United Parks & Resorts Inc (PRKS) 2013 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to SeaWorld fourth-quarter 2013 financial results conference call. My name is Jamie, and I will be your conference operator today.

At this time, all participants are in a listen-only mode. After the prepared remarks, the management from SeaWorld will conduct a question-and-answer session. Conference participants will be given instructions at that time. As a reminder, this conference call is being recorded.

I would now like to turn the conference call over to Gene Ballesteros, Treasurer and Head of Investor Relations. Please go ahead, sir.

Thank you, Jamie. Good afternoon, everyone, and welcome to our fourth-quarter and full-year 2013 earnings conference call.

Today's conference is being recorded and webcast live. Our fourth-quarter and full-year earnings release was issued this afternoon, and is available on the Investor Relations portion of our website at seaworldentertainment.com. Also available on our website are presentation slides containing information covered in today's call. 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 afternoon are Jim Atchison, our President and Chief Executive Officer; and Jim Heaney, our Chief Financial Officer. They will review our financial results and discuss important factors impacting the business.

Before we begin, I'd like to remind everyone that our comments today may 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, and we undertake no obligation to update these statements.

In addition, on the call we may reference certain non-GAAP financial measures. More information regarding our forward-looking statements and reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the earnings release and can be found in our filings with the SEC.

Now I would like to introduce Jim Atchison. Jim?

Thanks Gene, and thank you to everyone for joining us on our call today.

Driven by record fourth-quarter total attendance at our SeaWorld-branded parks in Orlando, San Diego, and San Antonio, I'm pleased to report our third consecutive year of record revenue and adjusted EBITDA. We ended the year with adjusted EBITDA of $439.1 million, at the high end of our previously provided guidance range.

We are pleased to deliver on the financial and operating commitments we made in our first year as a public Company. Delivering these results in a challenging operating environment is a testament to the strength of our brands, Company, Management team, and most importantly, our team members.

2013 was a year of organizational transition, disciplined growth, domestic expansion, and conservation milestones for our Company. In April, through the launch of our IPO, we transitioned from being privately held to publicly traded on the New York Stock Exchange. Then in December, we followed up our successful IPO with a secondary offering, and concurrent share re-purchase, all while operating and maintaining 11 parks, which are among the most exciting and entertaining theme parks anywhere in the world.

In May of last year, we opened the Company's largest capital expansion ever, Antarctica: Empire of the Penguin. This new realm located at SeaWorld Orlando, has been extremely well received by our guests, and we are thrilled with this one-of-a-kind attraction and animal habitat at our flagship park. Antarctica helped SeaWorld Orlando achieve record revenues, and the park continues to be a top performer in our family of theme parks.

In June we opened our 11th park, Aquatica San Diego, much to the delight of our guests in Southern California. This water park provides a great companion park to SeaWorld San Diego, and we are very pleased with its first full-year performance.

Reflecting on our 2013 media developments, in October, we launched the third season of our highly successful Sea Rescue television show. Sea Rescue showcases the dedicated SeaWorld rescue team as they work to provide care and assistance to injured, stranded, or abandoned animals. Just this past January, the first season of Sea Rescue received even greater distribution through iTunes, where it's now available for download.

Also in October, we debuted our second television show, Wildlife Docs. This inspiring new show highlights the care our Busch Gardens Tampa animal experts provide at our animal care center, which opened in 2012. Impressively, through the end of 2013, more than 135 million viewers have learned of our mission to care for the natural world we share by watching these two shows on Saturday mornings.

On the conservation side, I'm happy to report that in the fourth quarter of 2013, our Company surpassed a monumental milestone in our animal rehabilitation program. We have now rescued over 23,000 animals. This program spans more than four decades, and is an integral component of our Company's dedication to wildlife.

Whether it's a young male dolphin found stranded in the shallow waters on Florida's east coast, a pair of sea turtles fighting to survive with fish hooks lodged in their body, or orphaned sea lions found on the beaches in southern California, our passionate animal care teams are on the call 24 hours a day, seven days a week, to aid in the rescue, rehabilitation, and release of animals requiring assistance.

