SeaWorld Entertainment, Inc. (NYSE:SEAS) Q2 2022 Earnings Conference Call August 4, 2022 9:00 AM ET
Company Participants
Matthew Stroud – VP, IR
Marc Swanson – CEO
Michelle Adams – CFO & Treasurer
Conference Call Participants
Steven Wieczynski – Stifel, Nicolaus & Company
Philip Cusick – JPMorgan Chase & Co.
James Hardiman – Citigroup
Eric Wold – B. Riley Securities
Benjamin Chaiken – Crédit Suisse
Michael Swartz – SunTrust
Chris Woronka – Deutsche Bank
Paul Golding – Macquarie Research
Barton Crockett – Rosenblatt Securities
Operator
Good day, and welcome to the SeaWorld Entertainment, Inc. Q2 2022 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Matthew Stroud, Head of Investor Relations. Please go ahead.
Matthew Stroud
Thank you, Rene, and good morning, everyone. Welcome to SeaWorld’s Second 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, Chief Executive Officer; and Michelle Adams, Chief Financial Officer and Treasurer. This morning, we will review our second quarter financial results, and then we will open up the call to your questions. Also, we have posted a short slide presentation on our investor website along with our earnings press release that we will discuss during our prepared remarks today.
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 non-GAAP financial measures and other financial metrics, such as adjusted EBITDA and free cash flow. More information regarding our forward-looking statements and reconciliations of non-GAAP measures 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 our Chief Executive Officer, Marc Swanson. Marc?
Marc Swanson
Thank you, Matthew. Good morning, everyone, and thank you for joining us. We are pleased to report our fifth consecutive quarter of record financial results. While our second quarter and first half financial results were strong, these results still do not reflect a normalized operating environment and we still have significant scope to improve our execution and our financial results.
International and group-related visitation is better than 2021, but is not yet back to pre-COVID levels and our staffing improved over the course of the second quarter, but we are still not yet at optimized staffing levels. Inflationary pressures, while moderating, continue to impact costs across the enterprise.
Total revenue for the quarter was up more than 24% versus 2019 and up almost 15% versus a record 2021, and our pricing power and consumer spending remained strong with total revenue per capita, up significantly versus 2019 and up nicely versus a record 2021. While we were focused on getting all of our parks open and fully operating during the summer season, for the first time since 2019, we could have had more effective cost management during the quarter.
We can and will work to do a better job going forward, consistent with what we have been doing for the past several years. We have several new projects and initiatives in flight that we expect will help us work to offset the unusually high inflationary pressures and become an even more efficient and profitable operating business. Further, we expect certain cyclical supply chain-related and/or temporary cost pressures such as energy and utilities, shipping, food and certain wage and employee-related costs to moderate over the coming months and quarters.
We continue to benefit from a very strong financial position with leverage under 2.7x, long-term debt maturities, a generally low cost of debt slightly over 5%, and significant available liquidity and cash flow generation. Given this strong financial position, our clear belief in our go-forward prospects and what we believe is an extremely attractive value being offered by the markets, we continue to aggressively repurchase shares during the second quarter and into the third quarter, exhausting our prior share repurchase authorizations.
And today, we are announcing a new $250 million buyback authorization. We are pleased that preliminary July revenue continued to grow versus a record July 2021 and was up approximately 20% compared to July of 2019, and we look forward to closing out what we expect to be another solid summer.
Looking ahead to the fall, we are excited about our popular Halloween events we have scheduled at our SeaWorld, Busch Gardens and Sesame Place parks. We look forward to building on the strength of last year, including the return of Howl-O-Scream at SeaWorld Orlando and SeaWorld San Diego, following last year’s introduction, along with the first year of the counts, Halloween Spooktacular at our newest park, Sesame Place San Diego.
As we continue to demonstrate, our business model is strong and resilient, and we have significant opportunities to improve and grow our revenue and profitability. As a reminder, we operate in an industry and in markets with growing demand trends over the long term, and we have significant available guest capacity across our park portfolio. Our recent attendance levels are still below the total attendance levels we achieved in 2019 and well below our historical high attendance recorded in 2008.
