SeaWorld Entertainment Inc

NYSE:PRKS

Earnings Call Transcript 2019-Q3

[Operator]

Good morning, and welcome to the SeaWorld Third Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Matthew Stroud, Vice President of Investor Relations. Please go ahead, sir.

[Matthew Stroud, Vice President of Investor Relations]

Thank you, and good morning, everyone. Welcome to SeaWorld's third quarter 2019 earnings conference call. Today's call is being webcast and recorded. 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, Interim Chief Executive Officer; Elizabeth Gulacsy, Interim Chief Financial Officer and Chief Accounting Officer; and Sergio Rivera, recently appointed Chief Executive Officer, whose first official day will be Monday, November 11.

This morning, we will review our third quarter 2019 financial results, and then we'll open up the call to your questions. Before we begin, I'd 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 Risks Factor 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 adjusted EBITDA and free cash flow, which are non-GAAP financial measures.

More information regarding our forward-looking statements and reconciliations of adjusted EBITDA and free cash flow 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 Marc Swanson. Marc?

[Marc Swanson, Interim Chief Executive Officer]

Thank you, Matthew. Good morning, everyone, and thank you for joining us. I am very excited to have the opportunity to introduce Serg to everyone today. As outlined in our press release this morning, Serg will be officially joining as CEO on Monday. Elizabeth and I will take you through the quarter and answer your questions today, but we thought it would be good for you to briefly hear from Serg.

I'll pass the call over to Serg for some brief remarks and then Elizabeth and I will take you through the quarter. Serg?

[Sergio Rivera, Chief Executive Officer]

Thank you, Marc. Good morning, everyone. I am excited to be here at SeaWorld Entertainment. Company has an exceptional business model, irreplaceable set of assets and an incredibly talented group of ambassadors who are delivering extraordinary service and experiences to all our guests. I've been out to most of our parks over the past several weeks and it's been really incredible to see how special these parks truly are.

As Marc will tell you shortly, the Company has made good progress as executing against its long-term plan, but we know there's a lot more to do to unlock the long-term potential of this business. I look forward to working with this talented team to further improve our execution and dramatically increase shareholder value.

Given that I don't officially start at the Company until Monday, I won't have much to say today, but I look forward to speaking with many of you in the coming quarters, and updating everyone on our progress as we grow this company.

Let me turn the call back to Marc. Marc?

[Marc Swanson, Interim Chief Executive Officer]

Thanks, Serg. I am pleased with the progress we have made this year towards optimizing our business and operations. While we are disappointed with our financial results in the quarter, we believe these results would have been stronger and that we would have grown attendance, revenue, and adjusted EBITDA, absent unusually unfavorable weather, a negative calendar shift, and a significant overspend of certain marketing-related expenses.

Our third quarter net income was $98 million, an increase of $2 million over the prior year third quarter, and adjusted EBITDA was $206.9 million, a decline of $5.5 million over the prior year. Our trailing 12 months net income stands at $102.6 million and our trailing 12-month adjusted EBITDA of $437.6 million.

Attendance in the third quarter was 8.1 million guests, down 221,000 guests from the prior year quarter. Over the peak visitation period of July and August, attendance across several of our parks, particularly in Florida was negatively impacted by more rain days when compared to the prior year. We estimate the number of weather days impacting the quarter for our Florida parks increased by almost 50% compared to the prior year quarter.

In addition, over the extended Labor Day weekend, one of our highest attendance weekends of the year, attendance at our Florida parks was considerably impacted by Hurricane Dorian, and its related impact on travel and visitation plans and park operating hours. We estimate the attendance impact related to Hurricane Dorian was over 90,000 visits.

Also, this quarter was negatively impacted by a calendar shift. We lost one peak weekend summer day in July and gained an off-peak weekday in September. In aggregate, we estimate the combination of unusually unfavorable weather and the negative calendar shift reduced our quarterly attendance by approximately 330,000 visits.

Despite the weather and calendar headwinds that negatively impacted our attendance, we continued to grow our total revenue per capita and we continued to make good progress on our cost and efficiency initiatives. Our progress on cost reductions was masked in the quarter by a significant overspend in marketing expense of approximately $9.5 million related to less disciplined management of certain marketing-related costs. We have since made adjustments to our process to better manage these costs.

On the positive side, on days where there were no adverse weather conditions during the quarter, we performed well, sometimes very well. For example, in the month of July, we recorded three separate days with near all-time record daily attendance. For the third quarter, including these three days, we had a total of six separate days of top 20 daily attendance since we've been a public company.