Turning now to the year ahead, in just eight days on March 21, the SeaWorld brand will celebrate its 50th anniversary. We're very excited to celebrate A Sea of Surprises with our guests at all three SeaWorld parks over the next 18 months. The energy we will be felt throughout the parks, with the addition of a new evening Shamu show, a Surprise Squad delivering prizes and surprises, added animal encounters, and festive new shows and entertainment.

In addition to our 50th anniversary celebration, we are excited to be opening new attractions in nine of our 11 parks in 2014. From a thrilling 300-foot drop tower at Busch Gardens Tampa, to a serene float-through aviary in Aquatica San Antonio, to an imaginative multi-attraction land in Sesame Place, our newest attractions present something for everyone in the family to enjoy. All of our 2014 attractions are scheduled -- are on schedule, and will open in the coming months. I would encourage you to review our earnings presentation for details on our new attractions.

I also want to provide a progress update on our business development work. Our intellectual properties and theme parks are nature- and education-based concepts that easily transcend cultures and international boundaries. Our team is actively engaged with partners on both domestic and international fronts to expand our beloved brands beyond our existing parks. As we work through the details, we hope to be in a position to share with you some of these great opportunities in the not-too-distant future.

Before I turn the call over to Jim to provide more detail on our financial results, I would like to take a moment to thank my Management team, the park teams, and all of our team members for their dedication to our guests, to our animals, and to our Company mission. We have posted three years of record performance, and this achievement would not have been possible without their hard work and commitment to providing the absolute best experience possible.

We are truly proud of what we do, and how we get it done.

Now I'd like to turn the call over to Jim to discuss our 2013 financial results in more detail, and provide an update on our 2014 outlook. Jim?

Thanks, Jim. Good afternoon, everyone.

First, I will touch on results for the fourth quarter, followed by a full review of our 2013 performance, and close with our guidance for 2014. For the fourth quarter, the Company generated revenue of $272 million, an increase of 3% over 2012. The increase in revenue was driven by a 5% increase in total revenue per capita, from $58.11 in 2012 to $60.91 in 2013. It was partially offset by a 1.4% decrease in attendance. In the fourth quarter, admissions per capita increased by 4%, while in-park per capita increased by 6%.

Despite record fourth-quarter attendance at the Company's SeaWorld-branded parks, consolidated fourth-quarter attendance declined by 1.4% to 4.5 million guests in 2013. The attendance decline was the expected result of planned pricing and yield management strategies implemented at the beginning of the year.

Sequentially, attendance trends continue to improve in the fourth quarter, effectively reversing the negative trend we saw in the first half of the year. Compared to 2012, fourth-quarter attendance was down 1.4%, versus 3.6% in the third quarter, and 5.7% in the first half of the year.

Moving on to the full-year 2013 results, the Company delivered a phenomenal 52% increase in adjusted free cash flow by increasing revenues, expanding margins, reducing interest expense, and reducing capital expenditures. This strategy delivered for us in 2013, and we look to build on these same drivers again in 2014 to drive additional free-cash-flow growth.

For 2013, the Company generated record revenue of $1.46 billion, which is an increase of $36.5 million, or 3% over the comparable period in 2012. This improvement was driven by a 7% increase in total revenue per capita, from $58.37 in 2012 to $62.43 in 2013, partially offset by a 4.1% decrease in attendance. Admissions per capita increased by 9%, while in-park per capita increased by 4%.

The decline in attendance was a result of new pricing and yield management strategies implemented at the beginning of 2013, and the impact of adverse weather, primarily in the second quarter and in July. For the full year 2014 we expect a more typical pattern of revenue growth from both per capita and attendance growth.

The cost of food, merchandise, and other revenue decreased by 4% from $118.6 million in 2012 to $114.2 million in 2013. As a percent of revenue, these costs decreased from 8.3% in 2012 to 7.8% in 2013. These cost declined due to improved culinary margins, and the benefits of leveraged purchasing initiated by our strategic sourcing group.

