United Parks & Resorts Inc. (PRKS) Q1 2020 Earnings Report, Transcript and Summary

Good morning and welcome to the Q1 2020 Earnings Conference Call. All participants will be in 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. Please go ahead.

Thank you and good morning everyone. Welcome to SeaWorld's First Quarter Earnings Conference Call. Today's call is being webcast and recorded. A 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; and Elizabeth Gulacsy, Chief Accounting Officer and Interim Chief Financial Officer and Treasurer. This morning we will review our first quarter financial results and then we will open up the call to your questions. Before we begin, I would 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 risk factors 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 Interim Chief Executive Officer, Marc Swanson. Marc?

Thank you, Matthew. Good morning everyone and thank you for joining us. We are living through a truly extraordinary time and we hope that you and your loved ones are safe. We also want to recognize the heroic efforts of healthcare workers and first responders worldwide, who care for those affected and protect those who are vulnerable to this virus. While the world is experiencing an unprecedented global health crisis that has impacted nearly everyone on the planet, we are confident in the resiliency of our business our ability to weather this crisis and that we will emerge an even stronger company. In response to COVID-19 we took the extraordinary step to close all of our parks on March 16th, 2020. Prior to the closure of our parks, we had a strong start to 2020 with record-setting results through February for attendance revenue and adjusted EBITDA. This performance was a continuation of the strong financial results, we have delivered over the last two years which we believe demonstrates the successful execution of our strategic initiatives related to marketing and communications pricing cost and capital efficiencies and new rides, attractions, and events. We have taken a number of proactive measures to strengthen our financial position and enhance our liquidity and flexibility while our parks remain closed. These actions include significantly reducing our monthly cash expenditures including labor operating expenses and capital spending; significantly increasing our liquidity by upsizing our revolving credit commitments and issuing new senior secured notes; and significantly enhancing our financial flexibility by amending our credit agreement to among other things revise our financial maintenance covenant so that the covenant will not apply in 2020 and will be modified in 2021. For our loyal pass members and other ticket holders, we have extended expiration dates provided upgrades and/or added additional benefits while we have substantially reduced our capital expenditure spending in 2020 since closing our parks. Prior to the temporary park closures, we had made significant progress on the construction of our 2020 lineup of new rides and attractions. We completed almost 90% of the construction on these new rides for 2020. In fact, two of our new rides located in Texas opened just prior to the park closures. Depending on when we are allowed to reopen, we will make the decision as to whether or not the unfinished projects are completed for the 2020 season or pushed into 2021. With respect to reopening, while we don't have any park opening dates to announce today, we are in regular contact with local, state, and federal authorities and we sincerely look forward to opening our parks and welcoming back our guests as soon as it is safe and permitted to do so. To that end, we have a dedicated team working with our Park Presidents, focused on finalizing plans to reopen our parks including enhanced health and safety protocols that will meet and/or exceed government guidelines and provide the safe and clean environment our guests and ambassadors expect. We will be providing more information on our enhanced health and safety protocols in the coming days, so our guests can clearly see the extraordinary efforts we are making and the seriousness of our commitment to the safety and well-being of everyone who visits or works in our parks. As noted in this morning's release, and as I alluded to earlier, we recently closed on a private offering of $227.5 million of senior secured notes. With the close of this transaction, we now have just over $400 million of cash and cash equivalents on our balance sheet as of April 30, 2020. Factoring in the proactive measures we have already taken to reduce our cash expenditures, we estimate our average monthly net cash outflows will be between $20 million and $25 million per month, while our parks remain closed. Based on our current available liquidity, we can sustain our current level of monthly cash burn into the fourth quarter of 2021. As such, we are confident the actions we have taken to date will allow the company to weather an extended crisis situation. With that, let me comment on our first quarter results for attendance and revenue. Keep in mind we were forced to close all of our parks on March 16, 2020 which severely impacted our first quarter results. Also keep in mind that, during the month of March, we would normally have had nine of our 12 parks open and that our parks were closed and are not able to open right before the peak spring break season for most of our markets which is a high-visitation and high-revenue period for our business. Prior to the closure as I previously mentioned, we saw record-setting attendance revenue and adjusted EBITDA through the month of February. Attendance in the first quarter declined 30.6%, primarily due to the temporary park closures, resulting from the COVID-19 pandemic. Prior to the COVID-19 pandemic, attendance through February increased 9% to 1.9 million guests. Total revenue in the first quarter declined 30.4%. However, total revenue through February increased 12% to $121 million. We are pleased with our progress through the first two months of 2020 and that our strategies were continuing to drive improved performance. When we are able to reopen, we continue to have confidence we will be able to drive significantly improved operating and financial performance. Until then, we are intensely focused on preparing to safely reopen our parks and welcome back our guests and ambassadors. With that, I'd like to turn the call over to Elizabeth to discuss our financial results in more detail. Elizabeth?

