Earnings Call Transcript - PRKS Q2 2022

Operator, Operator

Good day, and welcome to the SeaWorld Entertainment, Inc. Q2 2022 Earnings Conference Call. Operator provided instructions. Please note this event is being recorded. I would now like to turn the conference over to Matthew Stroud, Head of Investor Relations. Please go ahead.

Matthew Stroud, Head of Investor Relations

Thank you, Rene, and good morning, everyone. Welcome to SeaWorld's 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 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 Michelle Adams, Chief Financial Officer and Treasurer. This morning, we will review our second quarter financial results, and then we will open up the call to your questions. Also, we have posted a short slide presentation on our investor website along with our earnings press release that we will discuss during our prepared remarks today. 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?

Marc Swanson, Chief Executive Officer

Thank you, Matthew. Good morning, everyone, and thank you for joining us. We are pleased to report our fifth consecutive quarter of record financial results. While our second quarter and first half financial results were strong, these results still do not reflect a normalized operating environment and we still have significant scope to improve our execution and our financial results. International and group-related visitation is better than 2021, but is not yet back to pre-COVID levels and our staffing improved over the course of the second quarter, but we are still not yet at optimized staffing levels. Inflationary pressures, while moderating, continue to impact costs across the enterprise. Total revenue for the quarter was up more than 24% versus 2019 and up almost 15% versus a record 2021, and our pricing power and consumer spending remained strong with total revenue per capita up significantly versus 2019 and up nicely versus a record 2021. While we were focused on getting all of our parks open and fully operating during the summer season, for the first time since 2019, we could have had more effective cost management during the quarter. We can and will work to do a better job going forward, consistent with what we have been doing for the past several years. We have several new projects and initiatives in flight that we expect will help us work to offset the unusually high inflationary pressures and become an even more efficient and profitable operating business. Further, we expect certain cyclical supply chain-related and/or temporary cost pressures such as energy and utilities, shipping, food and certain wage and employee-related costs to moderate over the coming months and quarters. We continue to benefit from a very strong financial position with leverage under 2.7x, long-term debt maturities, a generally low cost of debt slightly over 5%, and significant available liquidity and cash flow generation. Given this strong financial position, our clear belief in our go-forward prospects and what we believe is an extremely attractive value being offered by the markets, we continue to aggressively repurchase shares during the second quarter and into the third quarter, exhausting our prior share repurchase authorizations. And today, we are announcing a new $250 million buyback authorization. We are pleased that preliminary July revenue continued to grow versus a record July 2021 and was up approximately 20% compared to July of 2019, and we look forward to closing out what we expect to be another solid summer. Looking ahead to the fall, we are excited about our popular Halloween events we have scheduled at our SeaWorld, Busch Gardens and Sesame Place parks. We look forward to building on the strength of last year, including the return of Howl-O-Scream at SeaWorld Orlando and SeaWorld San Diego, following last year's introduction, along with the first year of the Halloween Spooktacular at our newest park, Sesame Place San Diego. As we continue to demonstrate, our business model is strong and resilient, and we have significant opportunities to improve and grow our revenue and profitability. As a reminder, we operate in an industry and in markets with growing demand trends over the long term, and we have significant available guest capacity across our park portfolio. Our recent attendance levels are still below the total attendance levels we achieved in 2019 and well below our historical high attendance recorded in 2008. We have made significant investments that we expect will continue to pay off, and we have specific plans we are executing on today and for the future that give us high confidence in our ability to deliver additional operational and financial improvements that we expect will lead to meaningful increases in shareholder value. In response to various questions and inquiries we have received over the past few weeks and months, we posted a short presentation on our investor website along with our earnings press release that provides more detail around our cost reduction and efficiency initiatives, the