United Parks & Resorts Inc. Q1 FY2023 Earnings Call

Hello, and welcome to SeaWorld's First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Matthew Stroud, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to SeaWorld's first quarter 2023 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 www.seaworldinvestors.com. 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 first quarter financial results and then we will open the call up 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. Now, I would 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're pleased to report another quarter of record financial results despite adverse weather across a number of our markets, particularly in our California market and a shift in the timing of the opening of our new rides. In the first quarter of 2022, we had seven of our 10 new rides and attractions opened, while this year in the first quarter, we only had two out of our 11 new rides and attractions open. This marks our eighth consecutive quarter where we have generated record financial results. I want to thank our ambassadors for their ongoing efforts as we prepare for what we anticipate will be another busy summer season. We continue to drive growth in total per capita spending in the quarter demonstrating the effectiveness of our revenue strategies, our pricing power, and the strength of consumer spending in our parks. Looking ahead, we are very encouraged by our group booking trends which are running well ahead of 2022 and we are really excited about our 2023 lineup of new rides, attractions, and events, several of which are some of the most anticipated rides of 2023 and we look forward to most of them opening in the coming weeks. On the international front, we are also thrilled for the opening of the fourth SeaWorld park and the first SeaWorld-branded park outside of the United States in Abu Dhabi on May 23, 2023. We are very proud of this project and along with our partners in Abu Dhabi are excited about introducing a new region of the world to the wonders of SeaWorld and introducing a next-generation SeaWorld park, the first new SeaWorld-branded park built in 35 years. SeaWorld Abu Dhabi is a custom-built approximately 183,000 square meter almost entirely indoor park that will feature over 100,000 marine animals, the world's largest multi-species aquarium, and eight different realms that showcase the complexity, interconnectivity, and beauty of life under the sea. I spent some time visiting this park last month and I could not have been more impressed by the facility, the staff, and of course the animals and attractions on display. It's really a one-of-a-kind, world-class venue, and we are excited to see this open. As a reminder, this is a licensing arrangement with our partner in Abu Dhabi and we will share more information once the park is operating. For 2023, the company has a truly exciting lineup of new rides, attractions, events, and upgrades, including four of the most anticipated roller coasters of 2023, according to USA Today. In February, Busch Gardens Tampa opened the Serengeti Flyer, the world's tallest and fastest Screaming Swing that takes riders up to 135 feet at speeds reaching 68 miles per hour. In March, Aquatica San Antonio opened Kata's Kookaburra Cove, a newly expanded and upgraded 3,000 square foot area with multiple unique water play elements, waterspouts, all-new private cabanas, and a fully themed splashpad and multiple shade structures. This month, SeaWorld Orlando will open Pipeline, The Surf Coaster, the first-of-its-kind surf coaster, with seats in a surfing position that rise and fall to mimic the sensation of riding a wave. The coaster will accelerate riders to 60 miles per hour through five airtime moments and an innovative wave curl inversion. Busch Gardens Williamsburg will open DarKoaster, the first all-indoor straddle coaster in North America where riders experience four launches at speeds up to 36 miles per hour through over 2,400 feet of track. Aquatica Orlando will open Turi's Kid Cove, an all-new water play area featuring watering palms, tipping buckets, spraying jets, water bobbles, and more. And Sesame Place Philadelphia will open Bert & Ernie's Splashy Shores, a water play area featuring water umbrellas, tipping buckets, spraying jets, water bottles and a spraying water tower. Later this spring and summer, SeaWorld San Diego will open Arctic Rescue, the fastest and longest straddle coaster on the West Coast that takes riders through three launches at speeds up to 40 miles per hour. Water Country USA will open Riptide Race, the first dueling pipeline slide in Virginia, and Sesame Place San Diego will open The Count's Splash Castle, an enhanced water play area and expanded play structure which features three tipping buckets, four water slides, and over 100 other water play elements. And finally, we anticipate that SeaWorld San Antonio will open Catapult Falls, the world's first launched flume coaster, featuring the world's steepest flume drop, North America's only flume with a vertical lift, and the tallest flume drop in Texas. Now, let me give a brief update on some of our strategic initiatives. First, our cost and efficiency related work with our dedicated internal team and specialized outside consultants is progressing well and we are on a pace to deliver at the high end of our cost savings target of $30 million to $50 million. The team continues to find ways for us to source and organize more efficiently, replace labor with capital and technology, and eliminate unnecessary and redundant expenses. Second, on the digital transformation front, we continue to build out our CRM capabilities which are still in their infancy in rollout and we continue to improve our mobile app. On CRM, we see upside opportunities for us ultimately having more rich data about our past members and guests and being able to more effectively engage, analyze behavior, and tailor messages and offerings. On the mobile app, we are excited about our performance today. Our recently rolled out app is being used by an increasing number of guests in our parks and has been downloaded more than 5 million times. As of the end of April, the number of active users is over 20% higher compared to prior year, and the total revenue generated on the app is up over 200% compared to prior year. Mobile ordering has been expanded to additional restaurants and is now operating at approximately 70% of our target restaurants. Mobile orders have had a 26% higher average order value compared to non-mobile orders. While we are happy with these early results, we see additional upside from continuing to improve the app experience and functionality and continuing to expand mobile ordering capability across our portfolio. We are excited about the potential of the app and its ability to improve the in-park guest experience, drive increases in revenue, and decrease costs. Third, as you know, we have strategically increased our parks-specific ROI investments this year in an effort to drive incremental revenue and/or decrease cost through expanding, enhancing, and improving our food and beverage and retail offering, park infrastructure and aesthetics, and generally improving the guest experience in our parks and facilities. Many of the new improved and/or enhanced venues will be opening as we move into the summer season and others will be opening over the course of the rest of the year. We're really excited for our guests to experience these new venues and improvements and we began to see the benefits of these important investments. Fourth, on the international front, as I have already discussed, we are thrilled with the coming opening of SeaWorld Abu Dhabi and continue to make good progress on discussions related to other international opportunities and expect to have more to share in coming quarters. Fifth, on the hotel front, we also continue to make progress with our plans that we discussed last quarter, and as we communicated last quarter, we expect to have our first hotel open in 2025 followed by our second hotel in 2026. We are working on design and planning for those two hotels and on-site selection for additional hotels across our park portfolio. We very much look forward to sharing more specifics in future quarters on what we expect to be really exciting and value creating projects. Very excited about 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 meaningful increases in shareholder value. Let me briefly comment on our balance sheet, which continues to be strong. Our March 31, 2023 net total leverage ratio is 2.7 times and we had approximately $426.4 million of total available liquidity, including $54.8 million of cash on the balance sheet in advance of us starting our summer season where we generate the majority 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. Despite the uncertain times that we're living in our financial position is strong, our business is resilient, and our first quarter results, along with the coming opening of our ride attraction and event lineup, the opening of new and improved venues, and other park upgrades and enhancements, and all of the initiatives that we have underway give us high confidence in our ability to continue to deliver meaningful growth and new records in revenue and adjusted EBITDA for 2023. With that, Jim will discuss our financial results in more detail. Jim?