Thanks, Marc and good morning everyone. As Marc mentioned, we had a strong early start to the year with record-setting attendance and revenue through the first two months of the quarter. This strong start to our year was materially impacted by the temporary park closures resulting from the COVID-19 pandemic. These park closures began on March 16 and resulted in the closure of all of our parks. As a result, attendance for the first quarter decreased by approximately one million guests or 30.6%. As Marc mentioned, these closures came right before the peak spring break season for most of our markets which adversely impacted the visitation mix for the quarter as spring break visitors tend to be higher revenue per capita guests. We generated revenue of $153.6 million, a decrease of $67 million or 30.4% compared to the first quarter of 2019. The decrease in revenue results from the decline in attendance and was partially offset by an increase in total revenue per capita. First quarter total revenue per capita was $56.25 compared to $66.04 in the first quarter of 2019, an increase of 0.3%, driven primarily by an increase in admissions per capita. Admissions per capita increased by 1.2% to $39.05 for the first quarter of 2020, primarily due to our pricing initiatives and partially offset by visitation mix during the quarter due to the loss of higher revenue per capita spring break attendance. In-park per capita spending, decreased by 0.9% to $27.20 in the first quarter of 2020. Excluding the impact of revenue related to our Zhonghong international agreements which we terminated in early 2019 and was recorded in-park and other revenue, in-park per capita spending improved by 0.9% due to pricing initiatives, partially offset by the unfavorable visitation mix from the lack of spring break attendance. We generated a net loss of $56.5 million compared to a net loss of $37 million in the first quarter of 2019. Adjusted EBITDA for the first quarter was a loss of $30.9 million, a decline of $47.3 million compared to the prior year quarter. Adjusted EBITDA was largely impacted by the decline in total revenue due to the park closures, partially offset by a decrease in expenses. The decrease in expenses reflects some of the early proactive measures that Marc discussed, including a reduction in direct labor and other direct operating costs due to the park closures and a decrease in marketing and media costs. Expenses were also impacted by the realization of our previously discussed cost savings initiatives. We continue to manage our expenses while the parks are closed and are actively evaluating additional cost reduction opportunities. Turning to our season passes. Our season pass base was up 2% at the end of February, compared to the prior year. At the end of the first quarter, however, our season pass base was down approximately 9% related to our park closures and a loss of key spring break selling weeks across our parks. We are highly confident in our pass program and look forward to resuming marketing and selling of our pass offerings, which we believe provide the best value in the industry. As Marc mentioned, we are actively engaging with our season pass holders to provide them with increased flexibility including extended expiration dates, free upgrades to higher tiers and/or other additional benefits. Now turning to our balance sheet. Our total deferred revenue balance related to all of our products as of the end of the quarter was $123.9 million, down approximately 18% from March of 2019. Total deferred revenue related to our pass products was down approximately 7%. As described previously this decline results from the closure of our parks and the loss of key selling weeks during the spring break period. We spent $49.2 million on CapEx in the first quarter of 2020, of which approximately $44.5 million was on core CapEx and approximately $4.7 million was on expansion ROI projects. As Marc mentioned, we had a couple of rides, which opened before the park closures in Texas and a few of our lives in other parks were within weeks of opening before we were forced to close our parks. Almost 90% of the construction for 2020 attraction was completed prior to the park closures. Looking ahead, our capital expenditure outlay for the remainder of the year will depend on when we are permitted to reopen the parks. During the three months ended March 31 2020 and prior to the park closures, the company completed a share repurchase of 469,785 shares for an aggregate total of approximately $12.4 million, leaving approximately $237.6 million available under the share repurchase program as of March 31, 2020. As noted in this morning's earnings release, our net leverage ratio was 3.89 times adjusted EBITDA for the 12 months ended March 31, 2020. As Marc mentioned, over the last few weeks a significant part of our focus has been on strengthening our financial position and flexibility and enhancing our liquidity while the parks remain closed. To that end, in March, we entered into an amendment to increase our revolving credit commitments from $210 million to $332.5 million. We subsequently borrowed the remaining available amount of approximately $187.5 million, which is included in cash and cash equivalents on the balance sheet as of March 31st. In April, we then entered into another amendment to among other things amend certain provisions related to our financial covenants. As a result of this amendment, we will now be exempt from complying with our leverage ratio covenant starting in the second quarter through the fourth quarter of 2020. Beginning in the first quarter of 2021, for covenant purposes only, our 12-month trailing adjusted EBITDA used in the calculation of our leverage ratio will ignore the second, third and fourth quarters of 2020 and we'll use the adjusted EBITDA for the corresponding quarters in 2019 instead. Additionally, we will be required to comply with a quarterly minimum liquidity test of not less than $75 million through the third quarter of 2021. These amendments along with the senior notes transaction that Marc discussed strengthens our cash position and increases our financial flexibility and liquidity. As Marc mentioned, we have taken a number of proactive measures to appropriately manage costs and expenditures and to increase liquidity during these temporary park closures. We started the year strong with momentum from 2019 and are confident in our strategy. We are focused on navigating through these uncertain times and positioning ourselves to emerge in an even stronger position from the crisis ready to welcome back our guests. Once we can resume normal operations, we will continue our focus on driving additional attendance and total revenue while eliminating unnecessary costs and continuing to identify more efficient ways to operate. Now, let me turn the call back over to Marc who will share some final thoughts. Marc?