visitation of our park portfolio and how our industry and business performed during historical recessions. On Page 4 of the presentation, you can see a select list of cost efficiency and reduction initiatives, which aggregate to $20 million to $40 million of savings. We have broken these initiatives down between our labor, SG&A, OpEx and cost of goods sold line items. This is just a select list and does not necessarily reflect everything we are working on or we'll work on over the coming months and quarters. On Page 5 of the presentation, we show a description of the visitation of each of our markets across our 12-park portfolio and the aggregate statistic for the whole portfolio. As you can see from the page, we estimate that approximately 85% of our attendees drive to our parks. Our visitation is more similar to a typical regional amusement park business. At times, people compare our business to destination theme park businesses like Disney or Universal, but we believe our visitation and business dynamics are more closely comparable to our regional theme park peers as opposed to our destination theme park peers. On Page 6 of the presentation, we show an industry graph that shows the growth of the industry over the last 20 years and the resiliency of the industry during the last two U.S. recessions. On Page 7, we show our specific performance during the last two U.S. recessions. As you can see, we believe our business demonstrated resiliency in both the 2001/2002 recession and the 2008/2010 recession. As we've discussed before, we offer a tremendous value to our customers. And given our attractive value proposition and the drive-to nature of our parks and how our business has performed in past recessionary periods, we expect it will perform relatively well in future recessionary environments. We hope this helps everyone better understand our cost reduction and efficiency efforts, the drive-to and regional theme park nature of our total park portfolio and the resiliency of our industry overall and our business in particular. Before moving to Michelle and her update on financial performance, let me comment on a few more items in greater detail. First, let me comment on our balance sheet, which continues to be strong. Our LTM June 2022 net total leverage ratio is below 2.7x and we have approximately $531 million of total available liquidity, including $160.8 million of cash, and we expect to generate significant additional cash as we are in the middle of our historically high cash flow generation part of the year. This strong balance sheet gives us flexibility to continue to invest in and grow our business, make opportunistic investments and to thoughtfully return capital to our shareholders. Second, we continue to make progress on our mobile app which guests are increasingly utilizing to improve their in-park experience. So far, there have been approximately 2.9 million downloads of the app. And in June, almost 1 out of every 5 guests in our parks were using and engaging with the app. We are seeing an approximate 10% increase in average transaction value for food and beverage purchases made through the app compared to point-of-sale orders, and we are seeing double-digit percentage revenue penetration across other in-park products that guests are purchasing through the app. Third, we continue to make progress with our plans to design and build hotels to complement our park offerings. We have engaged multiple consultants and industry resources to evaluate a number of site and facility concepts as we further develop our strategies. We look forward to sharing more specifics in future quarters. Finally, we repurchased approximately 7.1 million shares of common stock at a total cost of approximately $390.1 million from April 2022 through July 2022, fully exhausting the March 2022 and May 2022 authorizations. For year-to-date July 2022, we have repurchased 8.6 million shares at a total cost of $500 million. Also, our Board today approved a share repurchase authorization for $250 million. Overall, we are proud to report record net income on a trailing 12-month basis of $281.3 million and record adjusted EBITDA on a trailing 12-month basis of over $718 million, which was achieved with attendance of only 21.8 million guests, which is not only below our 2019 attendance, but well below our historical high of over 25 million guests we achieved in 2008. These achievements reflect the extraordinary efforts of our teams to operate our parks despite the challenging environment we faced and continue to position this company for revenue growth and increased profitability. With that, I would like to introduce everyone to Michelle Adams, our new CFO. We're very pleased to have Michelle join our team here at SeaWorld. She brings a lot of expertise in finance, accounting and process improvement as well as expertise and experience in the hospitality and entertainment industry. We are glad she is here, and we have enjoyed working with her. Michelle will now discuss our financial results in more detail. Michelle?