Thank you, Marc, and good morning, everyone. It's good to be back with you for another quarter. During the first quarter, we generated record total revenue of $293.3 million, an increase of $22.7 million or 8.4% when compared to the first quarter of 2022. The increase in revenue was due to an increase in total revenue per capita of 9.2%, partially offset by a decrease in attendance of 0.7%. The decrease in attendance was primarily due to adverse weather across a number of our markets, particularly at our California parks, including during peak visitation periods. Attendance was also likely impacted unfavorably by the timing of new rides and attraction openings in 2023 compared to 2022. Our pricing and product strategies continue to drive higher realized pricing resulting in record total revenue per capita in the quarter of $86.84 compared to $79.54 in the first quarter of 2022. This increase was driven by improvements in both admissions per capita and in-park per capita spending. Admission per capita increased by 9.4% to a record $48.51 and in-park per capita spending increased by 8.9% to a record $38.33 in the first quarter of 2023 compared to the first quarter of 2022. The increase in admission per capita was primarily due to the realization of higher prices in our admissions products and pricing initiatives, along with the net impact of the admissions product mix when compared to the prior-year quarter. In-park per capita spending improved primarily due to an increase in revenue related to the company's international services agreements, along with the impact of pricing initiatives when compared to the first quarter of 2022. Operating expenses increased $19.7 million or 12.9% when compared to the first quarter of 2022. The increase in operating expenses is primarily due to an increase in costs associated with our international services agreements, increased labor-related costs due to more optimal staffing, and an increase in legal costs, including approximately $3.5 million related to the previously disclosed temporary COVID-19 park closures, partially offset by structural cost savings initiatives when compared to the first quarter of 2022. Selling, general and administrative expenses increased $2.2 million or 4.8% compared to the first quarter of 2022. The increase in selling, general and administrative expenses is primarily due to a $3.6 million increase in third-party consulting costs including one-time costs of $1.7 million, partially offset by decreased marketing-related costs along with the impact of cost savings and efficiency initiatives. We generated a net loss of $16.5 million for the first quarter, the second lowest ever for the first quarter compared to a net loss of $9 million in the first quarter of 2022. And we generated record adjusted EBITDA of $72.4 million, an increase of $6.5 million when compared to the first quarter of 2022. The improvement in adjusted EBITDA for the first quarter of 2023 was primarily driven by an increase in total revenue per capita, partially offset by an increase in expenses when compared to the first quarter of 2022. Now turning to our balance sheet. Our current deferred revenue balance as of the end of the first quarter was $212.8 million, an increase of approximately 2.3% when compared to March of 2022. At the end of April 2023, our pass base which includes all pass products accounting premium, Fun Card, teacher, and preschool was at near-record levels for this time of year and down only approximately 1% compared to April of 2022. We feel well positioned with the current status of our pass base with most of our new rides and attractions opening in the coming weeks and the peak advertising and selling season approaching. We are also quite pleased that we continue to realize double-digit price increases on our pass products compared to prior year. As Marc mentioned, we have a very strong balance sheet position. As of March 31, 2023, our total available liquidity was $426.4 million including $54.8 million of cash and cash equivalents on our balance sheet and $371.6 million available on our revolving credit facility. Cash flow from operations was $50.3 million for the first quarter of 2023. We spent $69.8 million on capital expenditures in the first quarter of 2023, of which approximately $56.3 million was on core capital expenditures and approximately $13.5 million was on expansion and/or ROI projects. For 2023, as our investment estimates have been refined and completion timelines solidified, we expect to spend approximately $160 million to $175 million on core capital expenditures. We plan to spend between $90 million and $100 million of capital expenditures on high-conviction growth and ROI projects. In total, we still expect to spend approximately $250 million to $275 million in capital expenditures for 2023. We are excited about our ability to make these high-confidence ROI investments and sincerely look forward to the benefits and returns from these investments flowing through to our financial results. Now, let me turn the call back over to Marc who will share some final thoughts. Marc?

