SeaWorld Dives Into Its Second Quarter

Can the company stay the course after a successful IPO?

   

SeaWorld (SEAS) will report its second-quarter earnings after the market closes today. Since going public in April, the shares have come off 9% from its high; however, the return is still a nice 35% since its debut.

There’s a lot riding on this Q2 report, considering SeaWorld gets about two-thirds of its attendance during the second and third quarters. In fact, six of its 11 locations are only open during that period.

As for the forecast, Wall Street is looking for earnings of 51 cents per share and revenues of $434.5 million. And it’s a good bet SeaWorld will hit these numbers — the economy has continued to stage a comeback in the U.S., and we’ve already seen strong traction with other theme-park operators, such as Disney (DIS).

But there are some other things investors will want to get details on, including:

Aquatica: SeaWorld has invested heavily in this new concept, which is a premium, family-oriented destination based on a South Seas setting. Attractions include high-energy rides, shows and unique exhibits, like the Orlando location’s habitat of more than 230 penguins. The company has even created a new animated character, a young penguin named Puck.

Intellectual Property: The Disney playbook has been to leverage all its brands across many channels, resulting in a mega business. SeaWorld, while late to the game, has finally realized the need to be more aggressive — and fast. To this end, it has helped develop a TV show called Sea Rescue, which was extended for another season by ABC. But investors also will want to get an idea of other branding opportunities. On the Q1 call, management was vague on its plans. Will there be more TV shows? What about a movie, or online games? Investors will be looking for more concrete answers this time around.

Flexibility: Because of its buyout from Blackstone (BX) a few years ago, SeaWorld has a substantial debt load of $1.85 billion. Investors will want to know if this is a problem, especially concerning its dividend payout (the current yield is 2.2%). More importantly, will there be enough resources to fight against competitors? Besides Disney, SeaWorld also must contend with rivals including Six Flags (SIX) and Cedar Fair (FUN).

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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