Michelle Adams, Chief Financial Officer and Treasurer

Thank you, Marc, and good morning, everyone. Let me start by saying how excited I am to be part of the SeaWorld Entertainment team. I've been a fan of the brand and parks for many years. This is an incredible company with an irreplaceable set of assets, a high-quality and resilient business model and a talented group of investors. I am proud to be part of an organization and team that is committed to the highest standard of animal care and makes important contributions to conservation, animal rescue, research and education. As Marc mentioned, our results of operations for the second quarter of 2022 and 2021 continue to be impacted by the global COVID-19 pandemic, as shown in part by the decline in both international and group-related attendance in both periods as compared to pre-COVID levels. The second quarter of 2021 was also impacted by capacity limitations, modified and/or limited operations and decreased demand due to public concerns associated with the pandemic. My commentary today will be focused on our financial results compared to 2021. However, due to the impacts that pandemic had on our 2021 second quarter results, we provide a comparison of some of our key results versus both 2019 and 2021 in our earnings release chart and will also do so in our Form 10-Q. During the second quarter, we generated record total revenue of $504.8 million, an increase of $65 million or 14.8% when compared to the second quarter of 2021. The increase in revenue is due to an increase in attendance of 7.8% and an increase in total revenue per capita of 6.4%. Attendance benefited primarily from an increase in demand, resulting from a return to more normalized operations when compared to the second quarter of 2021 which included COVID-19-related impacts, including restrictions on international travel, modified and/or limited operations and capacity limitations at some of our parks. However, as Marc said, we also continue to experience lingering effects of the pandemic with international and group-related visitation still not yet back to pre-COVID levels. In the second quarter, excluding international and group-related visitation, attendance would have increased 3.3% compared to 2019. Our pricing and product strategies continue to drive higher realized pricing, resulting in record total revenue per capita in the quarter of $80.59 compared to $75.71 in the second quarter of 2021. This increase was driven by improvements in both admissions per capita and in-park per capita spending. Admissions per capita increased by 5% to a record $43.98 and in-park per capita spending increased by 8.2% to a record $36.61 in the second quarter of 2022 compared to the second quarter of 2021. The increase in admissions per capita was primarily due to the realization of higher prices in our admission products, resulting from our strategic pricing efforts, which was partially offset by the impact of the park mix when compared to the prior year quarter. The increase in in-park per capita spending was due to a combination of factors, including pricing initiatives, improved product quality and mix, new or enhanced and expanded venues and events and other in-park offerings. These factors were partially offset by the impact of a higher mix of pass attendance when compared to the prior year quarter. Operating expenses increased $33.2 million or 21.1% when compared to the second quarter of 2021. With the return to more normalized operations, higher attendance and summer staffing levels, the increase in operating expenses is primarily due to the increase in labor-related costs and other operating costs. Operating expenses were also unfavorably impacted by unusually high inflationary pressures. These factors were partially offset by structural cost savings initiatives when compared to the second quarter of 2021. Operating expenses, as a percent of revenue, were 37.7% for the second quarter of 2022 compared to 35.8% for the second quarter of 2021. Selling, general and administrative expenses increased $13 million or 30% compared