Operating expenses increased by 2%, from $726.5 million in 2012 to $740 million in 2013. As a percent of revenue, operating expenses decreased from 51% in 2012 to 50.7% in 2013. Operating expenses increased due to higher labor costs, costs from new attractions, and costs from our new Aquatica park in San Diego, partially offset by ongoing expense-reduction initiatives.

SG&A expenses increased by 1%, from $184.9 million in 2012 to $187.3 million in 2013. As a percent of revenue, SG&A costs decreased from 13% in 2012 to 12.8% in 2013. SG&A expenses increased due to additions to the corporate staff related to public Company requirements, and higher equity compensation expense, offset by expense savings from utilizing more efficient marketing channels, and consolidating our media buying.

Adjusted EBITDA, a non-GAAP measure defined and reconciled in our earnings release, increased by 6%, from $415.2 million in 2012 to $439.1 million in 2013. Margins improved by 90 basis points from 29.2% in 2012 to 30.1% in 2013.

Depreciation and amortization expenses decrease slightly, from $167 million in 2012, to $166.1 million in 2013. This decrease was due to the impact of fully depreciated assets, partially offset by the impact of new asset additions.

Interest expense decreased by 16%, from $111.4 million in 2012 to $93.5 million in 2013. These savings were a result of the $177-million debt pay-down on our senior notes and term loan, with the net proceeds from our IPO, and our re-financing in May, that extended maturities, increased our loan covenant flexibility, and reduced cash interest expense.

GAAP net income declined by 35%, from $77.4 million in 2012 to $50.5 million in 2013, due to a one-time fee associated with terminating our advisory agreement with Blackstone, loss from early extinguishment of debt, and costs from the secondary offering in December. Including these items, adjusted net income increased by 31%, from $77.4 million in 2012 to $101.4 million in 2013.

At the end of the year, the Company had $116.8 million of cash and cash equivalents, with no amount outstanding on our revolving credit facility. Total long-term debt, including current maturities and discounts, was $1.658 billion, which equates to a 3.5 times net leverage ratio at the end of the year.

This brings me to our initial guidance for 2014. The following estimates are based on current Management expectations. Please refer to discussions of forward-looking statements in our earnings release and related SEC filings. For 2014, we are initiating guidance for adjusted EBITDA in the $450 million to $465 million range, and revenue in the $1.49 billion to $1.52 billion range.

For the first quarter, attendance will be impacted by the shift of Easter into Q2, as well as a reduction in park days due to changes in our operating calendars. For Easter, we are projecting a 250,000 shift in attendance out of Q1 into Q2. The impact of reduced park operating days will reduce attendance by additional 100,000 in the first quarter.

We will also incur around $10 million of incremental operating and marketing expenses in the first quarter related to our 50th anniversary celebration. All of these points are summarized in our earnings release presentation on Page 7.

With that, I will turn the call back to Jim Atchison.

Thank you, Jim.

Before we open up for questions, I would like to once again thank all of you for your interest in our Company. We are excited to be where we are headed in 2014, and for the years beyond. We are confident in the pricing and yield management changes we've implemented, which allows our Company to build attendance and per capita on top of that broader base. We believe that the compelling lineup of new attractions coming in to 9 of our 11 parks this year, will keep guests entertained, amazed, and passing through our gates all year long.

At this time, I will ask Jamie to open up the line for questions.

Thank you.

(Operator Instructions)

Tim Conder, Wells Fargo Securities

Thank you. I apologize there. I apologize for the background, we are on the road here. But a few questions, gentlemen, and first of all congrats on the first year under your belt there.

On the guidance, it would seem that your revenue is a little cautious here, given the weather. I guess that's one component.

Then Disney -- well-talked about, Disney has raised prices a couple weeks ago. Thoughts on that, and I know you raised prices a lot last year, but any thoughts on that? Then sort of the blend in the revenue -- mix between attendance and then what you can do on pricing or dynamic pricing, and other revenue measures?