Thank you, Elizabeth. Before we open the call to your questions, I have some closing comments. While our parks are closed, our rescue teams continue to operate helping wildlife in need. In the first quarter we participated in over 350 rescues and are close to exceeding 37,000 animal rescues over the company's history. We are one of the world's leading animal rescue organizations and we are proud of our efforts to protect and save wildlife. I also want to remind people that we own and operate some of the leading outdoor family entertainment venues in the country. The vast majority of our parks are in warm weather locations. And we estimate approximately 85% of our visitation comes from within driving distance of our parks. Even in Orlando where SeaWorld has been voted Orlando's best theme park and Aquatica has been voted Orlando's best water park, the majority of our visitation comes from within driving distance, which may be different for some of the other operators in the Orlando market. Our parks also typically have significant excess capacity. And have landscaped and well-manicured open, outdoor space, with room for people to safely, socially, distance, while still enjoying the varied sites and experiences our parks offer. In short, we believe our parks and our business are uniquely positioned to take advantage of pent-up demand, for out-of-home outdoor entertainment. When we are able to reopen our parks, we will continue to focus, on improving our execution, adjusting and enhancing our marketing and communication initiatives, as well as our pricing strategies and introducing new compelling rides, attractions, events and offerings, in every park, every year. We will also continue to relentlessly, identify and execute on, cost and capital efficiency initiatives that we expect will contribute to meaningfully improved margins and profitability. On a personal note, I just want to say that I feel privileged to be leading SeaWorld, at this very important time, and to be working closely with such a tremendous management team. And group of ambassadors, as well as a supportive and engaged Board of Directors. Together, we are all working overtime. And we're fully committed to successfully navigating through this current environment, reopening our parks and continuing to deliver exceptional experiences to our guests and meaningfully improved value to all our stakeholders. With that, let's open up the line, to take your questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Steven Wieczynski with Stifel. Steve, please proceed.