to the second quarter of 2021. The increase is primarily due to marketing-related costs, partially offset by the impact of cost savings and efficiency initiatives. Selling, general and administrative expenses, as a percent of revenue, were 11.1% for the second quarter of 2022 compared to 9.8% for the second quarter of 2021. We believe that approximately $20 million to $25 million of costs in the second quarter compared to 2019 are temporary unusual inflation-driven costs that we expect to moderate in the coming months and quarters. As Marc mentioned, most of these inflationary costs relate to certain cyclical supply chain-related and/or temporary cost pressures such as energy and utilities, shipping, food and certain wage and employee-related costs. We generated net income of $116.6 million, our second highest net income for the second quarter compared to net income of $127.8 million in the second quarter of 2021 and we generated record adjusted EBITDA of $234.4 million, an increase of $15.6 million when compared to the second quarter of 2021. The improvement in adjusted EBITDA for the second quarter of 2022 was primarily impacted by an increase in attendance and total revenue per capita when compared to the second quarter of 2021. Looking at our results for the first half of 2022 compared to 2021: total revenue was a record $775.5 million, an increase of $163.8 million or 26.8%. Total attendance was 9.7 million guests, an increase of 1.6 million guests or 20.5%. Net income for the period was a record $107.6 million, an improvement of $24.7 million and adjusted EBITDA was a record $300.4 million, an improvement of $56.4 million or 23.1%. Now turning to our balance sheet. Our current deferred revenue balance, as of the end of the second quarter, was $235.5 million, a decrease of approximately 1.2% when compared to June of 2021, which included the impact of some COVID-related product extensions. Excluding the extensions in the prior year quarter, deferred revenue would have been up approximately 11.1%. Compared to June 2019, deferred revenue increased 44.4%. At the end of July 2022, our pass base was up approximately 20% compared to July of 2019, a very healthy indicator of consumer demand for our parks and the remainder of the year. We are also seeing a higher mix of premium passes in our pass base compared to the prior year as our pass holders continue to recognize the value and benefits of our higher-tier products. As Marc mentioned, we have a very strong balance sheet position. As of June 30, 2022, our total available liquidity was $531.1 million, including $160.8 million of cash and cash equivalents on our balance sheet and $370.3 million available on our revolving credit facility, which has not yet been drawn. Cash flow from operations was a record $228.8 million for the second quarter of 2022. Free cash flow was $162.9 million for the second quarter of 2022. We repurchased approximately 7.1 million shares of common stock at a total cost of approximately $390.1 million from April 2022 through July of 2022. We spent $65.9 million on CapEx in the second quarter of 2022, of which approximately $44.6 million was on core CapEx and approximately $21.4 million was on expansion and/or ROI projects. In 2022, we plan to spend approximately $130 million to $140 million in core capital expenditures and another $50 million to $60 million on growth and ROI capital expenditures. We are investing in rides, attractions, events and habitats to continue our strategy of having something new and compelling across our parks each year, and we have more one-of-a-kind world-class attractions that we are excited to unveil when the time is right. We are also investing in and enhancing our food and beverage and retail venues across our parks, including providing a higher quality offering and more variety, investing in technology to make our business more efficient and to enhance the guest experience and also investing in our inorganic growth strategies to further drive shareholder value. Now let me turn the call back over to Marc to share some final thoughts.