Tim, this is Jim Atchison. I thank you for your question. It's quite a good one. I'll make some remarks year about pricing overall and then I'll ask Jim to comment on the guidance.

With respect to the recent price increases that we have seen at Disney and Universal, we certainly take note of them, and monitor and measure kind of our pricing that we have throughout our parks, not just our Orlando parks, or Florida parks, for that matter. Really, what we see is we are kind of happy with our plan as it plays out today.

Might we contemplate additional price increases as we open up our summer attractions, because we have such a strong attraction lineup? Perhaps, yes. We will take a look at that and evaluate as the year moves along.

But suffice to say we make our pricing decisions independent of our competitors. If you really look back last year, it was in June I believe when we actually took our price increases in Orlando and Tampa. We'll take stock of the changes in the market as we have done, but we will stick with our plan.

I'll ask Jim to comment a little bit about our guidance, particularly as it relates to revenue.

Okay, hi Tim. If you look at the revenue guidance and look at the low and high end, it equates to somewhere between a 2% and 4% growth rate. At the mid-point we are a tad above 3%, which is about what we did in 2013.

Our intent through the year is to get a little bit more precise on the revenue number. We are pretty early in the year, and we want to have numbers we are confident in early on. That may explain the range at this point.

As far as where the revenue growth is going to come from, as we've talked about, 2013 was all about pricing, and we pushed the pricing lever pretty hard. Our expectation for 2014 is to get a more normal mix of revenue growth from both attendance growth and per cap growth.

Would that be around a third-ish, roughly, attendance in the balance per cap?

It could range somewhere between that and about a 50-50 split. The first quarter will look a little different, but when you blend the whole year together, yes, somewhere between those two guard rails

Obviously, the portion derived from price is going to be a function of both our pricing strategies and our ongoing yield management efforts. I know that was also part of your question, Tim. So we feel very good about the strategies we've put in place, and how they are manifesting for us.

We have a number of initiatives that relate to those strategies that are also performing quite well related to our channel-management efforts, our mobile and e-commerce platforms, all of which are doing very well and we feel very good about. We will refine, as Jim said, our guidance as the year involves, but our business is so summer-centric that it's awfully early in the year at this point.

I think we've got an idea on this one. One more question here, if I may.

The flow-through of incremental revenue to EBITDA, if my calculations are right, was around 65% in 2013, and your implied guidance sort of around the mid-point would be around 40%. How much of that, I guess, is related to the 50th anniversary, or was last year unusual? If you could sort of refresh us on the overall framework there, gentlemen?

Sure. You are right on both cases. In 2013, our flow-through was very high, around 66%. We out-performed our long-term growth rate in that area in 2013.

The driver of that, again, was 2013 we pushed the pricing lever very hard, even to the point where it impacted attendance. We got more muted revenue growth, but the flow-through on that growth was very strong.

As you move into 2014, as you get a more normalized mix of revenue growth from attendance and pricing, the flow-through is not as strong; but still strong and better than our base rate. Then layered on top of that is roughly $10 million of incremental costs related to the 50th anniversary. So those are really the two factors kind of impacting the flow-through number.

Okay, great. Thank you, gentlemen

Robert Fishman, MoffettNathanson

Thanks, guys. Given your continued expected significant growth in free cash flow over the coming years, and the de-levering of the balance sheet. How should we think about any increases to your dividend or other returns of capital for this year and going forward?

Robert, good questions. I will ask Jim to make a comment or two about our overall leverage position, but let me talk for just a minute about our desire to return shareholder value. That's something that we as Management and our Board discuss with great consistency, virtually every time we are together. We will remain focused on that -- certainly dividend policy and share repurchase, and there is other ways to get at that.

It's something we will continue to evaluate and refine as we move along. We are 11 months into our IPO. I know our Board has great interest in looking at our dividend policy, share repurchase policies, and others. We will continue to evaluate that.

I'll let Jim talk a little bit about our debt position and how that relates to the cash flow we're generating, as well.