Yeah. Hey guys. Good morning. So Marc is there any way to help us think about, what attendance would have to look like as the parks reopen in order for you guys to breakeven? And I guess what I'm getting at here is, obviously you guys have cut a lot of expenses and all those expenses won't come back online right away or maybe forever. So, just trying to think about what levels of either -- whether it's attendance or revenues you guys would need to be at, in order to create the same amount of EBITDA you did before, all this virus noise happened.

Yeah. Hey Steve, it's Marc. I can take that question. So, a couple of things, I'll hit on. Number one we -- as you know, we operate a number of our parks, on a year-round basis. And look as I said in our prepared remarks, we rarely operate at kind of full capacity. We often have a lot of excess capacity. So, we're used to operating in an environment, where we do much less than a peak day. And obviously, we would not operate in those environments, if it didn't make sense for us to do that. So, to give you a little bit more of a particular example, if you look, like in Orlando where -- SeaWorld Orlando where a peak day might be upper 20,000 to 30,000 in attendance a day in January or February might be 5,000. And so that gives you some order of magnitude there of how low the attendance, can go and we still feel good about operating. And what I would also point out to you is, you kind of alluded to it we've done a lot of work the last couple of years on cost. And we had a lot of efforts going into 2020. And you've seen the success of those efforts over the last couple of years. We've also -- if there's -- the only kind of good thing with this whole situation and this has been a really tough situation for everyone. But the only thing that has been somewhat insightful is we've stripped our cost down to the most essential level. And so there's rarely, if ever that you could do that. And so we have I would say as good a visibility into our truly essential cost as ever. And we're going to be very careful and methodical in what we add back overtime. So as I mentioned I think we're going to emerge stronger and more efficient for having done that work. So we're confident, we can operate in much less reduced capacity. We're used to doing that and we're confident that, we can still drive above breakeven performance there. And I kind of gave you the example specifically about Orlando.

Okay. Got you thank you, Marc, and then, how do you think about reopening the -- specifically the Orlando parks? And I'm not sure you're going to want to answer this, on a public call. But what I'm getting at is once you get that green light from the authorities to open do you guys try and be the first ones to open? Do you wait until your competitors open their doors as well? Just trying to think about how you guys are thinking about the Orlando parks specifically.

Yeah. So, one thing we've been doing obviously as we've been in touch, obviously with the local and state authorities and federal authorities. And so in Florida and specifically there's a local task force. And then, the governor has rolled out his plan. So we're going to obviously stay close to that and see what exactly that means for us. Obviously, our number one priority is opening in a safe manner. And so we want to do – we want to open when it's safe. We don't have any specific dates for Florida. If you kind of follow – because I'm sure we'll kind of get this question but if you kind of follow the news, if you will and you kind of think across our parks I think where we're hopeful is in Texas. We'll see – we got to get through the phases there obviously, but I think we have some hope that that might be one of the first locations that would open. Again, don't have a time line and certainly things could change. And then I would say after Texas, I think we're next most hopeful is in Florida, but again no specific time line. We're obviously going to follow all the regulations and we're going to make sure we're in line. I would say, the other nice thing the industry tends to come together pretty well in difficult situations. And so I think I don't want to comment on when anybody else is going to open or when we're going to open, because none of us probably know. But I think we're going to open when it makes sense for us. And when we're given – assuming that's within the greenlight period obviously. So we're staying close and hopefully that's helpful.

Yeah. Thanks, Marc. Really appreciate it. Best of luck.

Thank you.

Our next question comes from Brett Andress of KeyBanc. Brett, please proceed.

Hey, good morning. So Marc you mentioned pent-up demand in your prepared remarks. But when the parks do initially reopen, how are you thinking about the consumer propensity to return to your theme parks? I mean, there's been some survey work out there but just curious what you've been hearing from your customers.

Sure. Hey, Brett, thanks for joining us. Look, we've looked at data. We've done some of our own surveys. We'll continue to do that and we'll continue to look at data. What I would remind you is we get a lot of attendance as I said from our local markets people that can activate and most easily access our parks. And I think that's going to be to our advantage and that would include even in the Orlando market. So we're staying close to those pass holders. We're staying close to the local communities. Our surveys suggest that, there's a pretty strong pent-up demand for people who say, they're likely or very likely to come visit a park when it opens. So we're going to stay close to that. We have surveys out right now and we'll continue to look at those and other data.

