2,566,358
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	140,584		$	105,369
Current maturities of long-term debt		12,000			15,505
Operating lease liabilities		3,037			3,757
Accrued salaries, wages and benefits		22,368			10,781
Deferred revenue		173,431			130,759
Other accrued liabilities		55,426			50,950
Total current liabilities		406,846			317,121
Long-term debt, net		2,106,366			2,177,137
Long-term operating lease liabilities		117,582			120,144
Deferred tax liabilities, net		26,382			15,772
Other liabilities		42,568			41,987
Total liabilities		2,699,744			2,672,161
Commitments and contingencies (Note 9)
Stockholders’ Equity (Deficit):
Preferred stock, $0.01 par value—authorized, 100,000,000 shares, no shares issued or outstanding at September 30, 2021 and December 31, 2020		—			—
Common stock, $0.01 par value—authorized, 1,000,000,000 shares; 95,419,927 and 94,652,248 shares issued at September 30, 2021 and December 31, 2020, respectively		954			946
Additional paid-in capital		695,374			680,360
Accumulated deficit		(186,825	)		(371,800	)
Treasury stock, at cost (17,794,246 and 16,260,248 shares at September 30, 2021    and December 31, 2020, respectively)		(498,026	)		(415,309	)
Total stockholders’ equity (deficit)		11,477			(105,803	)
Total liabilities and stockholders’ equity (deficit)	$	2,711,221		$	2,566,358

See accompanying notes to unaudited condensed consolidated financial statements.

3

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2021			2020			2021		2020
Net revenues:
Admissions	$	296,694		$	63,087		$	635,699	$	163,368
Food, merchandise and other		224,512			43,030			497,211		114,336
Total revenues		521,206			106,117			1,132,910		277,704
Costs and expenses:
Cost of food, merchandise and other revenues		37,977			9,298			87,092		23,555
Operating expenses (exclusive of depreciation and amortization shown separately below)		195,113			91,337			460,192		283,385
Selling, general and administrative expenses		53,617			24,335			128,271		72,393
Severance and other separation costs		—			2,581			1,582		2,655
Depreciation and amortization		36,306			38,052			109,111		114,006
Total costs and expenses		323,013			165,603			786,248		495,994
Operating income (loss)		198,193			(59,486	)		346,662		(218,290	)
Other (income) expense, net		(39	)		(2	)		156		(15	)
Interest expense		28,372			28,145			90,455		69,206
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs		58,827			—			58,827		—
Income (loss) before income taxes		111,033			(87,629	)		197,224		(287,481	)
Provision for (benefit from) income taxes		8,936			(8,392	)		12,249		(20,696	)
Net income (loss)	$	102,097		$	(79,237	)	$	184,975	$	(266,785	)
Other comprehensive income:
Unrealized gain on derivatives, net of tax		—			—			—		1,559
Comprehensive income (loss)	$	102,097		$	(79,237	)	$	184,975	$	(265,226	)
Earnings (loss) per share:
Earnings (loss) per share, basic	$	1.29		$	(1.01	)	$	2.35	$	(3.41	)
Earnings (loss) per share, diluted	$	1.28		$	(1.01	)	$	2.31	$	(3.41	)
Weighted average common shares outstanding:
Basic		78,962			78,154			78,804		78,153
Diluted		79,950			78,154			80,065		78,153

See accompanying notes to unaudited condensed consolidated financial statements.

4

SEAWORLD ENTERTAINMENT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands, except share amounts)

	Shares of Common Stock			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income		Treasury Stock, at Cost			Total Stockholders' Equity (Deficit)
Balance at December 31, 2020		94,652,248		$	946		$	680,360		$	(371,800	)	$	—	$	(415,309	)	$	(105,803	)
Equity-based compensation		—			—			4,473			—			—		—			4,473
Vesting of restricted shares		130,834			1			(1	)		—			—		—			—
Shares withheld for tax withholdings		(41,271	)		—			(1,971	)		—			—		—			(1,971	)
Exercise of stock options		116,634			1			2,392			—			—		—			2,393
Net loss		—			—			—			(44,884	)		—		—			(44,884	)
Balance at March 31, 2021		94,858,445		$	948		$	685,253		$	(416,684	)	$	—	$	(415,309	)	$	(145,792	)
Equity-based compensation		—			—			5,634			—			—		—			5,634
Vesting of restricted shares		653,146			7			(7	)		—			—		—			—
Shares withheld for tax withholdings		(213,601	)		(3	)		(10,554	)		—			—		—			(10,557	)
Exercise of stock options		82,491			1			1,638			—			—		—			1,639
Net income		—			—			—			127,762			—		—			127,762
Balance at June 30, 2021		95,380,481		$	953		$	681,964		$	(288,922	)	$	—	$	(415,309	)	$	(21,314	)
Equity-based compensation		—			—			13,049			—			—		—			13,049
Vesting of restricted shares		14,945			—			—			—			—		—			—
Shares withheld for tax withholdings		(3,427	)		—			(171	)		—			—		—			(171	)
Exercise of stock options		27,928			1			532			—			—		—			533
Repurchase of 1,533,998 shares of treasury stock, at cost		—			—			—			—			—		(82,717	)		(82,717	)
Net income		—			—			—			102,097			—		—			102,097
Balance at September 30, 2021		95,419,927		$	954		$	695,374		$	(186,825	)	$	—	$	(498,026	)	$	11,477

5

	Shares of Common Stock Issued			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Treasury Stock, at Cost			Total Stockholders' Equity (Deficit)
Balance at December 31, 2019		94,044,203		$	940		$	673,893		$	(59,479	)	$	(1,559	)	$	(402,903	)	$	210,892
Equity-based compensation		—			—			(3,601	)		—			—			—			(3,601	)
Unrealized gain on derivatives, net of tax    expense of $254		—			—			—			—			704			—			704
Vesting of restricted shares		410,807			4			(4	)		—			—			—			—
Shares withheld for tax withholdings		(121,089	)		(1	)		(3,159	)		—			—			—			(3,160	)
Exercise of stock options		11,096			—			203			—			—			—			203
Adjustments to previous dividend declarations		—			—			1			—			—			—			1
Repurchase of 469,785 shares of treasury stock, at cost		—			—			—			—			—			(12,406	)		(12,406	)
Net loss		—			—			—			(56,519	)		—			—			(56,519	)
Balance at March 31, 2020		94,345,017		$	943		$	667,333		$	(115,998	)	$	(855	)	$	(415,309	)	$	136,114
Equity-based compensation		—			—			3,320			—			—