United Parks & Resorts Inc (PRKS) 2015 Q1 法說會逐字稿

Welcome to the SeaWorld Entertainment's first quarter 2015 financial results conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. I would now like to turn the conference over to Gene Ballesteros, Senior Director of Investor Relations and Corporate Treasurer. Please go ahead, Sir.

Thank you. Good morning and welcome to our first quarter 2015 earnings conference call. Today's call is being recorded and webcast live. Our earnings release was issued this morning and is located on the Investor Relations portion of our website at SeaWorldEntertainment.com. Replay information for this call can be found in the press release. It will be available on our website following the call.

Joining me this morning is Joel Manby, our President and Chief Executive Officer and Jim Heaney, Chief Financial Officer. They will discuss important factors impacting the business and review the first quarter 2015 financial results.

Before we begin, I would like to remind everyone that our comments today may contain forward-looking statements within the meaning of the Federal Securities laws. Statements are subject to a number of risks and uncertainties that could cause actual results to be materially different. We are taking no obligation to update these (Technical Difficulty).

In addition, on the call we may reference certain non-GAAP financial measures. For more information regarding our forward-looking statements and reconciliations of non-GAAP financial measures and the comparable GAAP measures are included in the earnings release and can also be found in our filings with the SEC. Now, I would like to introduce Joel Manby. Joel?

Thank you, Gene, and good morning, everyone. Thank you for joining us today. I'll offer some opening comments and then Jim Heaney will provide details of our first quarter 2015 financial performance before we take your questions.

Today, marks only one month since I became SeaWorld Entertainment's President and CEO. I'm incredibly excited about the opportunity to lead this Company. As a nearly 20 year veteran of the theme park industry, I have always had a high regard for this Company; its business, its brands, its parks and its people. It is a privilege to be part of this team.

I have already begun working with our Board members and leadership team on developing the Company's long-term strategy. I expect to be in a position to communicate this strategy to our investors and other key stakeholders later this fall.

As we stated in the earnings release we published this morning, we made some progress this quarter. But to be clear, this is the result of very early steps taken to address the immediate turn issues facing the Company. I want to caution everyone that we expect our brand challenges and the competitive situation in Orlando to remain as headwinds for the Company into the foreseeable future.

To address capital plans and (Technical Difficulty) [strategic] business development, I am reviewing the portfolio projects the team is working on and I'm excited about the opportunity. However, given the long-term nature of these projects and the fact I've only been here for 30 days, I do need time to spend prioritizing the opportunities, both domestic and internationally. For the time being, I can tell you that we continue to make progress in laying out our capital plan and in discussions with our international partners. I look forward to updating you when the time is right.

Now, turning to the near-term, I'm pleased that so far in 2015, we completed a debt refinancing which will generate significant interest cost savings. We've launched our new marketing and reputation campaigns and we're well on the way the process of executing on our $50 million cost reduction plan, which offsets the increased cost of the reputation and marketing plan as well as needed wage increases for our front-line staff to be competitive in the markets in which we complete.

Regarding our reputation campaign, we launched advertising online and in print on March 23, followed by television advertising the week of April 6. Our goal is to engage is healthy dialogue to help further educate our current and potential guests based on the facts. We intend to continue these efforts to get the facts out and set the record straight. I believe that when we get the facts out to our guests, our partners and other constituencies, we win. We are just beginning that fight.

Over the past few months, we've been introducing our 2015 attractions, shows and events throughout our portfolio theme parks. A few weeks ago, at Busch Gardens Williamsburg, we opened Tempesto, a new high-speed launch coaster which has received very positive reviews from our guests.

Our new sea lion and otter show, Clyde and Seymour sea lion, Hyde, premiered at SeaWorld Orlando on April 16. This show is expected to debut at SeaWorld San Antonio when our new sea lion environment, Pacific Point Preserve, opens later this month.

And in March, we opened Colossal Curl, a new family thrill slide at our Adventure Island water park in Tampa. We're off to a very good start there.

