United Parks & Resorts (NYSE:PRKS) Reports Sales Below Analyst Estimates In Q4 Earnings

Anthony Lee /
2024/02/28 7:27 am EST

Theme park operator United Parks & Resorts (NYSE:SEAS) fell short of analysts' expectations in Q4 FY2023, with revenue flat year on year at $389 million. It made a GAAP profit of $0.62 per share, down from its profit of $0.79 per share in the same quarter last year.

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United Parks & Resorts (PRKS) Q4 FY2023 Highlights:

  • Revenue: $389 million vs analyst estimates of $395.6 million (1.7% miss)
  • EPS: $0.62 vs analyst expectations of $0.81 (23.1% miss)
  • Free Cash Flow of $35.84 million, down 52.2% from the previous quarter
  • Gross Margin (GAAP): 44.9%, down from 52.6% in the same quarter last year
  • Visitors: 5 million
  • Market Capitalization: $3.12 billion

Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE:PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.

Leisure Facilities

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from "things" to "experiences". Leisure facilities seek to benefit but must innovate to do so because of the industry's high competition and capital intensity.

Sales Growth

Reviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. United Parks & Resorts's annualized revenue growth rate of 4.7% over the last five years was weak for a consumer discretionary business. United Parks & Resorts Total RevenueWithin consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. United Parks & Resorts's annualized revenue growth of 7.2% over the last two years is above its five-year trend, suggesting some bright spots.

We can dig even further into the company's revenue dynamics by analyzing its number of visitors, which reached 5 million in the latest quarter. Over the last two years, United Parks & Resorts's visitors averaged 7.3% year-on-year growth. Because this number aligns with its revenue growth during the same period, we can see the company's monetization was fairly consistent. United Parks & Resorts Visitors

This quarter, United Parks & Resorts missed Wall Street's estimates and reported a rather uninspiring 0.4% year-on-year revenue decline, generating $389 million of revenue. Looking ahead, Wall Street expects sales to grow 3.4% over the next 12 months, an acceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, United Parks & Resorts has shown solid cash profitability, giving it the flexibility to reinvest or return capital to investors. The company's free cash flow margin has averaged 16.3%, above the broader consumer discretionary sector.

United Parks & Resorts Free Cash Flow Margin

United Parks & Resorts's free cash flow came in at $35.84 million in Q4, equivalent to a 9.2% margin and down 21.6% year on year. Over the next year, analysts predict United Parks & Resorts's cash profitability will improve. Their consensus estimates imply its LTM free cash flow margin of 11.6% will increase to 13.2%.

Key Takeaways from United Parks & Resorts's Q4 Results

We struggled to find many strong positives in these results. Its revenue, operating margin, and EPS fell short of Wall Street's estimates. Furthermore, its 21.6 million full-year visitors were still below the levels achieved in 2019, primarily due to a decline in international and group attendance.

In 2023, the company opened a SeaWorld park in Abu Dhabi and plans to open new rides in its parks by summer 2024.

Overall, the results could have been better. The company is down 3.7% on the results and currently trades at $47 per share.

United Parks & Resorts may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.