Thank you, Jim. Before we open the call to your questions, I have some closing comments. In the first quarter of 2023 we came to the aid of 85 animals in need. Over our history, we have helped over 40,000 animals including bottlenose dolphins, manatees, sea lions, seals, sea turtles, sharks, birds, and more. I'm really proud of the team's hard work and their continued dedication to these important rescue efforts. I want to thank them and all our ambassadors for all they do to operate our parks. Also, I want to call out some recent awards received for some of our parks which underscore the quality of our assets and the enthusiasm for our parks and experiences. USA Today readers once again voted Aquatica Orlando as the Best Outdoor Water Park in the United States. They have voted the Mako roller coaster at SeaWorld Orlando as the best roller coaster in the United States. They have voted Tidal Surge at SeaWorld San Antonio as the best non-roller coaster ride, and they have voted Celtic Fyre live Irish step dancing at Busch Gardens Williamsburg as the best theme park entertainment. Additionally, SeaWorld Orlando, Busch Gardens Tampa Bay, and Busch Gardens Williamsburg all placed in the Top 10 for best theme parks in the United States. The Iron Gwazi roller coaster at Busch Gardens Tampa Bay and the Emperor roller coaster at SeaWorld San Diego also placed in the Top 10 for best roller coasters in the United States, while Water Country USA in Williamsburg and Adventure Island in Tampa also placed in the Top 10 for Best Outdoor Water Parks in the United States. We are very proud that our parks are receiving this kind of recognition from readers of USA Today. We are certainly excited about 2023 with an exciting lineup of new rides, attractions, events, and new and improved in-park venues and offerings, some of them opening in the coming weeks ahead as we start the busy summer season. We continue to believe there are significant additional opportunities to improve our execution, take advantage of clear growth opportunities, and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA. We continue to have high confidence in our long-term strategy and in our ability to deliver significantly improved operating and financial results that we expect will lead to meaningfully increased value for stakeholders. Now, let's take your questions.

Today's first question comes from Steve Wieczynski with Stifel. Please go ahead.

Yes. Hi, good morning, guys. Marc, so real quick, just first, a housekeeping question. Any idea in terms of the weather impact that you guys might have seen from an attendance standpoint? Is there any way you can kind of help us think about that or quantify that?