In addition, we continue to expand our focus on consumer events such as our food and wine festivals, Wild Days and Praise Wave to drive incremental attendance to a very targeted customer group. Also, two of our parks will celebrate milestone anniversaries this year with special commemorative in park events, attractions and other experiences. Busch Gardens Williamsburg is celebrating its fortieth season and Sesame Place will celebrate its thirty-fifth birthday.

I also want to provide a glimpse of what we will introduce at SeaWorld Orlando in 2016. In an effort to help improve our competitive positioning, we'll open the tallest, fastest and longest roller coaster of any of Orlando's many theme parks. At 200 feet high, this new attraction will be a thrilling addition to the variety of guest experiences that we currently offer at SeaWorld Orlando.

On the media and entertainment side, our TV show called the Wildlife Docs, which made its debut in 2013, was nominated by the National Academy of Television Arts and Sciences for a Daytime Emmy Award in the category of Outstanding Children's Series. I want to congratulate our media and entertainment team and our partners at Natural Nine Entertainment and Litton Entertainment on this notable achievement. With that, I'll turn the call over to Jim to walk through our first quarter 2015 financial results.

Thanks, Joel. Good morning, everyone. We're encouraged with our start to 2015 but I want to echo Joel in cautioning that our key operating season remains ahead of us and the first quarter represents less than 15% of our full-year attendance. Our first quarter results were primarily driven by our three year-round parks in San Diego, Orlando, and Tampa, while its limited seasonal operations at our water parks and regional parks San Antonio and Williamsburg.

First quarter 2015, the Company generated revenue of $214.6 million which is an increase of 1%, from $212.3 million in 2014. Increase in revenue was driven by a 5.6% increase in attendance offset by a 4.2% decrease in total revenue per capita. Attendance for the first quarter of 2015, increased due to the impact of an earlier Easter holiday and an overall improvement in demand. The earlier Easter caused a shift in the Spring Break holiday period for schools in our key source markets, while the overall improvement in demand was driven by our consumer event programs, strong pass holder visitation and increased promotional offerings.

The 4.2% decline in total revenue per capita from $69.72 in the first quarter 2014, $66.77 in 2015, was a result of an increase in promotional offerings and pass holder visitation along with park attendance mix and packs in the quarter. The cost of food, merchandise and other revenues decreased 5% from $16.8 million in the first quarter 2014, $15.9 million in 2015. Decrease was a result of successful leverage purchasing efforts in connection with our cost reduction initiatives. As a percent of total revenue, these costs decreased from 7.9% in 2014 to 7.4% in 2015.

Operating expenses decreased 8% from $167.9 million in the first quarter of 2014 to $153.8 million in 2015. Recent operating expenses was a result of the cost-saving initiatives implemented last year in December.

SG&A expenses increased 13% from $45.1 million in the first quarter of 2014, $51.1 million in 2015. Increase in SG&A expense was primarily related to an increase in third-party consulting services and additional equity compensation expense.

Adjusted EBITDA, a non-GAAP measure defined and reconciled in our earnings release, improved from a loss of $15 million in the first quarter in 2014 to a loss of $3 million in 2015. Improvement in adjusted EBITDA was primarily related to a decrease in operating expenses along with an increase in total revenue.

Depreciation and amortization expense increased 6% from $41.3 million in the first quarter of 2014 to $43.9 million in 2015. This increase was due to the impact of new asset additions offset by assets that are now fully depreciated or retired.

Total interest expense increased 2% from $19.7 million in the first quarter of 2014 to $20.2 million in 2015. GAAP net loss improved from a loss of $49.2 million in the first quarter 2014 to a loss of $43.6 million in 2015. Diluted earnings per share improved from a loss of $0.56 in the first quarter of 2014 to a loss of $0.51 in 2015.

We ended the first quarter with $43 million of cash and cash equivalents on our balance sheet and $30 million drawn on our revolving credit facility. Total long-term debt, including current maturities, $1.64 billion, our total leverage ratio at the end of the first quarter was approximately 4.2 times adjusted EBITDA based on our current covenant calculation. The Company has $120 million of capacity for certain restricted payments in 2015 including dividend declarations and share repurchases.

