Things might be looking up for SeaWorld today. Shares opened significantly higher on the heels of the company’s announcement to cut its dividend by more than half, eventually eliminating it altogether in order to raise cash for share repurchases. Of course all of this is in light of the theme park’s concern over the future without its killer whale shows.
As such, shareholders of SeaWorld Entertainment (SEAS) will soon get a cash dividend of 10 cents per share, coming October 7. This is down from 21 cents a share that the company had been paying. However, the board has decided to suspend its quarterly dividend from here on it.
SeaWorld Entertainment, of course, operates the SeaWorld marine parks and other, related, venues. In a statement, Monday, SeaWorld said, “The Board has determined that, consistent with the financial discipline pillar of the company’s strategy, the best way to support the long-term development of the business and deliver value to shareholders is to suspend future dividends at this time. Doing so will give us the greatest flexibility to deploy capital to the opportunities that offer the greatest long term returns to our shareholders.”
Furthermore, SeaWorld chief executive Joel Manby adds, “We believe our 5-point strategy to stabilize the business to drive sustainable growth is taking hold, and we are optimistic about SeaWorld’s long-term future.” He also notes that removing the dividend, after the next payout, at least for now, will provide more financial flexibility.
Manby goes on to explain “We want optionality,” noting that the most important element is to keep shareholders in this game until it is possible to more openly show stabilityalways been an important element to keep the shareholders in the game until we show our stabilization and then we have plenty of ideas and opportunities of how to use more capital. But, he also says, “I think it’s harder to do that in an environment where we haven’t proven that we’ve hit the absolute bottom.”
Attendance at SeaWorld has continued to fall, of course, as it has been for many years. In the second quarter of this year, for example, attendance fell by nearly 500,000. However, the park responds that the decline was not, in fact, due to adverse publicity. Instead, the company blames the decline on factors like a shift in holiday attendance, particularly with a fall in the number of Latin American visitors at the Florida parks.