We have made significant investments that we expect will continue to pay off, and we have specific plans we are executing on today and for the future that give us high confidence in our ability to deliver additional operational and financial improvements that we expect will lead to meaningful increases in shareholder value.
In response to various questions and inquiries we have received over the past few weeks and months, we posted a short presentation on our investor website along with our earnings press release that provides more detail around our cost reduction and efficiency initiatives. The visitation of our park portfolio and how our industry and business performed during historical recessions.
On Page 4 of the presentation, you can see a select list of cost efficiency and reduction initiatives, which aggregate to $20 million to $40 million of savings. We have broken these initiatives down between our labor, SG&A, OpEx and cost of goods sold line items. This is just a select list and does not necessarily reflect everything we are working on or we’ll work on over the coming months and quarters.
On Page 5 of the presentation, we show a description of the visitation of each of our markets across our 12 Park portfolio and the aggregate statistic for the whole portfolio. As you can see from the page, we estimate that approximately 85% of our attendees drive to our parks. Our visitation is more similar to a typical regional amusement park business. At times, people compare our business to destination theme park businesses like Disney or Universal, but we believe our visitation and business dynamics are more closely comparable to our regional theme park peers as opposed to our destination theme park peers.
On Page 6 of the presentation, we show an industry graph that shows the growth of the industry over the last 20 years and the resiliency of the industry during the last 2 U.S. recessions.
On Page 7, we show our specific performance during the last 2 U.S. recessions. As you can see, we believe our business demonstrated resiliency in both the 2001/2002 recession and the 2008/2010 recession. As we’ve discussed before, we offer a tremendous value to our customers. And given our attractive value proposition and the drive-to nature of our parks and how our business has performed in past recessionary periods, we expect it will perform relatively well in future recessionary environments.
We hope this helps everyone better understand our cost reduction and efficiency efforts, the drive to and regional theme park nature of our total park portfolio and the resiliency of our industry overall in our business, in particular.
Before moving to Michelle and her update on financial performance, let me comment on a few more items in greater detail. First, let me comment on our balance sheet, which continues to be strong. Our LTM June 2022, net total leverage ratio is below 2.7x and we have approximately $531 million of total available liquidity, including $160.8 million of cash, and we expect to generate significant additional cash as we are in the middle of our historically high cash flow generation part of the year.
This strong balance sheet gives us flexibility to continue to invest in and grow our business. make opportunistic investments and to thoughtfully return capital to our shareholders. Second, we continue to make progress on our mobile app which guests are increasingly utilized to improve their in-park experience. So far, there have been approximately 2.9 million downloads of the app.
And in June, almost 1 out of every 5 guests in our parks were using and engaging with the app. We are seeing an approximate 10% increase in average transaction value for food and beverage purchases made through the app compared to point-of-sale orders, and we are seeing double-digit percentage revenue penetration across other in-park products that guests are purchasing through the app.
Third, we continue to make progress with our plans to design and build hotels to complement our park offerings. We have engaged multiple consultants and industry resources to evaluate a number of site and facility concepts as we further develop our strategies. We look forward to sharing more specifics in future quarters.
Finally, we repurchased approximately 7.1 million shares of common stock at a total cost of approximately $390.1 million from April 2022 through July 2022, fully exhausting the March 2022 and May 2022 authorizations. For year-to-date July 2022, we have repurchased 8.6 million shares at a total cost of $500 million. Also, our Board today approved a share repurchase authorization for $250 million.
Overall, we are proud to report record net income on a trailing 12-month basis of $281.3 million and record adjusted EBITDA on a trailing 12-month basis of over $718 million, which was achieved with attendance of only 21.8 million guests, which is not only below our 2019 attendance, but well below our historical high of over 25 million guests we achieved in 2008.
These achievements reflect the extraordinary efforts of our teams to operate our parks despite the challenging environment we faced and continue to position this company for revenue growth and increased profitability. With that, I would like to introduce everyone to Chelle Adams, our new CFO. We’re very pleased to have Chelle join our team here at SeaWorld. She brings a lot of expertise in finance, accounting and process improvement as well as expertise and experience in the hospitality and entertainment industry. We are glad she is here, and we have enjoyed working with her.