One thing I did want to point out. We did do a share buy-back in December, so we signaled that we like buying our stock. That's an effective way for us to use our cash. We are going to pay our fourth dividend on April 1, so that will be our fourth dividend paid out as a public Company.

In regards to our capacity for dividends and share buy-backs, as long as our leverage ratio is below four times, we can pay out up to 7.5% of our market cap for dividends and share buy-backs. If you do the math on that, it's around $225 million capacity. That basket refreshes every year.

If you take our current dividend payout, around $73 million, that would leave around $150 million if the Company chose to either to increase dividends or to do incremental buy-back. Those are really the guard rails that we are working with when we are evaluating our strategy. As Jim mentioned, we continue to work with our Board to refine our strategy, and that's kind of where we are today.

Okay, thank you. That's very helpful.

In your prepared remarks, you mentioned the international opportunity. Can you provide any additional color on how you're thinking about these partnerships and the potential size and scale of investment and returns there?

Sure, Robert. As I mentioned in my remarks, we continue to feel very good about the reception we received for our brands and our content in our parks as we explore -- as we have explored opportunities over time.

We have refined that process quite a bit, and are now focused on really talking to specific partners in specific locations, and are very encouraged by the results we have received so far. As I said, I think we will be excited to share some news in the not-too-distant future. Nothing here today, but maybe Jim can just illuminate a little bit kind of the methodology we have gone through, and give you an idea where we are in the process.

Sure. As Jim said, we've made a lot of progress in this area, and we have a very disciplined process when we are looking at these projects.

To give you some context of where we are in that process, the first step in looking at a business development project is a market assessment. Then we go through a site selection process geographically, where are we going to locate a park, and where in that geographical location makes the most sense. Picking a partner is important -- that would be the next step. Then once you are at that stage you move into negotiations, hopefully signing a deal, construction, and then park opening.

The best way to characterize where we are right now is we have moved through the first three stages, market assessment, site selection, and partner selection. We've really moved into the negotiating stage. We can't speculate on the outcome of those negotiations, but we've made a lot of progress over the last 90 days, and we're pretty far into this process.

Okay, thank you. If I could just clarify one more. Does your full-year guidance that we just -- in the last question -- does that contemplate any future price increases across your parts, or just a steady state right now?

Not specifically. Last year we took pricing in Florida in June, and our revenue guidance would probably contemplate something similar

Yes, Jim's right. Our guidance includes our existing pricing strategies. Also, our guidance is reflective of the atmosphere as we see it through the quarter thus far in Q1.

Okay. Thanks a lot, guys.

Alexia Quadrani, JPMorgan

Hi, good afternoon. It's Nadia Lovell in for Alexia.

I just wanted to follow up on the pricing strategy for 2014. More specifically, how should we think about promotions for 2014? Do you expect to have more or less versus 2013?

Nadia, we have a very disciplined approach to our promotional strategy as it relates to our general admissions pricing. One thing that I will point out is that because of our intense focus on the 50th anniversary and the two surprises throughout our park, we have -- we do promotions associated with that offer -- or I should say associated with that anniversary. So you will see promotions related to that.

One thing we do focus on is we try not to do a lot of promotions. We do a handful of them. We tend to keep them rather fenced and specific around a rather precise objective.

You will see promotions throughout the year. I wouldn't frame it as any more than you saw last year. Really, I think what you'll see is going to be things related to our 50th anniversary and other unique offers that we have found, and our guests find, compelling.

Just one more question before I turn it back over. Can you provide any color on how season passes are tracking so far? I believe you raised prices on season passes late last year?

We don't give any real color on our annual pass strategy, particularly at this point in the year, because it's so early in the selling season. All I can say is we feel good about the plan we have in place and how it's progressing. But being as early as it is in the selling season, we don't really give more detail than that at this point.

We can mention the impact of passes on our attendance last year was consistent with prior years. It accounted for about 39% of our attendance. Within the pass category, we grew revenues about 9% last year. We have good momentum in that area, and expect to build on that this year.