Got it. And then so with the operating changes that are – it looks like they're going to happen in this new normal. I mean, it feels to me like operating costs just on a per capita basis inherently go up with all the sanitization and monitoring and reduced throughput. But I guess, am I thinking about that correctly? And then what are some of the offsets to that maybe new normal cost structure? A – Marc Swanson: Yeah. So, Brett of course, as you noted we'll expect to have more costs and that's – look we want to obviously have a very safe environment and that's our biggest priority and you'll see us issue some more – more about that down the road here. But obviously, we're going to have enhanced sanitation. We're going to have masks for our employees. We're going to have temperature checks for employees. We're going to have a lot of cleanliness. We're going to have social distancing all the things that people expect and we want to make sure we provide a safe environment. So there's certainly additional cost to doing all that. And again, it's the right thing to do and we're happy to do that. What I would go back to is a little bit of what I was – I mentioned in Steve's question is we've done a lot of work during this closure period to really look at our organization to look at our cost structure. Cost that maybe we used to think were essential, we might look at a little bit differently now. And the way, we structure our parks our corporate functions things like that, we're really again have probably more visibility than ever into those things because we strip them down to the most essential level. So I'm optimistic that we'll find other efficiencies as we reopen. That will help to offset some of these cost of kind of additional safety and whatnot.

Thank you.

Our next question comes from Alexia Quadrani of JPMorgan. Alexia, please proceed.

Hi. This is Anna on for Alexia. Just in terms of the reopening eventually of the parks do you expect maybe a more phased reopening of certain areas before any others in addition to different parts and different states opening at other times? And then also are there any events such as theatrical performances or shows that you expect you won't be able to hold just because of social distancing guidelines?

Yeah. Anna, it's Marc. I can take that question. And I think by phased openings like what I would tell you there is I think certainly our parks across the country will most likely perhaps open at different times. We're not targeting to have one specific date for all our parks. Within the actual individual parks yes there could be some different ways we operate the park how we think about it. But the idea is we're still going to provide a very good guest experience. And if you take some of our shows, for example, we can still have those shows and there's ways that we can space people every other row-type of seating. So I think we can still provide a really good product and provide the appropriate safety protocols and social distancing with -- still with a really good product.

All right. Thank you so much.

Our next question comes from Michael Swartz with SunTrust Robinson Humphrey. Michael, please proceed.

Hey. Good morning, everyone. And just sticking on the theme of what the new normal looks like once you reopen. Can you talk about maybe some of the technology platforms or upgrades you maybe making or need to make in the future to limit attendance and better manage park loads going forward?

Yeah. Thanks Mike. It's a good question. So, we'll -- we are certainly working on exactly what you described. So everything from a reservation system to things, like mobile ordering. And look these things have varying levels of time to complete. But obviously some will be sooner than others. But when they're complete, we'll roll them out. And so yeah, we're definitely looking at that. Our IT group has been engaged in looking at exactly some of those things I mentioned.

Okay. Great. And just with regards to the new Sesame park that was expected to open the spring of 2021, just wondering the time frame of that. Has it been pushed back? As I remember in the agreement or a renewal with Sesame I think, you were contractually obligated to open something in 2021. Is that still the case?

Hey. This is Elizabeth. I can take that. So, as we've discussed, we did temporarily pause construction across all of our projects. So that did impact the construction timing out in Sesame Place for San Diego. Having said that though, it's temporarily paused. We're close to it to see when we can resume that again. And we're currently evaluating our plan on whether or not that's going to impact the opening date. But at this time, we don't really have anything else we can report on that.

Yeah. And Mike the only thing I would add is, we remain obviously very big fans of the Sesame Street product. It's a great product. And we work closely with the folks at Sesame Workshop. We're big fans of the product. So we'll -- as Elizabeth mentioned, we're still very high on the product.

Thank you.

Our next question comes from Jason Bazinet with Citi. Jason, please proceed.