Chelle will now discuss our financial results in more detail. Chelle?
Michelle Adams
Thank you, Marc, and good morning, everyone. Let me start by saying how excited I am to be part of the SeaWorld Entertainment team. I’ve been a fan of the brand and parks for many years. This is an incredible company with an irreplaceable set of assets, a high-quality and resilient business model and a talented group of investors. I am proud to be part of an organization and team that is committed to the highest standard of animal care and makes important contributions to conservation, animal rescue, research and education.
As Marc mentioned, our results of operations for the second quarter of 2022 and 2021 continue to be impacted by the global COVID-19 pandemic, as shown in part by the decline in both international and group-related attendance, both periods as compared to pre-COVID levels. The second quarter of 2021 was also impacted by capacity limitations, modified and/or limited operations and decreased demand due to public concerns associated with the pandemic.
My commentary today will be focused on our financial results compared to 2021. However, due to the impacts that pandemic had on our 2021 second quarter results, we provide a comparison of some of our key results versus both 2019 and 2021 in our earnings release chart and will also do so in our Form 10-Q.
During the second quarter, we generated record total revenue of $504.8 million, an increase of $65 million or 14.8% when compared to the second quarter of 2021. Increase in revenue is due to an increase in attendance of 7.8% and an increase in total revenue per capita of 6.4%. Attendance benefited primarily from an increase in demand, resulting to a return to more normalized operations when compared to the second quarter of 2021 and which included COVID-19-related impacts, including restrictions on international travel, modified and/or limited operations and capacity limitations at some of our parks.
However, as Marc said, we also continue to experience lingering effects of the pandemic with international and group-related visitation, still not yet back to pre-COVID levels. In the second quarter, excluding international and group-related visitation, attendance would have increased 3.3% compared to 2019.
Our pricing and product strategies continue to drive higher realized pricing, resulting in record total revenue per capita in the quarter of $80.59 compared to $75.71 in the second quarter of 2021. This increase was driven by improvements in both admissions per capita and in-park per capita spending. Admissions per capita increased by 5% to a record $43.98 and in-park per capita spending increased by 8.2% to a record $36.61 in the second quarter of 2022 compared to the second quarter of 2021. The increase in admissions per capita was primarily due to the realization of higher prices in our admission products, resulting from our strategic pricing efforts, which was partially offset by the impact of the park mix when compared to the prior year quarter.
The increase in in-park per capita spending was due to a combination of factors, including pricing initiatives, improved product quality and mix, new or enhanced and expanded venues and events and other in-park offerings. These factors were partially offset by the impact of a higher mix of pass attendance when compared to the prior year quarter.
Operating expenses increased $33.2 million or 21.1% when compared to the second quarter of 2021. With the return to more normalized operations, higher attendance and summer staffing levels, the increase in operating expenses is primarily due to the increase in labor-related costs and other operating costs. Operating expenses were also unfavorably impacted by unusually high inflationary pressures. These factors were partially offset by structural cost savings initiatives when compared to the second quarter of 2021. Operating expenses, as a percent of revenue, were 37.7% for the second quarter of 2022 compared to 35.8% for the second quarter of 2021.
Selling, general and administrative expenses increased $13 million or 30% compared to the second quarter of 2021. The increase is primarily due to marketing related costs, partially offset by the impact of cost savings and efficiency initiatives. Selling, general and administrative expenses, as a percent of revenue, was 11.1% for the second quarter of 2022 compared to 9.8% for the second quarter of 2021.
We believe that approximately $20 million to $25 million of cost in the second quarter compared to 2019 and are temporary unusual inflation-driven costs that we expect to moderate in the coming months and quarters. As Marc mentioned, most of these inflationary costs relate to certain cyclical supply chain-related and/or temporary cost pressures such as energy and utilities, shipping, food and certain wage and employee-related costs.
