Shares of SeaWorld Entertainment (SEAS) surged in afternoon trading, climbing the most in over five years, after the company reported a significant increase in theme park attendance as well as an agreement in principle with the Securities and Exchange Commission on its investigation.

EARNINGS AND GUIDANCE: This morning, SeaWorld reported second quarter earnings per share of 26c, which slightly missed analysts' estimates of 27c, though revenue of $391.9M came in ahead of the $371.4M consensus. Attendance at the company's theme parks jumped 4.8% over last year in the quarter to 6.4M guests. John Reilly, interim CEO of SeaWorld Entertainment, commented that the results were driven by "our new strategic pricing strategies, new marketing and communications initiatives and the positive reception of our new rides, attractions and events. In addition, we continued to experience a double-digit increase in season pass sales revenue and an increase in total revenue per capita driven by a 6.5% increase in in-park per capita spending." On the company's earnings conference call, Reilly expanded further, citing a free beer promotion in Tampa and Orlando, rising sales of season passes and new rides for the attendance increase. Reilly also said SeaWorld has seen continued strong attendance through July. Looking ahead, SeaWorld established a goal of achieving $475M-$500M in adjusted EBITDA by the end of 2020.

SEC SETTLEMENT: Separately, SeaWorld said this morning that it has reached an agreement in principle with the SEC related to possible violations of federal securities law. SeaWorld said it has recorded an estimated liability of $4M related to the matter, which stems from a "Wells" notice the company received in April notifying it that the agency was recommending that a civil enforcement action or administrative proceeding be brought against the company.

BACKGROUND: SeaWorld has been under investigation by both the SEC and Department of Justice for executives' disclosures and public statements in August 2014 and earlier about the impact of the "Blackfish" documentary and trading in the company's securities. Last year, SeaWorld's board also formed a special committee comprised of independent directors with respect to the inquiries. Earlier this year, Joel Manby unexpectedly stepped down as CEO after less than three years. Under his leadership, the company announced in 2016 it would end killer-whale breeding.

ANALYST COMMENTARY: In a research note to investors, Stifel analyst Steven Wieczynski noted the company's "very strong" Q2 and said he continues to recommend the turnaround story on steadily improving underlying operations and incremental cost savings opportunities.

PRICE ACTION: In afternoon trading, shares of SeaWorld are up nearly 19% to $25.05.