Additionally, in September, we had an all-time record-breaking weekends in attendance at two of our larger parks. In short, we have confidence, our strategy is working and absent unfavorable weather, we are able to drive attendance, revenue, and adjusted EBITDA.

In the third quarter, we had many of our guests’ favorite events going on, including our one-of-a-kind Sesame Parade at several of our parks, our award-winning Electric Ocean event in each of our SeaWorld parks, and our Popular Summer Nights events in our Busch Gardens parks. In September, we began our Halloween events which continued through October and into this past weekend. In fact, while we are very early in the fourth quarter, we are pleased with the performance of our Halloween events across the portfolio.

Through the conclusion of these events on Sunday, November 3, we have seen growth in both attendance and revenue quarter-to-date on a year-over-year basis. Later this month, our Popular Holiday events featuring Rudolph the Red-Nosed Reindeer will start to rollout at many of our parks, giving guests another reason to visit throughout the end of the year.

Despite the headwinds in the third quarter, our year-to-date results remain strong compared to the prior year period. On a year-to-date basis, net income was $113.7 million, an increase of $57.8 million over the first nine months of 2018 or 103.5% higher, and adjusted EBITDA was $373 million, an increase of $36.3 million over the prior year or 10.8% higher.

While we are pleased with our year-to-date progress through the end of the third quarter of 2019, we know we can do better. As we have communicated previously, we strongly believe there is additional opportunity to drive significantly improved financial performance and we are intensely focused on continuing to execute throughout the fourth quarter. We are enthusiastic about the future and our increasing ability to deliver meaningful, operational and financial improvement.

With that, I'd like to turn the call over to Elizabeth to discuss our financial results in more detail. Elizabeth?

[Elizabeth Gulacsy]

Thanks, Marc, and good morning, everyone. As Marc mentioned, we faced some headwinds this quarter, which we actively work to try to mitigate and although we ended the quarter softer than we expected, we were encouraged by our results on non-weather impacted days. And our year-to-date results for the first nine months remain strong.

Let me first walk you through our third quarter results. Then I'll touch on some of our year-to-date numbers. Our attendance for the third quarter was 8.1 million guests, a decline of 2.6% or 221,000 guests from the prior year. We believe factors impacting attendance largely related to unfavorable weather and a calendar shift due to one less weekend day in the quarter.

Give you some context, based on the internal estimates and analysis; we believe weather impacts and the calendar shift combined led to a shortfall of approximately 330,000 guests in the quarter, 190,000 of which we attribute to weather impacts and 140,000 to the calendar shift.

Included in the weather estimate is the impact from Hurricane Dorian over Labor Day weekend, which we estimate contributed to a shortfall of more than 90,000 guests. As a reminder, the calendar shifts this quarter results from trading a weekend day in July for a weekday in September when compared to the prior year.

During the quarter, we generated total revenue of $473.7 million, a decrease of $9.5 million or 2% compared to the third quarter 2018. This was driven by decreases in attendance partially offset by increased total revenue per capita. Third quarter total revenue per capita was $58.31 compared to $57.91 in the third quarter of 2018. This improvement was driven by an increase in in-park per capita spending and was partially offset by decline in admissions per capita.

In-park per capita spending improved 3.9% primarily due to pricing initiatives and increased sales of in-park products. Admissions per capita declined 1.6% primarily due to continued implementation of targeted promotions and pricing strategies and with partially offset by price increases taken on certain admission products.

Operating expenses were $175.6 million, a decrease of $23.1 million or 11.6% and was primarily related to a reduction in labor costs as a result of cost efficiencies and a decrease in non-cash asset write-off.

Selling, general and administrative expenses were $64.6 million, an increase of $13.1 million or 25.4% and was largely due to an overspend in marketing costs of approximately $9.5 million and the timing of certain expenses that shifted from the first half of the year into Q3.

As Marc mentioned, the overspend in marketing was due to less disciplined management of certain marketing related costs during the quarter. We have since made adjustments to our process to better manage of these costs and we do not expect this type of overspend to repeat.

Turning back to the rest of our financials. We reported net income of $98 million, an increase of $2 million or 2.1% when compared to the third quarter of 2018. Net income in 2019 includes approximately $1.2 million of pre-tax expenses associated with restructuring and other separation related costs, which for the third quarter of 2018 were approximately $3.9 million.

Adjusted EBITDA for the third quarter was $206.9 million, a decline of $5.5 million compared to the prior year quarter. The adjusted EBITDA decline was primarily driven by the decrease in total revenue and increased marketing expenses and was partially offset by the realization of cost savings initiatives.