We generated net income of $116.6 million, our second highest net income for the second quarter compared to net income of $127.8 million in the second quarter of 2021 and we generated record adjusted EBITDA of $234.4 million, an increase of $15.6 million when compared to the second quarter of 2021. The improvement in adjusted EBITDA for the second quarter of 2022 was primarily impacted by an increase in attendance and total revenue per capita when compared to the second quarter of 2021.
Looking at our results for the first half of 2022 compared to 2021. Total revenue was a record $775.5 million, an increase of $163.8 million or 26.8%. Total attendance was 9.7 million guests, an increase of 1.6 million guests or 20.5%. Net income for the period was a record $107.6 million, an improvement of $24.7 million and adjusted EBITDA was a record $300.4 million, an improvement of $56.4 million or 23.1%.
Now turning to our balance sheet. Our current deferred revenue balance, as of the end of the second quarter, was $235.5 million, a decrease of approximately 1.2% when compared to June of 2021, which included impact of some COVID-related-19 product extensions. Excluding the extensions in the prior year quarter, deferred revenue would have been up approximately 11.1%. Compared to June 2019, deferred revenue increased 44.4%.
At the end of July 2022, our pass base was up approximately 20% compared to July of 2019, a very healthy indicator of consumer demand for our parks and the remainder of the year. We are also seeing a higher mix of premium passes in our pass base compared to the prior year as our pass holders continue to recognize the value and benefits of our higher-tier products.
As Marc mentioned, we have a very strong balance sheet position. As of June 30, 2022, our total available liquidity was $531.1 million, including $160.8 million of cash and cash equivalents on our balance sheet and $370.3 million available on our revolving credit facility, which has not yet been drawn. Cash flow from operations was a record $228.8 million for the second quarter of 2022. Free cash flow was $162.9 million for the second quarter of 2022. We repurchased approximately 7.1 million shares of common stock at a total cost of approximately $390.1 million from April 2022 through July of 2022.
We spent $65.9 million on CapEx in the second quarter of 2022, of which approximately $44.6 million was on core CapEx and approximately $21.4 million was on expansion and/or ROI projects. In 2022, we plan to spend approximately $130 million to $140 million in core capital expenditures and another $50 million to $60 million on growth and ROI capital expenditures. We are investing in rides, attractions, events and habitats to continue our strategy of having something new and compelling across our parks each year, and we have more one-of-a-kind world-class attractions that we are excited to unveil when the time is right.
We are also investing in and enhancing our food and beverage and retail venues across our parks, including providing a higher quality offering and more variety, investing in technology to make our business more efficient and to enhance the guest experience and also investing in our inorganic growth strategies to further drive shareholder value.
Now let me turn the call back over to Marc to share some final thoughts. Marc?
Marc Swanson
Thank you, Chelle. Before we open the call to your questions, I have some closing comments. In the second quarter of 2022, we came to the aid of over 350 animals in need. Over our history, we have helped over 40,000 animals, including bottlenose dolphins, manatees, sea lions, seals, sea turtles, sharks, birds and more. I’m really proud of the team’s hard work and their continued dedication to these important rescue efforts.
I want to thank them and all of our ambassadors for all that they do to operate our parks in this current environment. We are excited about the remainder of 2022 as we finish out the summer and head into our fall and winter events. As I mentioned, our Halloween events are starting next month at our SeaWorld Busch Gardens and Sesame Place parks, and we look forward to the return of Howl-O-Scream at SeaWorld Orlando and SeaWorld San Diego, following last year’s introduction, along with the first year of the counts, Halloween Spooktacular at our newest park, Sesame Place San Diego.
While we have made good progress over the past year, we continue to believe there are significant additional opportunities to improve our execution take advantage of clear growth opportunities and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA. We continue to have high confidence in our long-term strategy, and in our ability to deliver significantly improved operating and financial results that we expect will lead to meaningful increased value for stakeholders.
Now let’s go ahead and take your questions.
Question-and-Answer Session
Operator
[Operator Instructions]. The first question comes from Steven Wieczynski with Stifel.