On April 7, we closed on a transaction to borrow $280 million of additional term loans and use the proceeds, along with cash on hand, to redeem the entire outstanding principal of the 11% senior notes and redemption price of 105.5%. This transaction generates significant interest cost savings for the Company, extends out maturities, simplifies our covenant structure as we'll be managing against a single set of covenants.

This brings me to our guidance. The following guidance is based on current management expectations, is subject to change and the Company undertakes no obligation to update the guidance. Please refer to the discussion of forward-looking statements in our earnings release and related SEC filings for additional information. For the full-year of 2015, the Company expects the adjusted EBITDA to be in the range of flat to up 3% versus 2014. Our capital expenditure guidance for 2015 remains consistent with the previously provided range of $180 million to $190 million.

Additionally, we continue to expect operating expenses to be flat or down slightly in 2015 as the impact of the $50 million cost reduction will be largely offset by an increase in marketing and other expenses, primarily labor. That concludes our prepared remarks. We will now open the call up for questions. Operator?

Thank you.

(Operator Instructions)

Your first question comes from the line of Tim Conder from Wells Fargo Securities. Your line is open.

Thank you. Joel, welcome aboard. A couple of things, gentlemen. First of all, if you could provide a little bit more color on the promotions, maybe the level and what you're doing both in San Diego and Orlando? And then, any metrics, early metrics feedback that you've had on the advertising and education program? Again, understanding that it's very early. Greatly appreciate it. Lastly, any update, color on the international developments? Thank you.

Hey, Tim. This is Joel. Nice to hear you on the phone and appreciate our earlier get to know you call. A couple things. I'll talk about the international piece and the reputation campaign and then I'll let Jim speak to some of the discounting elements in the first part of your question.

As far as the reputation campaign, as we said, we launched it March 23 on print and then TV on April 6. So we are incredibly early in the process, as you know. We are pleased so far. It's very early though and it's part of a long-term very targeted initiative. We have heard from our partners, our employees, most importantly, our guests that they are very happy that we're out there disseminating the facts. What I'm very encouraged by is, I believe, very strongly when we get the facts out to our guests, our partners and constituencies that we win and we have just begun the fight. I think the main point is, it is a long-term initiative, we're going to keep doing it because we know the facts are on our side. I think everyone's encouraged by that.

As far as the international piece, I'm very early in the process, as you know, only 30 days. I'm reviewing every one of our projects; every capital project, every domestic and international growth opportunity. So all I can say on this call is I'm very pleased with progress. I wish I could give you a definitive answer. I'll just tell you I'm pleased and we will tell you where we're headed with that at the right time.

Good morning, Tim. This is Jim. In the first quarter, pass holder attendance was driven by our consumer event programs and more pass related promotions. Our objectives coming into the year were to grow our pass base and increase visitation for pass holders. That was a goal of ours coming into the year. We accomplished both of those in the first quarter. As you know better than anybody, pass holders drive more total revenue per visitor but they spread that revenue over multiple visits and that results in a lower revenue per visit or a lower per cap. We saw some of that in the fist quarter. We expect to see some of that going forward, at least going into summer when the game changes and we become more dependent on our domestic and international tourist business.

As far as forward-looking indicators, the best one I could point to is deferred revenue. When you get the K tomorrow, you'll see our deferred revenue was up 5% over the year ago period at the end of March and that's proven to be a fairly good forward-looking indicator. Beyond that, we look at a lot of other indicators when we form our guidance including our April performance, how hard our comps are year-over-year and that's all baked into our guidance numbers. The main one I point to is our deferred revenue balance, which is up 5% year-over-year at the end of the quarter.

Okay. Helpful, gentlemen. Thank you. Last question as it relates to international visitors. We know the currencies have been hammered quite a bit and then have recovered a little bit of late. And it's early, but any trend that you're noticing just in general in the Orlando market from visitors from Brazil or any early visitors from the UK or Continental Europe? Or is that going to be more indicative here as we move into the second and third quarters?

Good question, Tim. A couple things drive our international business. One is, obviously exchange rates. The other is, the availability of air lift in the amount of volume coming into Orlando. I believe the numbers through February show that international visitation to Orlando was up, which is a positive sign. I think that's largely a function of the availability and the affordability of the lift coming into the market. We really won't get a good feel for where international's headed in terms of the exchange rate until the summer. They tend to book six months in advance at least. So it's really hard to say here so early in the year what the effect will be for exchange rates really until we get into the summer.