Yes. Hi, Steve. So I can help you with that. Obviously, the biggest impact was in California and I think you've heard our competitors talk about that as well. And that was over 100,000 in attendance lost alone just in California and then we have other markets, notably Texas and Virginia, where we had some declines due to weather. In fairness, we had a little bit better weather in a few spots. So when you net it all out, basically it took us from being down 1% with the weather to probably up low-single digit percentages if you didn't have the weather impact.

Okay. That's perfect. Thanks for that, Marc. And then second question, obviously you had Abu Dhabi opening up in what, a couple of weeks here, and we're starting to get a lot of questions from investors about what this could look like from a return perspective. And just wondering if you could kind of help us and investors understand the flow-through here. How this is going to look in terms of the impact on the income statement, what the potential impacts it could have, and maybe what the ramp is going to look like? Maybe you guys aren't sure yet given the park hasn't opened, but just trying to get an understanding of how you're thinking about the financial impact of this new asset?

Sure. Well, we're really excited obviously about the park as I mentioned, opening here later this month. It is a licensing agreement and so we would share obviously some of the revenue and then a percent of the adjusted EBITDA. I would say it's a little early, the park's not open right now as you mentioned, but I think you can expect that's likely to deliver low single-digit millions this year and ramp accordingly on a go-forward basis depending on how popular the park is. We think it's a great park. I'm very excited for it. As it opens and begins operating, we will provide updates and more details going forward, but certainly very excited about it.

So the impact this year you said kind of mid to upper single digit from an EBITDA perspective and then going forward, it should be higher than that?

Yes. Again, a little early to tell. I would probably model more in maybe the low to mid for this year. Just hard to know until we get it open. Low to mid-millions, sorry.

The next question comes from Mike Swartz with Truist Securities. Please go ahead.

Yes. Hi, good morning, guys. Just maybe a clarification question on deferred revenue and your season pass base. I think you said at the end of April. I'm just trying to do the math here, I think you said deferred revenue was up 2% at the end of the first quarter. You're seeing a double-digit increase in pass products, then you're talking about the end of April, the pass base was only down 1%. So does that mean there is a pretty considerable uptick in season pass sales in the month of April? Am I reading that wrong?

Well, let me start and then if Jim wants to add anything he can. I think what we're seeing is, as Jim mentioned, that the pass base is down just about 1%. Remember that's versus a record April of 2022 and without really many of our new rides open. So the new rides are ahead of us and we think that's obviously a time that many people would look to buy a pass. So I think once we get those rides open we would expect to see pass sales increase. Also, more normalized weather should help. The adverse weather and the rides not being open put some pressure on that number. So to be down 1% I think it's still a pretty good result with tailwinds ahead of us.

Yes. The only thing I would add, Marc, is we did have a nice increase in our pass sales between March and April, which we are comfortable with. And on our deferred revenue balance, we did see an increase year-over-year in pass sales on our deferred balance. So again, I think we're comfortable with where we are relative to our plan for the year.

Okay, perfect. That's helpful. And then just following up on the Abu Dhabi question prior. I think you had mentioned that that contributed to the in-park per caps in the first quarter. Any way to break out how much of the per cap, I think it was a 9% per cap growth, is driven by those international agreements and is that how we should think about that revenue stream falling kind of in that in-park per cap number going forward? Would that be broken out a little differently or separately?

Yes, I would say there was about $5.5 million or so of that impact in the quarter. That's going to ebb and flow a little bit depending on how the park performs and different things related to the revenue agreement. So hopefully that's a little bit of color. I wouldn't necessarily model that in a fixed way; it will ebb and flow going forward.

Okay. Thank you.

The next question comes from Phil Cusick with JPMorgan. Please go ahead.

Hi, one specific and one maybe bigger picture. The specific is, can you tell us more about the financing for your hotels, how do you think about owning and operating versus partnering with someone outside that will matter on the capital side, I imagine? And then a bigger picture question. What are the big levers you think to get back to record attendance? When you were at that record attendance and I know that was on a lot fewer properties, was it less competitive, was there more demand overall, do you think that the Blackfish issue is still weighing on the parks, how should we think about that? Thank you.