We continue to make progress on the expense reduction front. Last year, we identified significant opportunities that we began to execute on to streamline our business, reduce redundant expenses, and operate more efficiently.

Our efforts have continued into 2019 as we continue to identify additional cost reduction opportunities and efficiencies. The results of these efforts are apparent in our financial results and we anticipate finding additional cost savings and efficiency into 2020.

Looking at our results for the first nine months of 2019, total attendance was 17.9 million guests, a decrease is approximately 57,000 guests or 0.3% and total revenue was $1.1 billion, an increase of $8 million or 0.7%. Net income for the period was $113.7 million, an improvement of $57.8 million and adjusted EBITDA was $373 million, an increase of $36.3 million or 10.8%.

Net income for the first nine months of 2019 includes approximately $8.1 million of pre-tax expenses associated with the previously announced equity transactions and separation related costs. Net income for the first nine months of 2018 includes approximately $34 million of pre-tax expenses associated with separation related costs and legal settlement accruals.

Now turning to our balance sheet. Our current deferred revenue balance as of the end of the quarter was $114.5 million, an increase of approximately 6% when compared to the third quarter of 2018. Through the third quarter, we reported approximately $153 million in total capital expenditures of which approximately $137 million relates to core CapEx.

As we have previously disclosed, we still anticipate approximately a $115 million in core capital expenditures and $30 million to $35 million of non-core capital expenditures in 2019. Non-core capital expenditures are associated with expansion in ROI projects including new properties such as Sesame Place, San Diego, and new revenue opportunities and/or cost reduction opportunities.

As noted in this morning's earnings release, our net leverage ratio was 3.34x, which is calculated by using adjusted EBITDA including estimated cost savings for the 12 months ended September 30, 2019 as defined in our amended credit agreement. Although, the third quarter presented some headwinds, our year-to-date results remain strong. As Marc mentioned, we believe we have significant opportunity for even further improvement.

To accomplish this, we will continue to focus on driving additional attendance and total revenue while reducing unnecessary costs and continuing to identify more efficient ways to operate our business. We are making progress which gives us confidence in our ability to achieve the higher end of our goal of $475 million to $500 million of adjusted EBITDA by the end of 2020.

Now let me turn the call back over to Marc, who will share some final thoughts. Marc?

[Marc Swanson, Interim Chief Executive Officer]

Thank you, Elizabeth. Before we open the call to your questions, I have some closing comments. Two weeks ago, we announced that we will build our second Sesame Place Park on the site of our existing Aquatica Water Park located in Chula Vista, California near San Diego. We are excited about this new location for Sesame Place on the West Coast.

To be clear, Aquatica San Diego will remain open for its final season of operation beginning in May of 2020. As such, we looked forward to welcoming guests for one more season of exciting fun at Aquatica San Diego. We anticipate opening Sesame Place San Diego in the spring of 2021.

We are looking forward to opening this park and continuing our work on future potential Sesame Place Parks across the United States. In addition to our Sesame Place San Diego announcement, we have recently announced some of our slate of 2020 attractions across our parks.

We are particularly excited to introduce what we believe is the strongest lineup of new rides and attractions in our history, including many one of a kind world-class rides. Almost every park will get a new ride or slide, including thrilling new coasters at all SeaWorld and Busch Gardens parks. The first time we have ever done this.

The new rides we have announced so far include the following: At SeaWorld, Orlando, we will introduce Ice Breaker, a quad launch family coaster with four airtime filled launches, both backwards and forwards, culminating in a reverse launch into the steepest beyond vertical drop in Florida, a 93 foot-tall spike with 100 degree angle.

At SeaWorld, San Diego, we will introduce the tallest, fastest and longest dive coaster in Southern California. At SeaWorld, San Antonio, we will introduce Texas Stingray, a high-speed wooden coaster, the tallest, fastest, and longest wooden coaster in Texas, where riders will reach speeds of 55 miles per hour.

At Busch Gardens, Tampa Bay, we will introduce Iron Gwazi, the tallest, fastest hybrid coaster in Florida that will plunge riders from a 206 foot-tall peak into a 91-degree drop and reach top speeds of 76 miles per hour.

At Busch Gardens, Williamsburg, we will introduce Pantheon, the fastest multi-launch coaster in the world or riders will experience three launches and speeds of 73 miles per hour. And at Adventure Island, we will introduce Solar Vortex, America’s first dual tailspin waterslide.

Stay tuned for more announcements as we have many new rides or attractions for 2020, which we believe is the strongest line-up of new rides and attractions in our history. I want to thank our outstanding team of ambassadors for their efforts this summer and fall. They continue to remain focus on providing exceptional service and safe and meaningful experiences to our guests. I believe we have some of the best, most passionate employees in the theme park industry, and I'm really proud to be working with them.