Marc Swanson, Chief Executive Officer

Thank you, Michelle. Before we open the call to your questions, I have some closing comments. In the second quarter of 2022, we came to the aid of over 350 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 of our ambassadors for all that they do to operate our parks in this current environment. We are excited about the remainder of 2022 as we finish out the summer and head into our fall and winter events. As I mentioned, our Halloween events are starting next month at our SeaWorld, Busch Gardens and Sesame Place parks, and we look forward to the return of Howl-O-Scream at SeaWorld Orlando and SeaWorld San Diego, following last year's introduction, along with the first year of the Halloween Spooktacular at our newest park, Sesame Place San Diego. While we have made good progress over the past year, 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 meaningful increased value for stakeholders. Now let's go ahead and take your questions.

Operator, Operator

Operator provided instructions. The first question comes from Steven Wieczynski with Stifel.

Steven Wieczynski, Analyst, Stifel

So I want to ask about costs in the quarter. And you made a statement, Marc, in your prepared remarks that you mentioned somewhere along the lines of you could have done better with costs. I'm just wondering what that statement means. Are you more focused on top-line metrics and took your eye off the ball on cost? Or does that mean something else? And then you also mentioned your staffing levels at this point are still too high. How do you continue to drive those down without impacting your satisfaction scores?

Marc Swanson, Chief Executive Officer

Steven, good to hear from you. Look, what I did comment about costs, let me start by saying we're still extremely pleased when we look back versus 2019 — the growth in this business from a revenue and adjusted EBITDA standpoint and the margin expansion. A lot of that work has been not only on the revenue side, but certainly on the cost side; we've done a lot of good things over the last couple of years. Having said that, we hold ourselves to a high standard, and I believe we could have done more, and so does our team. And I recognize we're in a, in fairness, a very high inflationary environment, some of the highest in the history of this country. That's the reality, and we've got to do things to adjust to that. We showed some new initiatives and new projects that we've been working on. We have a continuous mindset of improving. And I think there's some things around those initiatives that we can do to get ahead of this outsized inflation and try to offset as much of that as we can. But in reality, we're still very pleased, but again, we hold ourselves to a high standard and I think we could have done a better job there. As far as staffing, your second question, staffing has gotten better as we moved through Q2, and I think we're pleased to see that. What I meant by optimizing the staffing levels is really more around what is the right mix of our employees, what is the right scheduling, and what is the split between full-time and part-time. This is really the first full summer where everything is operating comparable to 2019, if you will, and so we're experiencing some of the modeling and things that we did during COVID and prior, and we're seeing that play out this year. We'll make some adjustments to get to that optimized level.

Steven Wieczynski, Analyst, Stifel

Okay. Got you. And then second question would be around your July trends. I know there is some concern in the marketplace that attendance may be slowing. While you said July was up year-over-year, can you help us think about what drove the July upswing? Was it more foot traffic? Higher ticket prices? In-park spending? Please help us think about what drove the upswing in July.

Marc Swanson, Chief Executive Officer

Sure. We are pleased with our July revenue performance. July attendance was positive and better than what we saw in June. We did some things to drive more attendance but not give it away. Some of our per caps remained healthy in July, especially in-park per caps where we've seen good growth. We're always going to focus on total revenue and will do things to continue to drive attendance. We're coming into our historically popular Halloween events next month and then Christmas. We like our position heading into the fall. I would also note that in July we experienced difficult weather in a few places, specifically Busch Gardens Williamsburg, which had the fewest good weather days we've had back to our data beginning in 1995. And if anyone has been to Texas lately, you know the heat there has been even for Texas standards quite high, which impacted our SeaWorld San Antonio park. Nonetheless, July improved over June and we grew revenue off a record July 2021.

Operator, Operator

Our next question comes from Phil Cusick with JPMorgan.

Philip Cusick, Analyst, JPMorgan

I wonder if you can talk and extend on the international and group attendance, what sort of trends you see in July and reservations looking forward? And then second, on the staffing side, what opportunities are there for additional revenue if you were fully staffed?

Marc Swanson, Chief Executive Officer

Phil, I'll take that. International attendance continues to improve but it's not back to 2019 levels — it's still down about 50%, and we've been settled in that range. Discovery Cove likely has the most international visitation for us and we're pleased with bookings there. When international fully comes back depends on factors outside our control. Group attendance is down less, probably in the teens, and it ebbs a bit quarter-to-quarter. On the back half of the year, we see some corporate events we feel good about. A key factor is schools and other groups; to the extent schools travel again for field trips, that helps. Regarding staffing, in Q1 we left some money on the table by not having everything open and staffed as we'd like; we did better in Q2, which helped capture more revenue. We're still not optimized and want to continue optimizing to finish the summer and the rest of the year strong.

Operator, Operator

Our next question comes from James Hardiman with Citi.

James Hardiman, Analyst, Citi

So my first question: versus 2019 attendance, I think it was up 2% in the first quarter, and it was down 3% in the second quarter. More specifically, is that the core business that went from plus 16 to plus 3? Maybe thoughts on detail versus 2019? And within the quarter, is it a straight line between those two things or any dynamics worth calling out?

Marc Swanson, Chief Executive Officer

James, I would focus on total revenue growth. If you look at total revenue growth in Q2 versus Q1, we did a little better in Q2 versus Q1 with less attendance, as you noted. In some of our markets in 2019 we were comping against more aggressive ticket offers than this year. Nonetheless, we want to do better and there are things we can continue to improve in marketing and communications. Overall, we're very pleased with the revenue growth and per cap growth, even with attendance slightly down relative to Q1.

