Like all companies, SeaWorld has an extensive section in its filings with the SEC that outline the business risks associated with the company.
Earlier on Wednesday, the company announced second quarter earnings and revenue that disappointed Wall Street, sending shares tumbling to record lows.
In its earnings press release, the company also said that, “it believes attendance in the quarter was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California.”
StreetInsider, citing comments from analysts at FBR Capital, said that this is the first time the company acknowledged attendance pressure related to animal activism. On its second quarter earnings conference call, when asked about the perception of the company’s brands in the marketplace, the company said it sees “relative brand health.”
SeaWorld, however, is clearly dealing with some of the fallout from the controversial documentary, “Blackfish,” which brought to light questions regarding the treatment of Orca whales. A January poll from Skift showed that 28% of Americans said they were less likely to visit SeaWorld after seeing Blackfish.
Attendance at SeaWorld parks in the second quarter was up 0.3% over the prior year, though this figure compared to a quarter in which attendance fell 9%.
This figure clearly didn’t satiate too many concerns investors and Wall Street analysts have about the company. On the earnings call, at least two analysts asked the company about their language in its press release, which said attendance had a “tough comparison” to the prior year quarter
But SeaWorld, which operates its eponymous entertainment park, also deals with a wide-ranging and particularly, well, potentially lethal mix of business risks.
Per SeaWorld’s latest annual report filed with the SEC on Form 10-K:
“Our theme parks feature numerous displays and interactions that include animals. All animal enterprises involve some degree of risk. All animal interaction by our employees and our guests in attractions in our theme parks, where offered, involves risk. While we maintain strict safety procedures for the protection of our employees and guests, injuries or death, while rare, have occurred in the past. For example, in February 2010, a trainer was killed while engaged in an interaction with a killer whale… This incident has also been and continues to be the subject of significant media attention, including extensive television and newspaper coverage, a documentary and a book, as well as discussions in social media. This incident and similar events that may occur in the future may harm our reputation, reduce attendance and negatively impact our business, financial condition and results of operations.”
The company’s financial position is also a risk unto itself, with the company in its 10-K stating simply: “We are highly leveraged.”
SeaWorld also faces what it calls a “complex and evolving regulatory environment.”
“We incur significant compliance costs in connection with these regulations and violation of such regulations could subject us to fines and penalties and result in the loss of our licenses and permits, which, if occurred, could impact our ability to display certain animals… For instance, in March of 2014 a bill was proposed by a California lawmaker that seeks to restrict our ability to display certain animals in that state… While we seek to structure our operations to comply with all applicable federal and state laws and vigorously defend ourselves when sued, there are no assurances as to the outcome of future claims and lawsuits that could be brought against us. In addition, negative publicity associated with such activities could adversely affect our reputation and results of operations.”
In short, SeaWorld is in a tough business.
SeaWorld, which went public in April 2013 after private-equity firm Blackstone took it private as part of a 2009 leveraged buyout, has had a rocky road in the last 15 months on the public market. As of SeaWorld’s most recent annual filing with the SEC, Blackstone held 42.8% of the company’s common stock.
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