On the rescue side, we recently announced that we have surpassed 36,000 animal rescues over the last 55 years. We are one of the world's leading animal rescue organizations and we are proud of our efforts to protect and save wildlife. We know of no company that does more to protect marine mammals and advance cetacean research, rescue and conservation than SeaWorld.

In fact, during the third quarter, we came to the aid of over 490 animals in the wild that were in need of care. It is our mission, hope and expectation that our actions also inspire our guests to consider and protect animals, their habitats, and the wild wonders of our world.

As we have said before, we have an exceptional business model. We are focused on improving our execution and continuing our efforts to adjust and enhance our marketing and communications initiatives, as well as our pricing strategies along with our goal of introducing new compelling rides, attractions, and events in every park, every year.

We will continue to identify and execute on costs and capital efficiency initiatives that we expect will contribute to meaningfully improved margins and profitability. Through these efforts, we are confident we will deliver attendance, revenue and adjusted EBITDA growth that will result in meaningful increased shareholder value.

I've been with this Company for nearly 20 years. I'm excited about the direction we are heading. I see significant opportunities to improve and grow our business, which will help us deliver the improved financial performance this Company is capable of achieving.

With that, let's open up the line to take your questions.

[Operator]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Steve Wieczynski of Stifel. Please go ahead.

[Steven Wieczynski, Stifel, Nicolaus & Co., Inc.]

Hey. Good morning, guys. So Marc, I want to dig in a little bit more to that – to the $9.5 million marketing spend that you said was “undisciplined”. Can we get more color on, I guess what that means? And I guess, where was that money spent? Or what it was spent on? Meaning, was that more Orlando-based? Was it San Diego-based? Was it across the Board? I'm just trying to figure out this was kind of a calendar measure against whether that's Star Wars in Orlando or just competition in general?

[Marc Swanson, Interim Chief Executive Officer]

Yes. Hey, Steve, it's Marc. I can take that question. Look, it's like we laid out in the release – in the prepared remarks. We have some incremental marketing spend. We get into a very good job of managing or optimizing or adjusting that spend, and ultimately we don't think we got a very meaningful return out of that spend and we probably shouldn't have done it.

The good news is we've put a process and procedure in place. We've enhanced those processes and procedures to make sure something like this doesn't happen again. Specifically, how it was spent. I think it was a combination of media and creative and again, we have a better process. We don't expect that type of thing to repeat again.

[Steven Wieczynski, Stifel, Nicolaus & Co., Inc.]

And I guess to follow-up there in terms of – kind of my last part of that question was I'm just going to ask it in terms of from a Star Wars perspective in Orlando. I mean, can you give any kind of commentary as to – has that been impactful? Has it not been impactful? Has it been kind of what you guys would have expected?

[Marc Swanson, Interim Chief Executive Officer]

Look, I think absent the weather impacts we've seen in Orlando that we call it out – we called out almost 50% increase in weather impacted days. Now we're pleased with our performance in Orlando. When you look at kind of the tourist mix coming into our parks, I think in general overall we're fairly pleased with that. So we've been competitors here for a long time, since the 70s, and we know a lot of parks have opened since that time.

There's been a lot of world-class attractions coming into the area. But we feel good about our opportunity to compete with our product, our differentiated attractions and product mix, our value proposition, how we do things at our parks. So we welcome the competition. We welcome more people to Orlando. And like I said, absent the weather impacts, we feel pretty good about our results in Orlando and in Florida.

[Operator]

Thank you. Our next question today comes from James Hardiman of Wedbush Securities. Please go ahead.

[James Hardiman, Wedbush Securities]

Hi. Good morning. Thanks for taking my call. So I really appreciate some of the data in terms of the various factors that impacted the quarter, the calendar, the weather. I wanted to peel back on that a little bit. So that 330,000 visit number, 140,000 of that sounds like was the calendar shift.

I guess first question is the year-to-date calendar now even or should we expect, and I guess, and should we expect any sort of calendar shifts in the fourth quarter. And then the remaining 190,000 of weather, is that an absolute number of weather impacted visits or is that 190,000 visits that you feel like you've lost over and above 2018?

[Marc Swanson, Interim Chief Executive Officer]

Yes. Hey, James. This is Marc. I can take that question. Look in the calendar, I think there's a small – there's probably a small benefit still to come in Q4 with just the timing of some school breaks as best we can estimate, but it's not as significant obviously as the shift that we saw in Q3.