Well, thanks. I just had one quick question, and I apologize if you did this at the beginning of the call. I had to dial in a little late. But the $20 million to $25 million of operating expense that you're going to incur when the parks are closed is that just OpEx or does that include CapEx and interest cost?

Yeah. Hey, Jason I can take that. This is Marc. So that includes all our cash cost for a month. And so that would include debt service labor the care and taking care of our animals feeding them working with them obviously and then the associated cost of being a public company and other things like utilities and taxes and insurance. So, it's all the costs that we would expect to incur, and there would be -- we've paused, as Elizabeth mentioned, we've paused all the CapEx. The CapEx we would spend would be anything essential. So if there was something that needed repaired or broken related to like an animal habitat or something we would obviously do that. But that's how we think about those -- that $20 million to $25 million.

Okay. That's super helpful. And then can I just ask one follow-up? This 85% number that you cited is super interesting. Because I remember back at the IPO, and I think maybe I was using 2012 numbers. But if I remember correctly, it was something like 55-ish percent in state residents, 15% international tourists, and something like 30%-ish of out of state. Has the mix shifted that much in the context of all your marketing initiatives and season pass to target local residents, or do you think the definition of drivable to the park is sort of different than maybe those metrics you shared many years ago?

Yeah. I -- again, not having specifically right in front of me, what -- from the IPO days, but what we tried to lay out here is what we feel within a driving distance of our park. So this is primarily people, if you wanted to use Orlando for an example, the vast majority would be people that are local or same day. So, if you drove over from Tampa, for example, or we're here in Orlando. And then you'd have some people maybe that come from Jacksonville, even up into Georgia, South Carolina, those are very drivable distances. And as you know, we have people that drive here from the Midwest, other places on the East Coast that are a little bit further out, but still drive. It's not that uncommon. So we're -- and then, kind of to your maybe to one of your points, we've had a lot of focus, as you know, on our pass program, and so that's an important component of our performance over the last couple of years obviously. So we'll continue to focus on that.

Thank you very much.

Sure.

[Operator Instructions] Our next question comes from Eric Wold of B. Riley. Eric, please proceed.

Thank you. Good morning. So two questions, one, I guess, when you talk about extending the season pass periods and the benefits for your pass holders, how should we think about the additional months kind of being offered beyond those that would be lost during the shutdown period, so beyond kind of the make good months? And what will be kind of the potential impact into next year in terms of admissions or per capita spending from some of the additional benefits you're offering from these changes kind of on an apples-to-apples basis, any way to think about that?

Hey, this is Elizabeth. I can take that. So, yes, we did extend some of the expiration dates on some of our products. And then we also added on -- what we're doing for our pass members is for the number of months that our parks are closed, we're going to be adding on those months to their passes. So when we look at this, our single-day tickets and some of our reservation-based tickets, we are looking at what the impact would be for this year versus next year. And the impact really, we still think we're going to be able to capture most of that attendance for this year, given the fact that our parks are year round. So keep in mind that a good number of our parks are year-round park. So we feel we'll be able to get most of that attendance still this year. We're offering incentives to our pass members to have them come in this year, by upgrading their tiers through the end of 2020. So we're hoping that helps drive some attendance into this year as well. In our deferred revenue number that I provided, there is a portion that we relate to long term, but that's about $3.6 million. So that puts it in perspective for you. It's not a big number that we're pushing out into the following year.

Yes. And, Eric, I would just add, we have a lot of confidence in our pass program. We think it provides a tremendous value. It's a great product. And so, we're optimistic about the program. And as Elizabeth mentioned, we've provided some additional incentives for those who currently have a pass and we're excited to welcome them back when we can.

Perfect. And then, any early thoughts on how you'll handle pricing upon reopening, both for kind of single day versus kind of what you were previously thinking into this year and then price increases for pass holders kind of heading into next year?

Yes. What I would tell you -- this is Marc. What I would tell you is, we've spent a lot of time over the last couple of years. You've heard us talk about pricing strategies and the work we've done there. So we always focus towards driving total revenue, obviously. But we've -- I think we've had good success in the various pricing initiatives and strategies we've had. I think that work is only going to continue to pay off. So we'll roll out the appropriate pricing initiatives and strategies that we think are going to work in this environment. And like I said the good news is, I think, we have learnings from the last couple of years that are going to help us do that process. And so we'll -- more to come on that, obviously, as we understand when reopenings would occur, that type of thing.