Okay. Gentlemen, thank you. Welcome aboard again, Joel.

Thanks, Tim. Looking forward to spending more time with you.

Thank you.

Your next question comes from the line of Felicia Hendrix from Barclays. Your line is open.

Hey, I have a few questions for you. So just, bigger picture, taking a first look at this Company, where are the key places that you've identified for growth and improvement? And can you talk a bit about how you're viewing the yield management systems and strategies for this Company? Are there room for improvement there?

Yes. It's good to hear your voice, Felicia. First of all, as I said in my opening comments, I've only been here 30 days. I'm reviewing everything in the Company, I've met with the leadership team, I've gone off to almost every property, we'll complete that by next week, I met with the Board, I've spent a lot of time in a Board meeting and one on one with our Board members.

Big picture, I am formulating the strategy with the Board, with our senior leadership team, and I will be prepared to share that with the investor community sometime this fall. And we're working on the timing of that, the form for that communication. So big picture, that's the main point. It's very early. Yes, I'm evaluating everything. Yes, I think there's places we can improve and we'll communicate that plan later this fall.

Secondarily, I think the most important thing that I can do as the CEO and with Jim as CFO, is we have to look at how we use cash in every aspect of the business. And our goal is to maximize the return for our shareholders, for our guests and always maintaining the quality of care for our animals and safety of our employees. So we always look at that and however we can maximize return, we'll do that. Now, having said that, I'll also say I remain very committed to protecting our current dividend. And as you can see from our cash flow, that should not be an issue. We remain very committed there.

Great. That's helpful. We'll look forward to hearing more as you get more time under your belt. Just as a follow-up, you talked in your prepared remarks about the roller coaster. It sounds exciting. Your competitors in Orlando are certainly plowing a lot of money into their parks and you at SeaWorld have to figure out ways how to offset that with the constraints that you have. You talked about the cash flow.

Can you just talk about the competitive environment there as you look forward? And also in your other regions, I know you have a lot of experience working in competitive industries. So what sort of things strategically do you think SeaWorld can do to offset that competition?

That is a great question, Felicia. I'll take it in two parts. First of all, Orlando specifically as a market, the obvious to everyone is the best tourist market in the world. You probably know in 2014, they had 62 million visitors so a rising tide tends to lift all boats. However, it's no secret if you look at the announcements from Disney, Universal, they've done incredibly well. They've poured a lot of money in the market. I do feel we've lost some share in the last few years because we haven't had as compelling a product. So I think the really important thing to hold our share is to continue to focus on how we're different.

I've had a lot of experience with brands that aren't number one or number two. As long as we maintain our difference, and I've been to all of our competitors in Orlando, they are incredible products, but we have a very unique experience and a very unique positioning. As long as we stay there and focus there and have a compelling marketing campaign and also a compelling value proposition, we will have our fair share and either hold share or at least minimize any share loss in a growing market so we can continue to grow our business.

I think the 2016 coaster is a great way to do that. Having the tallest, fastest, longest is definitely something we can market and when they come to our park, they'll see how unique we are. I have a lot of confidence that we can do that.

Great. Thank you so much.

Your next question comes from the line of Alexia Quadrani from JPMorgan. Your line is open.

Thank you. You gave a lot of color on the attendance we saw in the quarter and some of the reasons behind it such as the earlier Easter and that timing shift. Any more granularity you could provide in terms of what percentage might have been driven or just generally speaking to if of promotional efforts you had in the quarter versus the timing shift and how we should think about Q2 attendance given those two elements?

Hey, good morning. This is Jim. What we can say about Easter is we did benefit from the shift of Easter in the first quarter. I'm going to stop short of giving a precise number. What I can say is that our attendance would have been up without the Easter benefit in the first quarter. As you look ahead to the second quarter, we will give that Easter benefit back in Q2. You should model that. Going back to Q1, Q1 attendance did benefit from Easter but even without Easter, we still would have been up.

