United Parks & Resorts Inc. Q1 FY2026 earnings call

Core Q1 Operational Performance

• Q1 2026 results missed internal expectations due to 140,000 lost guests from unfavorable weather across key park locations (San Diego, Florida, Texas) and 80,000 lost guests from broad U.S. international tourism declines. Adjusted for these headwinds, attendance would have increased over 1% year-over-year.
• In-park per capita spending increased 5.3% to a record $40.62, driving overall total per capita growth of 2.1%, even as admission per capita fell 0.5% due to product mix shifts. Paid pass sales rose 10% in Q1 and 12% through April 30, 2026, with a growing paid pass base year-over-year. Advanced bookings for Discovery Cove and Group business outpace 2025 levels, with Discovery Cove bookings up double-digits.
• Discovery Cove was named Newsweek's 2026 number one best theme park in the U.S. via Reader's Choice Awards.

Strategic Initiatives

• Real estate: The firm is evaluating formal proposals from multiple parties for excess real estate portfolio assets, with advisors assisting in the process, and will update investors when more information is available. Management expects any development will complement park operations to extend guest stays and increase on-site spending.
• Sponsorships: Two new sponsorship agreements with high-quality brands were signed in Q1, with a pipeline of additional deals expected. Management projects over $15 million in total 2026 sponsorship revenue, with the line of business expected to grow to at least $30 million annually in coming years. Sponsorship revenue was immaterial to Q1 per capita growth.
• IP and international expansion: Active discussions are ongoing with global partners to add popular IP to park attractions, with announcements expected for 2026, 2027 and beyond. Talks with international expansion partners continue, with updates expected in coming quarters.
• Marketing: A full revamp of marketing strategy and media mix is underway, with execution hiccups during the transition to a more dynamic model. Testing and optimization is ongoing, with a first dedicated national SeaWorld brand campaign launching later this month, the first meaningful national campaign in many years.
• Cost efficiency: The company is on track to hit its previously announced $50 million gross cost savings target for 2026. Technology investments including AI-powered cameras, autonomous cleaning robots, expanded digital ordering, automated turnstiles and parking tools are being implemented to boost revenue, cut costs, and improve guest experience.

Capital Allocation

• Management believes the company's stock is materially undervalued, and continued opportunistic share repurchases in Q1: 2.6 million shares were bought for ~$92.7 million. An additional 1.8 million shares were repurchased for ~$64.8 million after quarter end, leaving ~$198 million remaining under the 2025 $500 million repurchase authorization.
• The firm maintains a strong balance sheet. If repurchase authorization is exhausted, the board will consider other capital return options including regular/special dividends, debt paydown, or additional growth investments.

The transcript does not break out revenue and financial performance across separate product segments. All results are reported on an aggregate company basis: total Q1 2026 revenue of $278.3 million, a decrease of $8.7 million year-over-year. The firm reported a net loss of $34.1 million, compared to a $16.1 million net loss in Q1 2025. Adjusted EBITDA was $58 million, a $9.5 million year-over-year decrease. Total capital expenditure in Q1 was $69.6 million, of which $62.7 million was core CapEx and $7.0 million was for expansion/ROI projects. Deferred revenue as of quarter end was $203.8 million, an increase of 4.1% year-over-year.

• Management reaffirms its expectation of full year 2026 growth in revenue and adjusted EBITDA year-over-year, maintaining prior guidance despite the Q1 miss, driven by forward indicators.
• Full year 2026 capital expenditure is projected to be $175 million to $200 million for core CapEx, plus $50 million for growth and ROI projects, in line with prior projections.
• Sponsorship revenue is guided to over $15 million for 2026, with the long-term target of at least $30 million annual sponsorship revenue maintained.
• The $50 million 2026 gross cost savings target is maintained, with savings expected to offset inflationary and other cost headwinds.
• No downward revision to growth targets was made following Q1 results, as management notes the vast majority of annual attendance and revenue occurs in the final three quarters, where new attractions and marketing initiatives will roll out.

• Unpredictable adverse weather across key park locations can materially reduce attendance and revenue, as seen in Q1 2026.
• Ongoing geopolitical and macroeconomic uncertainties, including elevated gas prices that could impact discretionary consumer travel and spending, are potential headwinds.
• Continued softness in international inbound tourism to the U.S. creates ongoing attendance pressure, with the full year impact dependent on how quickly this segment recovers.
• Transitioning to a revamped marketing model has resulted in near-term execution hiccups across corporate and park-level operations.
• Inflation and wage pressures create ongoing cost headwinds that must be offset by targeted cost savings initiatives.

Q: Can you confirm you still expect full-year EBITDA growth after the Q1 miss, and what factors drive this confidence? What trends have you seen in April and early May for Q2? / A: The vast majority of annual attendance and revenue still lies ahead in the final three quarters, where the full lineup of new rides, attractions, and events will launch. The firm now has favorable comparisons for weather and international visitation, which was a drag in the second half of 2025. Strong leading indicators include 10% Q1 paid pass sales growth (12% through April), a 4% year-over-year increase in deferred revenue (after being down 4% at end 2025), and accelerating in-park per capita growth with improving admission per capita trends. For Q2, an Easter calendar shift created an expected April headwind, with weather mixed across markets and too early in May to draw clear trends.

Q: Deferred revenue just inflected positive year-over-year for the first time in 18 months. What is driving this, and can we expect positive full-year attendance growth alongside EBITDA growth? / A: The positive deferred revenue inflection comes from a combination of higher advance pass sales, advance bookings for in-park experiences and tickets, all of which are up year-over-year with no single factor dominating. Management confirmed that growing full-year attendance remains the company's plan and expectation, supported by the new attraction lineup, alongside contributions from growing per capita spending and incremental sponsorship revenue.

Q: You maintained the $50 million gross cost savings target despite wage and advertising headwinds. What is the gross-to-net translation for these savings, and how comfortable are you with current leverage levels amid aggressive share repurchases? / A: Cost savings are primarily expected to offset existing inflationary and wage headwinds, helping keep overall expense growth very modest. Adjusted for one-time and non-cash items, Q1 expense growth was under 1%, and the company has already seen benefits from labor-saving technology and focused cost management. Management is comfortable with current leverage levels, noting Q1 is the seasonal trough for cash generation, and cash balances will rise as the peak summer season progresses, allowing continued repurchases while maintaining healthy leverage.

Q: With easier weather comparisons to last year's poor Q2 weather, will you recoup lost operating days in 2026? And when do you expect admission per capita to turn positive year-over-year? / A: Operating days will be relatively flat year-over-year, with only a small number of additional water park days possible compared to last year's widespread cold weather closures. Management has long maintained there is pricing headroom across most markets, and the sequential improvement in admission per capita (now only slightly negative after larger declines in prior quarters) is expected to continue. The firm prioritizes total revenue growth over pure per capita pricing, but the trend of improving admission per capita is expected to continue.