Perfect. Thank you, guys, and good luck.

Thank you.

And our next question comes from Paul Golding of Macquarie. Paul, please go ahead.

Hi. Thanks for taking my question. I was wondering if I could just follow-on to the question around the tech platforms to enable the social distancing. To what extent can you talk about whether these are prerequisites to opening? And what the time frame is on that? And as a follow-on to that, if there's anything you can say around the lead time required to reopen some of these parks in relation to what we hear about state reopenings? Is it, you're having conversations in the background and so it could be concurrent, even though there's lead time, or do you need an extra amount of time after the orders are lifted? Thanks.

Yes. Hey, Paul this is Marc. So, look, on your first question about technology, I mean, we're -- as I mentioned, we're working on those things. And look I don't think they're 100% prerequisite for reopening. I mean, there's ways -- I mean, if you've been out, we're here -- we're talking to you today from Orlando, where we've begun to open restaurants and things like that. And my observations are, there's a lot of signage, there's a lot of markers and we'll do the same thing. So we can still social distance people with signage and markers and ambassadors directing people. So the technology will help, but certainly not a requirement, as we look at it. And then, as far as the lead time, I think, most of the -- as we look at some of the phases that some of the states have rolled out, in our view, a lot of them appear to have several weeks in between the different phases. And so, we'll -- we think, if we get the green light, we think it's a couple of weeks, three four weeks -- two to three weeks, somewhere in there to get the park reopened. So I think we'll -- I think that lines up pretty closely with kind of the notice we expect to get. And so, we'll -- I think we feel pretty good about our ability to get open.

Great. Thanks so much.

Our last question comes from Tim Conder of Wells Fargo Securities. Tim, please proceed.

Thank you. Marc and Elizabeth, first of all, two clarifications, one for each of you. Elizabeth you mentioned on the deferred revenue, it was down 7% I believe and that was related to season pass products. So when we see the Q, the deferred revenue will be a different number, because there's some other things in there. I just wanted to make sure that what's your statement was just related to the pass products.

Yes. So let me clarify that for you Tim, and good morning. On deferred revenue as you know pass products makes up the majority of it, but -- certainly makes up the majority of it. However, we do have advanced purchased single-day tickets multi-day tickets or reservation based Discovery Cove for instance, would be in that number as well. And that's consistent with what we've typically seen or how we typically record that. So that's no different this quarter than it is in the other quarter. So in total I think what I said in my prepared remarks is our deferred revenue went down. When you look at total deferred revenue for these products, it went down by 18%. But when you're looking at season pass only that went down by 7%. And what I'd say, there Tim obviously is as you know we sell these season passes. These are annual products. Most of them are annual products for us. We sell them throughout the year, because we do have year-round parks. And our big high-volume selling periods happen to be spring and again in the summer. So having lost March and then again April, those are impactful for us which -- so it didn't come as a surprise for us to have our deferred revenue down for season passes and we're optimistic and we have a lot of confidence in our products. We know when we are able to start marketing open the parks, again, we think we can get that back again.

Okay. And then for Marc, again, clarification questions and my real questions. Marc, in the Orlando example is helpful. And again, all the color you all have given has been helpful, but for the organization as a whole comments from a couple of your -- from the regional competitors, there's the theoretical max, and then there's sort of the normal. What was your normal say capacity as of percent of theoretical max? And then what would you anticipate that being upon reopen? And then, I guess, your -- and then just any additional color as to that breakeven would be substantially below that as you gave the example of Orlando.

Yes. So what I can tell you is I gave you -- I kind of gave you the example of kind of more of a peak day in Orlando versus more of a traditional weekday or shoulder season type of day in Orlando. Look, we're -- you would obviously pull the peak down somewhat. And you'd probably take the trough up a little bit. So I don't know if that kind of gets you there. I don't know that we're going to guide to a specific number. I mean, I think the key point is we can do substantially less than even a more normalized attendance day and still breakeven. So I just gave the peak as an example of kind of the order of magnitude, but even you could do much less than kind of a more average summer day if you will and still breakeven.