So you can still be positive in Q2 given the impact the other efforts are having such as promotional spending and of course, maybe the marketing campaign kicking in a bit more?

In Q2, you'll have the, again, we've framed up the first half comps being more difficult due to where we had our declines last year in attendance. Back to that end, you have Easter that you should pay attention to and then from an expense perspective, the bulk of the reputational and marketing campaign gets started in Q2. And the bulk of the incremental expenditures year-over-year will also occur in Q2 from that perspective.

The promotional efforts that you have in place, will they continue throughout the remainder of the year? And then just one last question on the marketing campaign, which we know has a very effective and direct message. I think you may have just answered but I wanted to double check. When you were planning it, were you thinking -- I guess how long does it take until it really kicks in? Is it going to start begin to really benefit in Q2 or does it take, is it a much longer cycle?

Are you talking about the reputation campaign specifically?

Yes.

I think the main point is we're in the very first pitch of a game, a long game, and we don't know how many innings it'll take to help with our reputation. We're committed, though, that we will be targeted, and we will do what we need to do over the long-term to improve our reputation. We are just beginning that. We don't want to predict how long it's going to take or how many months. We just are committed to it and we've allocated the resources to make sure it happens. Because again, going back to the main point, we have found and I firmly believe that when we get the facts on the table, the facts are on our side and our customers need to know that.

Thank you very much.

Your next question comes from the line of Tim Nollen from Macquarie. Your line is open.

Hi. I may have missed just a bit because I joined a couple of minutes late, but I was just wondering if you have any comments on international expansion plans? This is something you've spoken about with a bit of still vagueness to date not wanting to lay things out. Just wondering if there's any update, please?

Hey, Tim. It's Joel. We did, Tim actually asked that on the first question. But just real briefly, we are reviewing everything. Again, I've only been here 30 days so we're looking at every capital project, every domestic and international expansion opportunity. I can tell you that the conversations remain positive but we just weren't in a position to announce anything. So we will come back and look forward to updating you when the time's right.

I think you had an MOU with your partner in the Middle East which was extended at the end of November. Should we assume that's still something ongoing and in addition, the previous announcements you had made with Village Road show about some park build outs in Asia. Again, that is still open. There's just nothing new to say?

That's correct in both regards. The MOU's still open in the Middle East and we're continuing to have discussions there.

Okay. Thank you.

Your next question comes from the line of Scott Hamann from KeyBanc Capital Markets. Your line is open.

Good morning everyone and welcome aboard, Joel.

Thanks, Scott.

Just two questions. Number one, could you provide a little bit of detail just around the SeaWorld parks? Maybe specifically, I know you don't like to, but at least from a high level? Do you continue to see some encouraging trends there? And then secondly, can you help us understand how you're thinking about the balance this year between attendance and per caps? I'm assuming with some of the promotional activity that you anticipate you're going to have that maybe volumes are heavier weighting this year. Thanks.

I think on the second one, just based on what happened last year, the third quarter was our most difficult quarter. That's, I think, why we remain on the guidance that you've got and even though we've had increased attendance in the first quarter. That's why we feel that's the right direction and guidance. You want to handle the other half?

Yes. In terms of the attendance and per cap mix, the best way I could frame it up is the strategy that we implemented in the first quarter drove the results that we expected. And with the timing of Memorial Day and Labor Day and when the summer season starts, I expect that we'll see a similar pattern going into the summer. Once we go into the summer, which starts this year on May 25, the game changes and our domestic and international tourist business becomes a bigger part of our business. I would expect the mix to change at that point. How it will precisely? We're just not in a position to say at this point.

And on the first part of your question about our SeaWorld parks specifically, as you know, we don't give park by park detail but really the first quarter is primarily the SeaWorld parks being the length of their season. So that result is primarily from SeaWorld although Tampa's open as well. So I think that gives you some indication that SeaWorld brand had a decent first quarter.

Appreciate it. Thanks.

(Operator Instructions)

Your next question comes from the line of Afua Ahwoi from Goldman Sachs. Your line is open.