Yes. Hi, Phil, it's Marc. I can take that. On the hotel financing, we don't have a final determination we can share yet. When we do, we'll share that going forward. We're obviously excited about the hotel. We're one of the few in the industry that doesn't own our own hotels or have our own hotels, so we're excited for those possibilities. As for attendance and the big picture on getting back to prior peaks, if you recall we did over 25 million in attendance in 2008, which is likely what you're referencing, and we're several million less than that right now. I think we have to continue to do the things we're doing: make investments in our parks, which you've seen us do; add things like hotels; refresh venues; add more events; improve CRM usage; and continue to broadcast our conservation and rescue efforts. We still have a lot to learn on CRM and how to best use it to engage guests. We also operate in attractive population markets such as Florida, Texas, California, Pennsylvania, and Virginia, and over the long term we believe we can grow attendance and ultimately do better than prior peaks.

Thanks, Marc. If I can follow up on the hotel. If you're going to open one in 2025, I imagine breaking ground pretty soon is going to be important. Is there a time at which you're going to tell us about the financing side?

What I can tell you is we will, when we have more to share, come back to you on that. We don't have anything to share right now.

The next question is from James Hardiman with Citigroup. Please go ahead.

Hi. This is Sean Wagner on for James. I wonder if there's any quantification you can give on that ride timing that you called out, whether the first quarter hit from that or is there a benefit to 2Q as well that you can quantify?

Hi, Sean. So what I would tell you is kind of what I said in our prepared remarks. Last year many of the new rides had already opened in Q1. This year our ride openings are following a more historically traditional timing around Memorial Day into the summer. We expect these openings to be a positive for the year once they're operating as we built these rides to drive incremental visitation. The ultimate lift is still to be determined, but we believe it will be beneficial as they open.

The only thing I would add, Sean, is we survey our guests periodically and know typically why they come to our parks and we had very good survey results last year for the rides we opened in 2022. We don't have that same level of detail on 2023 yet, but we have a fair estimate that there was some impact and that's why we called that out.

Okay, understood. And is there any way we should think about operating expenses and SG&A this year, whether by growth rate or absolute numbers, what are the major pressure points there and how much of your savings that you've earmarked will come this year?

Let me give you some high-level thoughts on costs. We have a strong focus on costs and our team is pacing well toward the $30 million to $50 million target and we believe we're closer to the higher end of that range. That includes efforts across SG&A and operating expenses. Our target is to achieve low single-digit expense growth. If we can grow per caps and attendance in the single digits while keeping costs in check at low single-digit growth, that's a good recipe for improved margins in this business.

Yes. Thank you very much.

The next question comes from Thomas Yeh with Morgan Stanley. Please go ahead.

Great. Thank you so much. Wanted to ask about group bookings. You mentioned some healthy recovery there from 2022 levels. Can you give us an update on where that stands relative to pre-COVID and maybe also just on international visitation compared to 2019, how that might be trending?

So on international, it was up in Q1 versus 2022 but it's still not up to 2019 levels. In Q1 we're still down roughly over 40% versus 2019 in international attendance, so there's more ground to make up. The group business is trending very well versus 2022; we're well ahead of typical pacing for this time of year and head-in units versus 2022. Versus 2019, group is very close to being back to 2019 levels, down slightly in Q1 but really close. The good news is we're driving more revenue out of the bookings we are doing.

Okay, makes sense. And then back on costs, any incremental color, and just maybe overall labor hours this year, how should we think about staffing levels and how that might look during peak season compared to last year? Is there an opportunity to pull some costs out with the tech initiatives you're putting in place?

I would say we feel comfortable that our staffing is somewhat improved in many areas, though a couple of pockets still need work. The recent Department of Labor data suggested inflationary pressures around 4.5% year-over-year; our labor rate growth is much less than that, measurably less, and we're pleased with that. We have initiatives in place to make ourselves more efficient, including technology projects at our main entrances, modifying restaurants through capital spend to make them more efficient, and detailed labor hour analysis to ensure we have the right labor at the right place and time. These efforts should moderate labor hour growth year-over-year while supporting expected attendance.

The next question comes from Eric Wold with B. Riley Securities. Please go ahead.

Thank you. Two questions. One follow-up on the mobile ordering: you mentioned that you are at about 70% of the planned restaurants for mobile ordering. Can you get to 100% this season, is that a 2024 target, and what is the ultimate goal around that? Is the goal to actually drive reduced labor staffing in those restaurants when it's fully implemented or is the goal more on driving the higher basket sizes and purchases from consumers?