James Hardiman, Analyst, Citi

Got it. And along those same lines, July grew about 20% versus 2019 while the second quarter was up 24%, so it seems there was some deceleration versus 2019 in July. There was a little confusion: it sounds like per caps got better year-over-year, but versus 2019 what decelerated — was it per caps or attendance? Or am I thinking about this the wrong way?

Marc Swanson, Chief Executive Officer

What I would say is we're pleased with 20% revenue growth in July. It's not 24%, but that's still very strong versus 2019. There will be some moderation over time, but 20% is strong. As I noted, some weather impacts affected July in certain parks. July was better than June, revenue growth remains strong, and per caps are up in July. We feel good about it.

Operator, Operator

The next question comes from Ben Chaiken with Credit Suisse.

Benjamin Chaiken, Analyst, Credit Suisse

The cost savings bucket you guys laid out — how many of those are already in motion versus more theoretical down the line? That's my first question.

Marc Swanson, Chief Executive Officer

We posted some items on the slide. They are in various stages. We wouldn't talk about things if we hadn't done meaningful homework. Some initiatives are further along and some are being tested. There are various stages of completion and lead times, but the takeaway is we have a continuous focus on costs. We hold ourselves to a high standard and will continue to find efficiencies to offset as much of the inflation as we can. We're in a very high inflationary period and we must work hard to offset it.

Benjamin Chaiken, Analyst, Credit Suisse

Makes sense. Using that $20 million to $40 million number, is there any way to ballpark how much of the inflation versus 2019 that would offset? Does that offset half the inflation, less than half, 75%? Any directional help would be appreciated.

Marc Swanson, Chief Executive Officer

I'll give some comments but leave a little math to you. We've seen meaningful inflation — likely more than a normal year. If we execute on these initiatives, we have a good chance to offset a good part of that inflation, but we need to see where things land going forward. Our goal is to get more efficient whether or not there's inflation, and we will continue to pursue these projects.

Operator, Operator

The next question comes from Chris Woronka with Deutsche Bank.

Chris Woronka, Analyst, Deutsche Bank

I wanted to ask: we've seen population growth in Florida and Texas over the past couple of years. Do you have analysis showing whether you're benefiting from people relocating to those states? Since a large number of attendees drive to your parks, can you see if you're capturing incremental residents?

Marc Swanson, Chief Executive Officer

Chris, we like the markets we're in. Florida and Texas are growing markets, and generally we like when more people come to a market. We'll do our best to capture the share of new people coming to those markets.

Chris Woronka, Analyst, Deutsche Bank

And a follow-up on staffing: you talked last quarter about bringing in some J-1 visa workers to Florida. Did that transpire and where are you versus what you had hoped to do last quarter?

Marc Swanson, Chief Executive Officer

Yes. We're generally pleased with the international programs we rolled out. Historically we'd used those primarily in Virginia; we expanded them to other markets. For a first year, we're generally pleased and plan to continue using them going forward.

Operator, Operator

The next question comes from Michael Swartz with SunTrust Robinson Humphrey.

Michael Swartz, Analyst, SunTrust Robinson Humphrey

Marc, you commented that attendance is still pretty far removed from the all-time high back in 2008. Maybe give a sense of what that means. Are we at a 10% gap, 20% gap versus then? Any color would be helpful.

Marc Swanson, Chief Executive Officer

I'm happy to provide that. Our attendance in 2008 was over 25 million people. On a most recent LTM basis, as I noted, we're under 22 million. So there's a 3 million-plus gap. Even compared to 2019, we're not back: 2019 was 22.6 million. Also note 2008 was with one less park — 11 parks not 12. If we could capture another 2 million to 3 million people to get back to 2008 levels, and then grow from there, that would materially impact financials. That's why we're excited about the prospects for the business.