Hi, good morning and thanks for taking my question. Just two questions for me. First, Joel, maybe following a little bit on Felicia's question, on the new coaster that you're building in Orlando for next year, how does it fit in with the long-term view and position of SeaWorld? And I ask this specifically because when we had our conversations earlier, you talked about how having a unique niche or a unique and well-defined identity and you thought maybe SeaWorld was more natural and relaxed. How does a coaster fit in with that view?

And then, maybe on just as much, if you could give any more color on the per caps in Q1, maybe how much of an impact was this higher season pass mix or the higher attendance in the non-SeaWorld park which I assume lower per caps and maybe just some breakdown on that would be helpful.

I'll take the first part of the question and Jim, you take the second half. Again, on the broad where are we headed with the brand, where are we headed with the Company, how are we going to grow? I really have to save that for the fall when I come out with the plan after working it with the Board and working it with our senior leadership team. So big picture, I can't give you a lot on this call, but I will say that a good coaster mix, even with our animal assets and a very strong positioning there, just is a very different positioning even in Orlando.

There aren't really just classic plain thrill rides to this same extent. There are incredible rides at Disney, Universal, but many are simulated like at Universal, more simulation oriented. This is just a classic thrill ride that is more typical of a regional park and it does break through. There's definitely a customer group that appreciates that and it mixes well. If you look at Busch Tampa, which is really one of our highest market share parks and does incredibly well, it has a very strong mix of great animal experiences as well as great ride experiences. And that combination is incredibly unique in our industry. It really is a good model that we're looking at for all of our parks.

Good morning. This is Jim. As we talked about earlier, we've had good results with our weekday and ticket product and expansion of dynamic pricing into other parts of our business outside Discovery Cove. We're implementing that quick queue parking and then in other areas with the premium in park experiences where we can revenue manage those and we have fixed inventory.

One of the things in Q1 that's a little confusing, is the benefits we're seeing from those initiatives are being somewhat masked by the growth of our pass business in the first quarter which again, drives higher overall revenues. But when you amortize those revenues over three or four visits, it impacts your per caps. We saw that in our first quarter and expect to see some of that dynamic continue at least through the summer.

The other thing I'd point to in terms of per caps in the first quarter is, go back and look sequentially over the last couple of years between 2013 and 2014, we increased per caps in the first quarter by 12% combined. We're coming off relatively difficult comps in the first quarter. That pattern changes a little bit as you move further into the year.

Okay. Thank you.

Your next question comes from the line of Josh Borstein from Longbow Research. Your line is open.

Hi, good morning, everyone. Thank you for taking my questions here. The in-park spend last year the mix you said suffered from bad weather because you lost some tourist business which tends to have a higher in-park spend level. How does the mix this year compare to last year?

Yes. Hey, good morning. The dynamic that we see again, with higher past mix in our attendance is we tend to get less in-park spending particularly on the merchandise side. They do spend roughly equivalent to tourists on the culinary side. That doesn't impact our in-park spend. And if you look at the categories within our in-park spending, culinary outperformed merchandise. Again, that was due to that dynamic.

Can you provide us with an update on the Blue World campaign and progress you've made on that front and how good they're proceeding there?

You broke up on our end. Sorry. Were you asking about the reputation campaign, Josh?

No, I'm sorry, the Blue World.

We couldn't hear you. You broke up. Yes, I'll take that one on Blue World. The project in San Diego is still on track to open sometime in 2018 so that's the main point. We remain committed to that but as with any capital intensive project, we may adapt our approach looking forward. We'll learn from that one and those learnings will be taken as we look at the other projects moving forward. But what we won't waver on is we're committed to the health and care of our animals and delivering value to our guests but also very importantly, our shareholders.

Thank you. Just one more from me. More generally, peeking into 2015 what you've seen so far, how does the consumer behavior look to you? Do you think the consumer has gained any additional confidence that might translate into higher consumer spend over the year? Thank you.

I think consumer spend overall is good. I think that as seen around the country in all kinds of different industries. As Jim said, a lot of it for us is based on the mix right now. We see culinary doing very well and hopefully, as our mix changes, the tourist market will get a little bit better on the merge. Again, that's the big question mark. Culinary is holding its own. It's merchant that's pretty soft. Jim, do you have any additional comments?