So I think kind of on a full-year basis these things tend to normalize out. But in Q3, obviously there was a pretty negative shift, but I think by the time we get to the full-year, these things tend to even out overall. We did have, as we mentioned before, a little bit of a favorable calendar shift back in Q2.

And then specifically on the weather, I mean this would be 190,000 visits that we lost versus last year. So I think what we wanted to make sure it was clear to people, our attendance was down 221,000 for the quarter and the calendar shift and the weather was 330,000. So just by that math alone, you can figure out that our attendance we believe would have been up for the quarter based on our estimates without those factors.

[James Hardiman, Wedbush Securities]

Perfect. And that sort of leads me to my follow-up. So if I were to add, let's assume that on a year-to-date basis, the calendar has generally evened out. And so if I add that 190,000 back to the year-to-date number, I basically get to a year-to-date attendance growth of just under 1%. I guess, is that a good – how do I put that number in context? Are you satisfied with that number? Is that generally what you're looking for? Do you think that could have been better, worse? How do I put that in context?

[Marc Swanson, Interim Chief Executive Officer]

Yes, it's a good question. Obviously, we always want to do better on attendance, but if you go back and look at our goal that we laid out for – by the end of 2020, hitting $475 million to $500 million in adjusted EBITDA. As we said, that required some recovery of the attendance we lost over time and then some modest attendance growth on a go-forward basis.

So if we were to able to grow our attendance low-single digits, I think we'd be pleased. We always want to do better. But I think in this industry are growing at a low single-digit and getting associated per cap growth and expense reductions. That's a pretty good recipe for a strong EBIDTA growth – adjusted EBITDA growth.

[Operator]

And our next question today comes from Tim Conder of Wells Fargo Securities. Please go ahead.

[Timothy Conder, Wells Fargo Securities, LLC]

Thank you. And thank you again for the good color on the weather, the attendance and everything, much appreciated. Yes, I want to maybe hit the cost side here, Marc or whoever want to take this, the cost in the quarter, the cost savings is part of the plan. How should we think what appeared in the P&L in the quarter?

And then what have you already identified that we should anticipate flowing through the P&L here in Q4 and then in 2020? So again, identify and not fully yet implemented, but to be realized over that period. So question number one there. And then on the season passes, any color you can give us here on an early basis, how units or pricing is trending for season passes across the network or if you want, by regional color also, if you could? Thank you.

[Marc Swanson, Interim Chief Executive Officer]

Sure. It’s Marc, I can take that question. So look on the cost, our revenue was down about $9.5 million for the quarter, our adjusted EBITDA was down $5.5 million. So we flowed through $4 million of EBIDTA savings. Obviously, we called out the $9.5 million in marketing overspend. So that masked a good portion of otherwise strong cost savings in the quarter. Those cost savings continue to come primarily in the OpEx area, but also in other areas as well.

And we've identified a few in the press release. We've estimated – our estimated cost savings go forward is $14.9 million that we've identified and we have begun to execute on. Having said that, we don't put absolutely everything into that bucket. There's other things that we've identified and we'll start to execute on. And to the extent they stick, they get into that bucket. But we're doing a lot of work around costs and we're confident we'll find more than the $14.9 million that you see in that number.

So we’ve made pretty good progress obviously towards that goal of $50 million. I think you can kind of go back and look at our revenue and EBITDA growth since the beginning of 2018 I should say, our adjusted EBITDA growth is outpacing our revenue growth by a fair amount. So that's cost savings we're taking. And at the same time with the associated attendance and revenue increases we've had since the beginning of 2018, we've also offset a good portion of the variable costs associated with that attendance.

So we're pretty far along we believe towards achieving that goal of $50 million and we're not going to stop there. And as you see, we have more costs identified and we're going to continue to find – we believe find more costs down the road.

On your second question, on the season pass sales. So you heard Elizabeth talk about the deferred revenue up 6% at the end of September. Obviously, our biggest part of the deferred revenue is the season pass sales. We really began our sales kind of for next year in October. And just as a reminder, we have kind of two types of pass products. We have the Fun Card, which you've heard us talk about, which is kind of the entry level pass if you will. It's really just gets you into the park. It doesn't have any benefits and it doesn't also allow you to use the EZ Pay, which is the monthly payment program.

And then we have our premium passes, which are a series of pass products like bronze, silver, gold, et cetera. And those as you move up the tier, those have associated benefits like free parking, discounts on park, different things like that. And so our goal is really to try to move people from Fun Card to premium. And that's ultimately what we'd like to do. We know there is a place for Fun Card, but our goal is to obviously move as many people as we can from Fun Card to premium.

