SeaWorld Clubs its Shareholders on Earnings

What is interesting is that the scandals and negative press did not totally destroy the company’s results, even if investors treat them as though they are atrocious. Attendance still rose by 0.3% to 6.6 million from a year earlier. That may not be stellar growth, but it almost seems impressive that all of the negative public opinion did not destroy the foot traffic. What lies ahead may be a different story.

SeaWorld said that it now expects revenues to be down 6% to 7% for 2014. Somehow, analysts were still expecting growth of close to 3%. Unfortunately, its adjusted EBITDA is projected to decline by 14% to 16% for the year. This translates to lower earnings as well.

The disappointing outlook and results did not help the case for SeaWorld. Its stock was down by slightly more than 25% to $20.90 in the first hour of trading on Wednesday, marking a new post-IPO low. Also, the 11.5 million shares traded in the first hour represent about 10-times normal trading volume.

Meanwhile, a cost-cutting plan, which often helps companies that report lower-than-expected results, is being overlooked. SeaWorld also said that its board of directors has authorized a new $250 million common stock buyback program effective January 1, 2015. The huge drop in the share price means that the company will get to buy back even more stock than it might have expected just one day sooner.

Being in the business of owning and operating a theme park can be very lucrative. It can also be very volatile, particularly when the park becomes the center of news stories that just refuse to go away.