I point to same day, look, consumer confidence indexes are higher than they've been over the last few years but they've come down a bit recently. Obviously, consumers are buoyed by lower gas prices. It's a positive but somewhat mixed outlook out there. We really won't get a good feel for where the consumer is until we get into the summer and to our peak season. That's really where our tourist business becomes a bigger driver and that's still ahead of us.

Great. Thank you.

Your next question comes from line Bryan Goldberg from Bank of America. Your line is open.

My question is for Joel. I know it's early days, but as you review the operations and the capital plans of the Company, how are you thinking about the potential structural changes to the portfolio, if any, be it asset sales, acquisitions? There's been talk over the years about a possible REIT conversion or even smaller stuff like greater licensing of third-party IP given the competitive dynamics you just outlined in Orlando.

As I said early on, I'm in the very, very early stages of responding to all that, looking at it, and then again, in the later fall period we'll come back with what our plan is there. I will say from the point of selling or looking at selling our assets, we feel very strongly that we have a very diverse portfolio of markets and brands. That just helps as a diversification and when one market is strong and the other is not. We feel very strongly about that. There is a lot of synergy between it.

In fact, with the cost cutting that we've just done, it actually added to that because we've dealt with the cost-cutting some of the functions that used to be at the park are now at corporate and so there's even more of that than in the past. So right now, we don't feel like that it's the best thing for the Company to sell off any assets. However, having said that, we are always talking with the Board and external advisors on evaluating ways to create value in the Company. So we are always looking at that. Always looking at how we use our cash.

That's helpful. Thanks. Then I apologize in advance if you guys already mentioned this, but given the tough weather trends up north in the first quarter, what kind of visibility do you have right now on potential school calendar shifts that could potentially skew attendance one way or the other this coming season?

Sure, yes. We do a detailed analysis of school districts across the country over spring break and than also going to the summer. We don't see any major shifts from that perspective. On the fringe, schools are getting out a bit earlier this year but it's not meaningful enough to model. There's also a small calendar benefit from the timing of Labor Day and Memorial Day this year. Memorial Day this year is on May 25, and Labor Day is on September 7, which net-net adds roughly an additional week of what I call peak operating period.

It's more meaningful at our seasonal parks which would actually add more operating days. It would also benefit our year-round parks in terms of getting more effectively, what we call peak days in the summer. From the school calendar perspective, we don't see any big shifts goes into the summer.

That's helpful. Finally, could you update us just on the current thoughts around returning capital to shareholders via share repurchases, what the capacity looks like for the remainder of the year and what your bias is, dividends versus buybacks.

Sure. This is Joel. I'll take a cut at that and then Jim, if you want to add anything. As I said earlier, as the leaders of the Company, the best thing we can do or one of the most important things we can do is how we allocate our cash and obviously, we're always looking to increase value for the shareholders. I'll reiterate, we're very committed to protecting our dividend. We've made two dividend declarations this year totaling $36 million. But we also evaluate all of our uses of cash, whether it's CapEx needs, protecting our dividends, buying our own shares back, paying down our debt or making strategic acquisitions. That's our job to look at every aspect and make sure every dollar's being spent where we can maximize value for the Company. I just see that as a very, very important function of what I do. So we torture that on a regular basis and we'll do so going forward.

On the question of capacity, at our current leverage ratio, our restricted payment capacity is $120 million a year. As Joel mentioned, we've used $36.3 million so far this year with two dividend declarations. If you look at our current dividend cadence, we will use up to $76 million this year per dividend, which will leave $44 million remaining for share repurchases which will likely occur later in the year if we go down that path.

That's helpful. Thank you very much.

Next question comes from the line of Joel Simkins from Credit Suisse. Your line is open.

Good morning, Joel. Welcome aboard. From a high level can you walk us through your philosophy around the balance sheet and where you're comfortable taking leverage to as you work on rehabilitating the business? (technical difficulty) back into some new rising attractions?