So what I can tell you is sitting here today, we have more people today hold a premium pass at this time than last year, and I think that kind of ties into directionally some of the deferred revenue et cetera. And then Fun Card is where we've just started selling probably since mid-to-late September, early October, we started selling the Fun Card for next year. And so far, the 2020 Fun Card that we've sold right now, we've sold more of those than we sold last year at this time of the 2019 Fun Card.

So when you put it all together, kind of more people today right now have some sort of pass product in their hand than they did last year at this time. Yes, I don't know if I'll give you a specific number, but it's not an insignificant increase and so we're pleased with that, but we've got a long way to go.

Obviously, we're very early in the process, and we sell passes year round, which is perhaps a little bit different than some of our competitors, but we're optimistic and we're going to keep working hard. We've got some pockets where we need to do better, obviously, but we're excited that more people hold that product today than last year at this time.

[Operator]

Thank you. Our next question today comes from Alexia Quadrani of JPMorgan. Please go ahead.

[Anna Lizzul, JPMorgan]

Hi. This is Anna on for Alexia. Thank you so much for the question. Could you talk a little bit about how Sesame Street is tracking in Orlando, given that you're expanding with the themed area in San Diego?

[Marc Swanson, Interim Chief Executive Officer]

Yes. Anna, this is Marc. I can take that question. Look, I think we're really pleased with that area. I know a number of folks have been down to see it. It's really a neat area, have a really authentic feel, it's almost like you're right there on Sesame Street. And so I think we've been really pleased with the results. One of the – as I mentioned, we've had a lot of weather in the Florida market in the third quarter. So you strip that out. Obviously, that's been a factor. But absent that we're pleased with our performance here and specifically we're pleased with our performance out of the new Sesame area that we opened.

[Anna Lizzul, JPMorgan]

Great. Thank you.

[Marc Swanson, Interim Chief Executive Officer]

Sure.

[Operator]

And our next question today comes from Brett Andress of KeyBanc Capital Markets. Please go ahead.

[Brett Andress, KeyBanc Capital Markets Inc.]

Hey, good morning. So I'm still kind of scratching my head on this marketing spend. When did that occur during the quarter? Was it earlier or later? And then also what benefit did that level of marketing spend have on attendance in the quarter?

[Marc Swanson, Interim Chief Executive Officer]

Yes. Hey, Brett, it’s Marc. I can help you with that. Look, I mean I'd say probably happened earlier in the quarter or kind of more in the peak times of the quarter, which would be more likely July and August. One of the things I'll say, as you know, we're always – and we said this last call, we're testing different things. We're making a lot of changes to the business and we know sometimes we're not getting things right. And we've had changes in personnel and we've had some vacancies here and there.

So those things certainly don't help. But having said that, we recognized we did not manage the process well. We didn't optimize within adjust very well. And so we don't believe we got a meaningful return and we've since put some procedures in place that we don't expect this type of overspend to occur in the future. We have a better process to manage that going forward.

[Brett Andress, KeyBanc Capital Markets Inc.]

Understood. And you also gave us some details on trends in the fourth quarter to-date. I guess, can you elaborate a little more on that? What level of growth are you seeing, and is that simply better weather conditions here? Are you leaning more into promotions? Just any color on the drivers in the fourth quarter here so far?

[Marc Swanson, Interim Chief Executive Officer]

Yes. So look, the fourth would obviously be our Halloween events. And so we ran those in most cases through this past Sunday, November 3 and we're pleased with the performance of those. As we said in my prepared remarks that the revenue and attendance is up, and so we're pleased with that. We're not going to go into a specific number, but I can tell you it is up and both of them are up.

Weather, we don't have the exact breakdown at this point in time, but we had some weather impacted weekends, even in September. But I think when weather was good we saw some really good results. I mentioned that in September, which would – our Halloween would started in September as well.

We had some really strong weekends as I talked about in my prepared remarks. So when weather is good, we're doing really well. And when – with the Halloween events, the equity behind those, the popularity of those, we're pleased with our results, obviously due this past Sunday for the fourth quarter.

[Operator]

[Operator Instructions] Today's next question comes from Chris Prykull of Goldman Sachs. Please go ahead.

[Christopher Prykull, Goldman Sachs & Co. LLC]

Good morning, guys. Thanks for so much for taking the questions. I just wanted to touch on your comment around still being confident in hitting the top end of the 2020 EBITDA target? Could you maybe give some color in terms of how you're thinking about the revenue assumption, necessary to hit that target, may be the composition of that revenue between pricing and attendance for next year? I know it's early, but are you comfortable with what you're seeing, year-to-date and in the fourth quarter obviously to still be comfortable with the topline into 2020?