Okay, great. Thank you very much

(Operator Instructions)

Barton Crockett, FBR Capital

Okay, great. Thank you for taking the question. I guess a couple quick ones, if I could.

First on your approach to share re-purchase, which you kicked off your buying back a portion of what Blackstone was basically exiting. Could you tell us how going forward do you think about Blackstone's relationship to share repurchase? Do they need to be completely out of the stock before you guys would buy back shares from other shareholders?

Well, I think to answer your question directly, Barton, no they don't need to be -- not as a matter of -- not as a technical matter, of course, so no. I think as everyone's aware Blackstone still has a significant position in the Company. Our decision around share repurchase is really a function of the Board and Management's view of how to return value to shareholders -- be that through dividends, be that through share repurchase, other ways.

As Jim had shared, we're generating significant free cash flow and will continue to do so. There's not a lot of glory in sitting on piles of cash, so we'll continue to work with our Board and others about efficient ways to return value to shareholders. Philosophically, speaking for Jim as well, we see the benefit and value in share repurchase, as evidenced by the repurchase we had with the secondary. It is something that we think is a great way to return value.

Great. Then if I could switch gears to get you to touch on the big thing that has been in the media. Obviously, the animal activism discussion from the documentary, from legislation, from bands making statements -- it's been in the news.

And if you have a fair response to that, in terms of it being unfair, given everything you guys do to help conservation and make that part of your brand. But leaving aside the fairness of it, I was just wondering you could comment on whether there's any impact that you've noticed at all on satisfaction or attendance or the desirability of SeaWorld for international licensees? Has this had any impact on any of that?

Let me say it's a fair question, and as you might expect, we get asked it from time to time. The assertions made by the broader animal activist community are just a fundamental mischaracterization of how we care for animals and the important work we do with respect to conservation and education and science. And I'll add inspiration by the millions of people who get close and connected with our animals and maybe leave our parks inspired in some way to make a difference for wildlife and wild places. For that we make no apologies. We're very proud of the work we do and how we do it.

With respect to the impact on our business, I get asked that a lot, too. As much as we're asked it, we can see no noticeable impact on our business. If you follow this -- even this recent announcement, our SeaWorld parks had record attendance in the fourth quarter of the year, and are out-performing our other parks by considerable margin.

With respect to national surveys and data that we collect around our reputation efforts and image, there's awareness of the movie that kind of peaks and drops as CNN -- who is one of the owners of the movie, by the way -- CNN shows it repeatedly from time to time, so that does spike on occasion. But our surveys don't reflect any shift in sentiment about intent to visit our parks.

A matter of fact, the movie in some ways has actually made perhaps more interest in marine mammal parks, and actually even about us. We have seen that reflected through certain visitor profiles, and certain guest comments and things we get. The movie did not get an Oscar nomination in January, and we continue to take proactive efforts around communicating with our guests and business partners and others.

But ultimately the assertions by the animal rights, animal activist community -- they don't necessarily burden themselves with fact, and we have to deal with that from time to time. But we have seen no impact on the business.

Okay. That's very helpful. Thank you.

Afua Ahwoi, Goldman Sachs

Hi, thank you. Two questions from me.

First, I think last quarter on the third quarter call, you indicated that October to November attendance was running flat with prior years. Then obviously the fourth quarter was negative, so that would suggest a meaningful drop-off in December. Maybe you can address that?

The second question was on the expenses, on the marketing expenses, can you remind us how much was in 2013 -- how much was stepped up in 2013 because of Antarctica? I guess next year -- this year -- we are stepping it up again because of the 50th anniversary celebrations. I'm wondering how much inflation have we had in your expenses over the last two years, and how we can expect that to normalized as these peak spending periods move away? Thanks.

I will ask Jim Heaney to comment a little bit on the expense number, and then I will comment on the attendance reference you made.

Hi Afua. You'll see in our 10-K, which will be filed later this month, that our marketing and sales expenses were actually lower in 2013 than they were in 2012.