Hi, Eric. The goal with the app and mobile ordering is multi-fold. First, we want a better experience for guests. Second, guests tend to spend more via the app, which drives revenue. Third, mobile ordering can allow us to staff more efficiently and reduce costs in those locations over time. So the app is intended to improve guest satisfaction, increase revenue, and reduce costs. As for timing and targets, Jim can give more detail.

As part of our capital spend, we have a significant amount dedicated to changing our service style of restaurants and installing mobile ordering and retrofitting legacy restaurants. We will design new restaurants to incorporate mobile ordering. This will be a multi-year project; we have major restaurants and cannot take them down all at once during the busy season, so we'll do it methodically over 2023 with a goal of completing in 2024. Regarding labor, while we will be more efficient, in constrained labor environments we often move labor to other revenue-generating areas, which can help maximize revenue.

Thank you. And then just a follow-up on capital allocation: you've repurchased a lot of shares in recent years and interest rates moved higher. At what point does the focus of excess capital shift toward reducing debt, and what would you see as an optimal leverage ratio over the coming years?

We don't guide to a specific leverage target. We're comfortable with where we are today at 2.7 times, though we would also be comfortable at lower or even somewhat higher levels depending on opportunities. We work with our Board on the best use of cash and will continue to evaluate that going forward.

The next question comes from Ben Chaiken with Credit Suisse. Please go ahead.

Hi, how's it going? Last year, you highlighted a bucket of transitory inflation costs. When you look at the operating environment today, are those transitory items rolling off or is it pretty sticky versus what you were seeing last year? Thanks.

Ben, we continue to be mindful of cost pressures, but we've seen moderation in many areas. For example, labor rate increases have moderated — our labor rate growth is well below recent overall inflationary measures — and we've had dedicated negotiations with vendor partners to get better pricing. We've generally reset to a healthier baseline and continue to monitor inflationary pressures.

That's helpful. And then I think you said you saw a step up in pass sales between March and April. Is it fair to assume that correlates with attendance trends you're seeing or was there something else?

We're encouraged by the pass sales step-up, which we expect to benefit attendance as we move into the period when rides open. The timing of ride openings and weather can influence those purchase decisions, so we view the April improvement positively as we approach openings.

The next question comes from Chris Woronka with Deutsche Bank. Please go ahead.

Hi, good morning, guys. Thanks for all the details so far. I was hoping we could maybe drill down a little bit into the customer buckets or the segmentation. If we think about your presentation as local and then group and then international, have you noticed any delineation in in-park spend among those groups or any change over the past three, six, nine months?

I don't have detailed segmentation to share publicly today. What we can say is per caps have been growing quarter-over-quarter across the portfolio, and that's driven by a mix of factors including pricing, product mix, and app adoption. We're generally pleased with the spending behavior we're seeing from guests, whether local or tourist, and we believe new attractions in key parks add appeal to both audiences.

Okay, fair enough. And then just follow up with Abu Dhabi now opening, is it licensing or perhaps joint venture? Is that something that could be on the table domestically, whether it's a larger park or even a smaller sesame-sized property? Is that something you would look at?

We certainly entertain a range of structures and opportunities. The Abu Dhabi park is a licensing arrangement. For other opportunities, both domestic and international, we will evaluate the right structure — licensing, joint ventures, or other partnerships — depending on the opportunity. We remain open to the right situations.

The last question today comes from Barton Crockett with Rosenblatt Securities. Please go ahead.

Okay. Thanks for squeezing me in. I wondered if you could describe the cadence of ride construction and a little bit of explanation about why things are starting later this year than last year. Is that by design — the optimal time to build and launch your new rides for best impact on the season — or does this reflect construction market factors like labor and supply chain challenges?

Barton, last year many rides we opened were already under construction during the COVID period and were further along when COVID restrictions eased, which allowed earlier openings in Q1. This year's openings are aligning more with the traditional Memorial Day into summer season. As with any construction project, we face factors such as weather and construction timing, which can cause delays. Overall, this year's schedule is more in line with historical seasonality, and we're excited to deliver a compelling lineup as we move into the summer.

Okay, that's it. Thank you.

This concludes our question-and-answer session. I would now like to turn the call back to CEO, Marc Swanson for any closing remarks.

Thank you, MJ. On behalf of Jim and the rest of the management team at SeaWorld Entertainment, we want to thank you for joining us this morning. As you heard today, we are confident in our long-term strategy, which we believe will drive improved operating and financial results and long-term value for stakeholders. Thank you. We look forward to speaking with you next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.