[Marc Swanson, Interim Chief Executive Officer]

Yes. Hey I take Chris – it's Marc. I can take that question. Let me just give you kind of the full picture and then I can comment specifically on revenue. But really we laid out that goal 475 to 500 back in August of 2018. So now we've kind of then through to two summers.

And so I think we have more visibility. More understanding of the business and we feel really good as we said in our remarks about hitting the high-end of that range. And if you look, today, a year-to-date through September 30, our adjusted EBITDA is up over 10%. We have those identified cost savings already sitting out there that, if you take those into the account, our LTM would be in the range of about $452 million with those estimated costs savings.

And so from there we know, this quarter was impacted by weather. We think going forward, hopefully weather normalizes and then we know we have what we believe is the best lineup of attractions in our history. As a Company, we've got a lot of really good attractions to customers in specifically coming to our SeaWorld and Busch Gardens parks and then other attractions that most of our other parks.

So a good lineup of attractions, hopefully some weather normalization. And then the continued execution on the cost, when you kind of laid out all together, we feel good about, it's in our opinion a bridge that we can get to from where we are today to the high-end of that range.

Specifically on revenue, we do still have confidence that we can grow our admissions and total revenue and in-park revenue over the long-term. Our in-park continues to be strong. We grew again this quarter and we're seeing continued momentum in that area.

On our admissions per cap, we continue to test and do different things in that area. That's sometimes it's going to be at odds with the per cap on the efforts to drive total revenue. That can get a little compensated when you have a quarter with a lot of weather obviously.

But over the long-term, we do believe we can drive growth in that admissions per cap and that's ultimately our goal. I can tell you that we do take price increases and I don't want to get too far out – ahead of ourselves, but I think we're optimistic about the pricing we can get on a go forward basis.

So I think you'll see combinations as we look out getting that goal. I think you'll see hopefully a combination of attendance in per cap growth and then continued execution on the cost savings, which all those together give us a lot of confidence. We can hit the high end of that range.

[Christopher Prykull, Goldman Sachs & Co. LLC]

Great. And then I have a follow-up, but just one maybe point of clarification on the cost savings. The $14.9 million identified in the release, that does include the $9.5 million of marketing spend, correct?

[Marc Swanson, Interim Chief Executive Officer]

No, it does not. It does not.

[Christopher Prykull, Goldman Sachs & Co. LLC]

Okay.

[Marc Swanson, Interim Chief Executive Officer]

We don't expect to $9.5 million to obviously – we don't expect to make that type of –have that type of issue on a go forward basis. But it is not in that number.

[Christopher Prykull, Goldman Sachs & Co. LLC]

Got it. And then maybe on – and I know it's early, but on Sesame Place, San Diego, how are you thinking about the expected revenue and EBITDA contribution from that property? The CapEx associated with it, when that CapEx will start? And then how should year one look versus that park closer to maturity? Thank you.

[Marc Swanson, Interim Chief Executive Officer]

Sure. I'll try to unpack that question a little bit for you. So look, we're really excited to be working with the Sesame workshop on putting another Sesame Park only the second standalone Sesame Park in the United States, and we'll be putting this in California obviously.

So we're really excited. They're great partners. We know this is a really strong IP. The Sesame Street IP is very strong. So the San Diego market provides a lot of good weather, which will allow us to run this park, combination of wet rides and dry rides. And then we also know it's obviously got good tourism demographics and in having a SeaWorld there is another plus.

As far as kind of the cadence of the CapEx, I mean, you'll see a little bit this year and then obviously it ramps up in 2020 and 2021. I think when you – what I would – probably the easiest thing to do is when we file our Q, which will be available no later than tomorrow morning. You can go in, dive into the footnotes there, the commitments footnotes, and you'll see a little bit more color on kind of the expected cost and how that plays out in that footnote.

As far as kind of your other question about the returns. Obviously, look the Aquatica brand is a really good brand. We have those parks in other locations. I think it tells you that fact that we're going to put Sesame Park there. We obviously believe the Sesame product will get an even better return than the Aquatica brand. We don't have any specific numbers to give you, but obviously I think it says a lot that we're – we want to put this park there. We think it's going to have a good return.

We're going to try to do good obviously right out of the gate, but obviously we'll, I'm sure get better over time, and our ideas to try to open this thing with as much as we can right out of the gate. And then we'll make improvements over time.

[Operator]

And our next question today comes from Paul Golding of Macquarie Capital. Please go ahead.