There was really no ramp-up going into an Antarctica. Antarctica was -- every year we open up new attractions, and there is incremental marketing spend behind that. Year-over-year, there really wasn't an impact from Antarctica.

The impact to 2014 -- the $10 million that we mentioned as being incremental spending in Q1, about half of that is marketing and the rest is what I call operational expenses -- largely around entertainment. I would look for that $5 million increase for 2014, but 2013 to your earlier question, there really wasn't an increase.

Also, this is Jim Atchison. I will comment on a little bit of your remark. I'm not sure if I heard your question properly, but I will try to frame it, and you can tell me if I missed anything.

In 2013, as we have reported throughout the year and in our third-quarter call in November, our attendance has continued to improve sequentially. If you look at the first half of the year, attendance was down 5.7% to prior year. Then in the third quarter it was down 3.6%; through the fourth quarter down 1.4%.

We continue to be encouraged by the results we're seeing. Bear in mind those numbers on attendance are coupled with rather dramatic increases in per cap. We actually are quite pleased with our pricing and revenue management strategies. The effects on attendance, whatever they are, they are actually improving with each passing quarter -- so moving from down 5.7% in the first half to down 3.6% to down 1.4%.

Another way to think about the attendance in the quarter was our SeaWorld-branded parks were up in attendance and our other parks were down, which nets down to the 1.4% decline. One thing you will recall, I think on our last call is we talked about the late Thanksgiving and the compression with Christmas. I think that explains a little bit of the trend difference between where we were going into Thanksgiving and where we came out at the end of the year. But our Christmas performance was very strong, and the fourth quarter was a really good quarter for us.

Okay, thank you.

Amanda Bryant, Barclays.

Great, thank you. Most of my questions have already been asked and answered, but just to follow up on the last question with respect to your attendance.

Obviously you had some very specific promotions in the fourth quarter to drive specifically weekday attendance. Just give us a little color in terms of how successful those promotions were? Thank you.

Sure. Our promotional activity was actually a little bit lighter in the fourth quarter, in comparison to prior year. We experimented with dynamic pricing with a lot of our holiday events, which we got some exciting results from that. But overall the promotional activity was -- I would say typical, or even a little lighter than normal in the quarter.

We finished the year strong with a good Christmas. The compression with Thanksgiving and Easter and basically losing a week, I think hurt us a little bit. But outside of that, we were pleased with the quarter.

Amanda, with respect to your comments about the weekday offer, we -- this is part of our evolution along the lines of getting more sophisticated with dynamic pricing. It's an offer that we put together and first tried last year, and we feel very good about. It's framed rather precisely as a weekday offer.

We were encouraged by the results of it and the incrementality that it drove. It's something we will kind of keep in our tool chest from time to time. But we will continue to push and evolve the notion of having a more dynamic fluid pricing algorithm for our business, and we see that as a way to continue to drive meaningful revenue growth over the longer term.

Great, thank you

Tim Nollen, Macquarie.

Hi, thanks. I wanted to ask about your expansions, please.

Is there any way to give a number in terms of additional square footage, or incremental CapEx, or something like that to give us an idea of what it means about what your expansions are domestically? Then on your international -- I appreciate your comments, and didn't realize you were that far along in terms of getting something else going internationally.

Correct me if I'm wrong, but I think I heard you said your net debt figure was 2.5 times. How do you think about your debt levels, and the balance between doing an international expansion versus doing shareholder returns?

One correction, it was 3.5 times

3.5 -- 2.5 seemed low to me, so I heard that wrong. Okay, 3.5, thanks.

I wish it was 2.5.

Yes, I was surprised. Okay, 3.5, thanks.

In regards to the international development -- I will let Jim talk about domestic -- all of the ideas on the table now being contemplated are largely capital light. We wouldn't have to take on debt to make this happen. We're dealing with partners right now that are willing to fund the projects. That won't have any impact, obviously, on our balance sheet.

That would be -- and what you give up from that is maybe a little bit lower share of the profits, but internationally we think that strategy makes sense. We will keep our powder dry for doing something domestically.