Hey, Joel. Good name. We've already met by phone once, but I think big picture again, our -- my main goal is to look at how we use cash and how we allocate it. Our debt level is on the high side. We certainly aren't looking at this point take it up anymore. We will look at the best return of our cash whether we pay that down or to other aspects with it like share buybacks or dividends or capital reinvestment or buying other assets. That's about all I'll say on it, just reaffirming that we do look at that and it's very important of how we use cash. Jim, do you have any other comment on that?

No, I'm sure you're familiar with our restricted payment basket structure. Where we are now 4.2 times. We have $120 million of capacity for dividends and share buybacks which based on our current needs and expectations is plenty. If we go under 4 times, our capacity goes up slightly, take the greater of $120 million or 7.5% of our market cap which at this point I think is around $140 million. The really material step down is getting below 3.5 times levered which would essentially give us unlimited capacity for dividends and repurchases. But I think where the Company is right now, we're comfortable with our leverage ratio and probably we would look to take it out or down -- it may come down over time as our earnings grow. But as far as the actual amount of debt we have [healthy] that changing materially.

Joel, I know you don't want to get too much into strategy here. You did mention the success of the Wildlife Docs. With that in mind, how do you guys continue to think about ways to either leverage your own IP and content or sort of look towards others then to bring some additional content in the park and can that further change the message with consumers?

I think it's a good question, Joel. It's an important part of our future. I think whether it's the reputation campaign, whether it's Wildlife Docs, whether it's animal rescue, sea rescue programs, our message of what we do to help animals in the wild is a compelling message. And part of what we'll talk about in the fall is the more we can make that direct link of supporting SeaWorld helps protect and save animals in the wild, it becomes a different conversation. So everything we can do in our power to communicate that message in all regards, whether it's reputation, TV shows, working with other partners, working with other NGOs, that is very important to us.

Thank you.

Your next question comes from the line of Barton Crockett from FBR Capital Markets. Your line is open.

Thanks for taking the question. Just a couple of more detailed things and then a bigger thing. On the detail, I know we talked about the school calendar shift. I was just wondering more specifically on weather, whether that was any factor at all in the first quarter, the weather comparisons to last year? And continuing on the current trends, if you could give us any color on what you've seen in April and this first week in May, they're small but bigger than January and February. Last quarter you gave us some color there so some updates would be helpful.

Hey, good morning, this is Jim. I'll talk about the weather effect. Weather was a small positive and it varied market to market. I'd characterize our Q1 weather as slightly better than prior year but about average over the long-term. It wasn't a material driver in our Q1 results.

So far, April and May, any commentary there?

On today's call, we're really focused on talking about our Q1 results. Beyond what we've already said about April, we'll get the downside of Easter and the year-over-year comps. We're not prepared to say a whole lot more.

Okay. All right. Then stepping me back a little bit. Joel, you were working at a large privately held theme park company, Herschend. I was wondering if you could talk about anything that you saw there or that you did there that you think could be potentially beneficial at SeaWorld.

It's a good question. I think there's a few things. One is, at Herschend, we got a lot for the dollar there. And so I think just really focusing on efficient use of capital and how that can drive guest attendance and that the whole focus is capital needs to drive guest attendance is an important learning. Not that it isn't happening here, but I definitely bring that bias and a lot of discipline to the capital planning process and that the capital has to get a return if it's used internally. If it doesn't, then it should be used to pay down debt or buy back shares or pay it in dividends. I'm very focused in that regard on that issue.

Also, having multiple brands in multiple markets, very used to that. To some degree, the third point would just be maybe a little bit more from auto industry days than the Herschend days, is just being used to having brands that aren't necessarily number one in a market or two. That's certainly the case here in Orlando. As I said in my opening comments, that's where we have the most headwinds is in Orlando because I think the reputation issues in California, we have a firm plan on that one. I'm used to being not number one or two and that takes a strong focus of marketing, positioning and product to gain or keep your fair share of the market.

Okay, great. Thank you.

There are no further questions at this time. Mr. Ballesteros, I turn the call back to you.

Thanks to everyone for your questions and for your continued interest in our Company. We look forward to speaking with you again next quarter. This now concludes our call. Thanks again for your time.

This concludes today's conference call. You may now disconnect.