SeaWorld Entertainment (NYSE:SEAS), a company that owns a chain of amusement parks, reported its recent quarter’s earnings on November 12, 2014. The revenues of the company dropped by 8 percent and came down to $495.8 million due to a 5 percent drop in the visitors’ attendance.
The expenses of the company are quite high as it takes a lot of money to run an amusement park with beautiful scenery, thrilling rides and big whales. The company not only reported lower revenues, but its adjusted net income also fell by 27 percent. To make the matter even worse, the adjust EBITDA was recorded to be at 18 percent.
The Wall Street had predicted a revenue of $495.5 million for the company’s recent quarter. The estimates were purposefully kept low, due to the fact that the attendance falls significantly in the summer quarters.
The company reported a profit of $1.01 share, which was far behind the estimates of analysts as well as the figures that SeaWorld Entertainment (NYSE:SEAS) reported on the same quarter a year back. The analysts’ estimates were $1.14 whereas the company reported a profit of $1.34 last year.
This is not the first time that SeaWorld Entertainment (NYSE:SEAS) has missed analysts’ estimates, for if it was, the market would not have been surprised. It is the third time in a row that the company’s reported figures missed the estimates.
A number of investors who bought stocks in this company so as to enjoy a high yield are getting cold feet now. The company already warned its investors that the dividend will be announced as late as in December or January..
Although investors will get their payments in January; what is bothering them, is the restricted payments. The company has already invested around $120 million in a share buyback program and has given around $104.9 million in payouts, which means that it does not have enough mone to give in the fourth quarter. Hence, if the revenues continue to fall, the company won’t be able to maintain its high yield of 4.6 percent.
According to the company, the lower attendance in the summer quarter resulted due to bad publicity, for there are rumors that California will sign a bill restricting the captivating of whales. This bill has not been signed yet, but the park has gotten bad publicity.
Another reason as to why the company failed to report high figures was the delay in the launch of Falcon’s Fury, a new ride in the park. This ride opened several months late than its predicted time.
SeaWorld Entertainment (NYSE:SEAS) is trying hard to make the situation favorable for the company, as it announced in the summer quarter that it will improve its whales’ habitats. The attendance is still very low, which means that the company needs to do more.
As for the stock prices of SeaWorld Entertainment (NYSE:SEAS), the shares of the company are currently being traded in the range of $16.85 to $17.14.