[Paul Golding, Macquarie Capital (USA), Inc.]

Thanks so much for taking my question. Just a question around how weather and calendar impacted attendance mix of member and pass versus single day. And then just a follow-on to that, anything, any color you can give around how that impacted per caps?

[Marc Swanson, Interim Chief Executive Officer]

Yes. Hey Paul, it's Marc. I can take that question. I think the simplest way to answer it is really around, when we look at kind of the demographics, the source of residency, so not a huge surprise that weather is going to impact your local and kind of same day visitors the most. They have the most optionality to change their dates. And so that's exactly what we saw. And kind of tied to that then would be your most of your locals, your locals are more likely to have a pass. And so I think that provides you some color there.

As far as on per caps, as we've said, we're always focused on driving total revenue, but we're going to do obviously some things at times that might be at odds with the per cap and there's some element of promotions and pricing strategies in the quarter.

And sometimes some of those are going to be in response to weather, some of those are going to be in response to other things. So there probably was some impact obviously on the per cap. I think over the long-term, we feel good about our ability to grow the per cap over the longer term.

[Paul Golding, Macquarie Capital (USA), Inc.]

Thanks for the color.

[Marc Swanson, Interim Chief Executive Officer]

Sure.

[Operator]

And today's final question comes from Michael Swartz of SunTrust. Please go ahead.

[Michael Swartz, SunTrust Robinson Humphrey]

Hey. Good morning, guys. Just wanted to ask a question with regards to maybe the commentary around your 2020 guidance and your comfort level with the high-end of that, is there any read through into that kind of change in tone with regards to cost savings? In other words, are you now thinking cost savings above $50 million when you talk about that or would anything above $50 million be above and beyond kind of that range? Just trying to understand that a little better.

[Marc Swanson, Interim Chief Executive Officer]

Yes. Hey Michael, it’s Marc. I can take that question. I think the simplest way, as we've said, we're not going to stop at $50 million, and I think we feel pretty good that we're going to exceed that amount. We gave the illustrative example of how to get there back in August of 2018. So we said, look, we might over or under-perform in certain of these areas, attendance per cap and costs, but I think we have a lot of momentum around costs.

Like I said, if you just kind of look at our adjusted EBITDA growth since at the beginning of 2018 and you look at our revenue growth, obviously we're outperforming revenue and a lot of that is through cost savings and then we're covering all the variable costs associated with meaningful increases in attendance since the beginning of 2018.

So when you kind of put those two together, you get – I think you can kind of get to a number that's pretty close to – getting close to $50 million and then we've got these additional $15 million or so, $14.9 million in the estimated cost savings bucket that's in our release.

[Michael Swartz, SunTrust Robinson Humphrey]

Great. Thank you. And then second question, Marc, as you had laid out some of the new attractions and capital plans for 2020, one thing that was noticeably absent was any mention of events, festivals, limited time events that you guys have had success during the past few years.

So is that something that you have any color on today or something that we'll be hearing about in the future? It's not only most of what you're talking about here is more coasters, thrill rides, but any color you can provide would be helpful. Thank you.

[Marc Swanson, Interim Chief Executive Officer]

Yes. I can take that question. Look, we're always – we talked about more of the coasters and the attractions because obviously we're very excited about those. But yes, I don't want to certainly at all downplay our events. A lot of the events we've been holding, we'll continue to execute on. We haven't completely finalized the calendar.

So there might be some pluses and minuses to those numbers. But I think in general, we'll continue to obviously to have Halloween and Christmas and our food and wine, different festivals like that. We've had some success with beer festivals in a few places, our inside look events. So there's a lot of things that I think you're going to see us continue to do and we are really excited about those as well. And so yes, you'll continue to see us focus on events.

[Operator]

Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to Marc Swanson for any closing remarks.

[Marc Swanson, Interim Chief Executive Officer]

Thanks Rocco, and thanks to everybody. And on behalf of Sergio, Elizabeth and the rest of the management team here at SeaWorld Entertainment, I want to thank you for joining us this morning. I want to again thank our employee, ambassadors for their efforts every day to further our mission to protect animals.

As you heard this morning, we have a lot of confidence in our ability to achieve the higher end of our 2020 adjusted EBITDA goal of $475 million to $500 million. And we believe our slate of 2020s rides, attractions and events are among the best, or if not the best in our history.

And we have a lot of confidence that we'll deliver attendance, revenue and adjusted EBITDA growth that result in meaningful to increased shareholder value. So again, we want to thank you for joining today and we look forward to speaking with you next quarter.

[Operator]

Thank you. Today's conference has now concluded and we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.