Michael Swartz, Analyst, SunTrust Robinson Humphrey

Follow-up: Regarding the inflationary costs you mentioned, you called out $20 million to $25 million. Is that in the quarter or a run-rate basis? And are you seeing most of that in park costs versus SG&A?

Marc Swanson, Chief Executive Officer

That's referring to the second quarter. It's spread across a number of areas: shipping, food, supply chain items, and some other inputs like water quality chemicals for water parks. It's a host of costs that are higher, which Michelle referenced.

Operator, Operator

Next question comes from Barton Crockett with Rosenblatt.

Barton Crockett, Analyst, Rosenblatt

I want to ask about your share repurchase. What factors drove you to be aggressive this quarter versus other periods when the business has been strong but you haven't done this level of buybacks? And also talk about the re-up and how you would describe the environment going into the third quarter compared to the second quarter when you did all that repurchase. Has anything changed in the environment?

Marc Swanson, Chief Executive Officer

You broke up slightly but I think you were asking about share repurchases. We work closely with our Board on use of cash. Share buybacks have been one use of cash historically. We also invest in the business through CapEx, pursue strategic opportunities and return capital to shareholders. We'll continue to work with the Board on deployment of cash in the best interest of shareholders, and the Board is clear on doing what's best for shareholders. Today's announcement is a new authorization approved by the Board.

Barton Crockett, Analyst, Rosenblatt

Okay. And I haven't heard much about the Sesame Place San Diego launch. How has that performed relative to expectations and how does it look relative to your Sesame Place in Pennsylvania?

Marc Swanson, Chief Executive Officer

We opened the park toward the end of Q1 in San Diego. It's a beautiful park and setting. We like the Southern California location and family demographics. We're still learning and operating the park and are excited about the prospects. We will start the Halloween Spooktacular there this fall. The prior water park in that location was a very seasonal operation; transitioning to the Sesame product lets us operate more year-round with events like Halloween and Christmas, which is attractive.

Operator, Operator

The next question comes from Paul Golding with Macquarie.

Paul Golding, Analyst, Macquarie

Michelle, congrats on the role. Marc, you discussed regaining record attendance levels; is that an aspirational target? Given labor constraints and inflation, is there a sweeter spot between maximizing attendance versus yielding on a per-visit basis? Also, does the app factor into contemplated cost savings in your presentation?

Marc Swanson, Chief Executive Officer

Thanks, Paul. We have a lot of guest capacity across our parks; very few days are at capacity. To regain prior attendance levels, we can find ways to fill available capacity most days. We're focused on driving total revenue, balancing attendance and per-capitation spend. Ideally, you can grow both attendance and per caps while controlling costs. Regarding the app, we're pleased with usage: about 2.9 million downloads and near 20% guest engagement in June. Mobile ordering and app-driven transactions can be more efficient — for example, mobile-only pickup points can reduce staffing needs at point-of-sale locations. We're rolling those features out in some parks and plan to expand them, which can help with both guest experience and cost efficiency.

Operator, Operator

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

Eric Wold, Analyst, B. Riley Securities

I want to ask about the 25 million attendance reference. What has changed structurally in the parks since then that could accommodate more guests? Additional space, more food and beverage, more rides? What attendance level would start to adversely impact guest experience? Do you have guest satisfaction scores from 2008 to compare?

Marc Swanson, Chief Executive Officer

Thanks, Eric. The 25 million reference is to 2008. If we had grown since then, we'd probably be closer to 30 million. We have capacity in our parks — very few days hit full capacity — and we've added new attractions over the years and have more in the pipeline. We can attract more people and still deliver a good guest experience. I'm confident in the capacity availability and our ability to maintain an enjoyable experience.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Marc Swanson for any closing remarks.

Marc Swanson, Chief Executive Officer

Well, thank you, Rene. On behalf of Michelle and the rest of the management team at SeaWorld Entertainment, I 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. So thank you for joining us today, and we look forward to speaking with you next quarter.

Operator, Operator

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