Okay. Okay. Now my two real questions. One I think historically you run about 11% of your guests international. What's your survey work telling you about? I think predominantly it's been U.K., Brazil, Canada at this point again a lot of moving parts and other competitors in Orlando, especially dependent on international guests maybe even more so. But what's your survey work telling you about the propensity of those guests to return? And then the second question is back to the reopening time line. In the furloughs, it seems like there have been wide ranges, I guess, of degrees of whether health care has been provided or not to folks that have been furloughed across the industry. How do you feel you're positioned to attract the person who would represent the brand and the experience that you want relative to other options for the folks that have been furloughed?

Yes. So let me give you a couple of comments on that. So you're right. We -- across the whole company we do -- about 11% of our attendance comes internationally. So I don't have any specific breakdown of the survey specifically to international guests. I think we'll -- but that is primarily an Orlando market phenomenon. We do get some international guests in Tampa and San Diego, but much less than what we get in Orlando. Having said that, as I mentioned to Jason, Orlando still gets a good portion of its attendance -- more than half of its attendance is coming from local same-day and driving overnight people. So, people that can readily access its parks. And then as far as the type of employee or attracting employees, no, I think -- look one thing I like about our company is we have a lot of people who are pretty passionate about working here. And there's a lot of good things this company does with conservation and animal rescues and things like that that attract pretty passionate people. So I'm confident, we can get employees. When we did furlough the employees we obviously, made it known that we would -- when the time was right and when we'd be open we'd start to call some of them back. So we're confident in our ability to still attract employees and look forward to doing that when we can reopen.

Okay. Again, thank you all for your color and stay safe.

Thank you.

Thanks, Tim.

Our last question comes from Bryan Goldberg of Bank of America ML. Bryan, please go ahead.

Thank you very much. I dialed in a little late. I apologize if you addressed this. But I guess for Marc, I mean, given your tenure at the company just hoping to get your perspective both on the company and the industry. The last downturn in 2008-2009, sort of, how prevalent was your -- was promotional activity and your strategy to bring guests back into the park once the economy started to recover? And then, I guess, what's -- what are some of the options or possibilities from a promotional standpoint to bring guests back in this go around? Obviously safety comes first. Certainly appreciate the pent-up demand commentary, but I'm just curious how you're thinking about promotional activity into this new phase.

Yes. I can take that Bryan. So I mentioned in the prepared remarks the resiliency of the business. And what I would tell you is, I think, you mentioned the recession years of kind of 2008-2009 in that range. We look back on those years as we did better than the industry. It was tough for everybody, but I think we did better than the industry did as a whole. So we're confident in the resiliency of the business. I think in general the industry is pretty resilient. We also know our parks provide a unique value proposition that I think is important and is going to aid in that. You mentioned kind of how we think about offers and ways to bring people back. Look there's a lot of work we've done as I mentioned over the last two years on pricing strategies and initiatives. So I think we have a pretty good understanding of the type of things that will motivate people to visit. As you mentioned getting all the safety and cleanliness protocols correct that's the most important thing. But I think beyond that I feel confident with the work, we've done over the last couple of years. As you look back over the last two years our attendance over the last two years has gone up substantially. So we're -- I think we're confident in our ability to drive the attendance and we'll use that knowledge to tailor the right messages right offers to the reopening construct that will be hopefully coming into later in the year.

Thank you very much.

You’re welcome.

Thank you.

This concludes our question-and-answer session. I would now like to turn the conference back over to Marc Swanson, Interim Chief Executive Officer for any closing remarks.

Thank you, Ian. On behalf of Elizabeth and the rest of the management team at SeaWorld Entertainment, I want to thank you for joining us this morning. You know, as you heard today we're confident in the business and the strategy and sincerely look forward to coming out of this crisis and continuing to drive improved operating and financial results and long-term value for all stakeholders. So I just want to thank you again and we look forward to talking with all of you next quarter.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.