Tim, this is Jim Atchison. I will comment a little bit on the domestic development questions -- part of your question, as well. This is an area that we continue to work diligently on, and we feel there's some great opportunities. A good example is the acquisition and then re-purposing and re-investing and opening of our 11th park, with Aquatica in San Diego last year.

I will say I think the market throughout the continental US is rather well-developed for kind of larger format parks. But actually, some of our most compelling brands are actually smaller format parks.

Discovery Cove is a boutique park that's a rather small footprint in nature. The one in Orlando is about 35 acres. Our Sesame Place park in Langhorne, Pennsylvania, is not much larger than that, and also is just a great dynamic product featuring those brands.

Our Aquatica water park, where we combine animals in a water park environment is really just a stunning kind of new entry into a water park category. The domestic opportunities we have are rather significant, and some of that relates to just the portfolio of products we have, versus big and small parks. We can do small and mid-size things throughout the US, and we could do bigger things overseas, perhaps.

We'll continue to be quite focused on that. We feel very good about the development initiatives we are pursuing. As we mentioned, I think before too long we'll have good news to share on the front.

Okay, thanks.

We have time for one more question today. Tim Conder, with Wells Fargo Securities.

Thank you. Just a couple of things here, gentlemen.

CapEx D&A expectations for 2014? Then on the international component, once you negotiate and get a contract signed, what would be the time frame between construction and anticipated park opening?

Yes Tim, this is Jim Atchison. I will comment on the latter part of your question. I will let Jim come back to the first part.

With respect to an international development, we feel confidently that from the time that we would perhaps enter into definitive agreements with a partner, we could have a -- one of our small- or mid-size format parks open within maybe 24 months to 30 months -- 36 months, something in that range. A bigger format park like a full-size SeaWorld park, if you will, is probably going to add 18 months to that window.

We have some distinct advantages here, having multiple of each of these concepts from which to draw from, and kind of accelerate the architectural and engineering pieces. We think that the full build-out of a park could be anywhere from 2.5 years to 4.5 years.

However, as we consider how to best monetize this intellectual property and our brands, part of that involves fees for the use of licensing of our trademarks and names. Those would potentially monetize even before the park opening, with respect to marketing value and ongoing commitments, as well as technical advisory fees related to the development of concepts. It might not all be so back-loaded, I guess is my point. But once we defined for sure the terms and conditions of any agreement, we can add more color on that.

Okay.

Regarding the depreciation and amortization question, we expect D&A to largely stay where it is, maybe tick up 2% or 3% in 2014. Then on CapEx, one thing we did in our earnings presentation was detailed a little extra color on our expectation for this year. Given that we under-spent and delayed some spending this year, we expect about one point of spending to shift out of 2013 into 2014. That would make our 2014 CapEx come in around 11% of revenue versus 10%.

Okay.

If you look at the total spend for the two years combined, it's essentially the same. It's really just a timing variance.

Okay, great. Thank you.

That concludes today's question-and-answer session. Mr. Atchison, at this time I will turn the conference back over to you for any additional or closing remarks.

Thanks so much, Danny. Before our closing, I'd like to once again thank all of our team members for continuing to deliver safe, personal, interactive, and educational experiences to each of our guests.

The safety of our guests, team members, and the welfare of our animals continues to be foremost to our operations. I again thank our team for all their work and dedication to making our parks amongst the safest, well-maintained, and highest visited theme parks in the world. Our team members are truly the best in the industry.

I'm extremely pleased with our Company's record performance in 2013. Yet as strong as 2013 was, we're looking forward to another great year in 2014. Beginning next week with the start of our 50th anniversary celebration, and continuing with the amazing new attractions we have opening later in the spring, you can expect the same determination and dedication all year through, as we continue to create a differentiated memorable guest experience. One that can only be found in our parks, delivering strong financial performance, and providing solid returns to our shareholders.

Thank you all very much for your interest and engagement today.

Thank you for your participation. This does conclude today's call.