Analyst Says SeaWorld's Dividend Cut 'Not A Complete Surprise' As Shares Plunge
Shares of SeaWorld Entertainment (SEAS) dropped in morning trading after the theme park operator cut its next quarterly dividend and suspended subsequent dividends after the October payment.
DIVIDEND NEWS: SeaWorld on Monday cut its quarterly dividend to 10c from 21c per share and said it would suspend future payments. The October dividend is payable on October 7 to shareholders of record at the close of business on September 29. SeaWorld said it would redeploy the capital by "opportunistically repurchasing the company's shares" during the rest of 2016. As of September 19, SeaWorld said it had about $190M available for future share repurchases under its $250M program authorized by its board in 2014. Commenting on the dividend suspension, president and Chief Executive Officer Joel Manby said that "After careful and thorough deliberation, 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."
WHAT'S NOTABLE: In August, SeaWorld said its quarterly revenue fell 5% from the year-ago period and that its attendance in the quarter was down by about 7.6%, primarily due to a decline at the company's Florida park locations, along with the negative impact of an earlier Easter and a later Memorial Day in 2016 on the company's seasonal parks. SeaWorld announced earlier this year that stops the breeding of killer whales within its facilities and will introduce "natural" encounters with orcas in place of its previous theatrical shows. SeaWorld had come under fire for its treatment of killer whales and their trainers in the documentary "Blackfish."
DIVIDEND CUT 'NOT A COMPLETE SURPRISE': Janney Mongtomery analyst Tyler Batory said in a note to clients this morning that SeaWorld's dividend cut "is not a complete surprise," but believes that part of the money could be better spent building new attractions and reinvesting in the business. Batory, who said he is "disappointing" management chose not to commit some of the capital back into the business, believes the company's turnaround will take longer than expected.
PRICE ACTION: SeaWorld fell 3.6% to $12.23 in morning trading. Shares have plunged almost 38% year-to-date.
OTHERS TO WATCH: SeaWorld peer Six Flags (SIX) is up 0.5% this morning, though shares have lost almost 5% this year.
Disclosure: None.