Steven Wieczynski
So I want to ask about costs in the quarter? And you made a statement, Marc, in your prepared remarks that you — I think you mentioned somewhere along the lines of you guys could have done better with costs. And I’m just wondering what that statement means? Are you more focused on top line metrics and took your eye off the ball on cost? Or does that mean something else?
And then you also mentioned your staffing levels at this point are still too high. And I’m wondering how do you continue to drive those down without the resulting impact or without impacting your satisfaction scores?
Marc Swanson
Steven, good to hear from you. Look, what I did comment about costs, let me start by saying, look, we’re still extremely — when we look back versus 2019, the growth in this business from a revenue and adjusted EBITDA standpoint and the margin expansion, we’re obviously very pleased with that. And a lot of that work has been not only on the revenue side, but certainly on the cost side, we’ve done a lot of good things over the last couple of years.
Having said that, you know this, we hold ourselves to a high standard, and I believe we could have done more, and so does our team. And I recognize we’re in a in fairness, a very high inflationary environment, some of the highest in the history of this country. So — but that’s the reality, and we’ve got to do things to adjust to that. And we announced today not so much announced, just showed you some new initiatives and new projects that we’ve been working on.
We have a continuous mindset set of improving. And I think there’s some things around those initiatives that we can do to kind of get ahead of this outsized inflation and try to offset as much of that as we can. But in reality, we’re still very pleased. But again, we hold ourselves to a high standard and I think could have done a better job there.
As far as staffing, your second question, staffing has gotten better as we move through Q2. And I think we’re pleased to see that. What I meant by kind of optimizing the staffing levels is really more around what is the right mix of our employees, what is the right scheduling, what is the split between full-time and part time. So we — this is really the first full summer where everything is operating comparable to 2019, if you will, and so we’re kind of experiencing some of the modeling, some of the things that we did during COVID and prior, and we’re seeing all that kind of play out this year. And we’ll make some adjustments to get to kind of that optimized level.
Steven Wieczynski
Okay. Got you. And then second question would be around your July trends, and I’m not sure how much you’ll really go into those, but clearly, there — I think there’s some concern out there in the marketplace that attendance is slowing, whether that’s possibly be caused by a number of different factors. And while you said July was up year-over-year, just wondering if you can maybe help us think about what kind of drove the July upswing? Was it more foot traffic? Was it higher ticket prices? Was it in-park spending? Just wondering if you can help us kind of think about what drove the upswing in July.
Marc Swanson
Sure. I can help you with that. So yes, we are pleased with our July revenue performance, as I mentioned. And what I can — I think I can share with you is July attendance was positive and better than what we saw in June. So we did some things to, I think, drive more attendance but not necessarily — obviously, give it away or anything like that. And some of our per caps remain healthy in the month of July, especially the in-park per caps is well where we have seen some good growth.
As I’ve said, we’re always going to focus on total revenue as we’ve said in the past. And so we’re going to do some things to drive — continue to drive attendance. We’re coming into our historically popular Halloween events here starting next month, and then we’ll move into Christmas. And so we like the position we’re in and where we’ll end up as we move into the fall.
I would also say — in the month of July, we accomplished what I just laid out in the face of some difficult weather in a few places, specifically in our park, Busch Gardens Williamsburg. It was the least/fewest good weather days that we’ve had back to what we have data for, which is back to 1995. And then obviously, if anyone on this phone has been to Texas lately, you know the heat there has been even for Texas standards quite high, and I think that’s had an impact, obviously, on our SeaWorld Park in that area. So — but nonetheless, we wanted to call out July. It did improve over June and growing the revenue off of a record July of 2021.
Operator
Our next question comes from Phil Cusick with JPMorgan.
Philip Cusick
I wonder if you can talk and extend on the international and group attendance, what sort of trends you see in July and reservations looking forward?
And then second, on the staffing side, what opportunities are there for additional revenue if you were fully staffed?
Marc Swanson
Phil, it’s Marc. I can take that question. So what I would tell you, and I’ll speak to Q2 is, international attendance hasn’t — continues to improve. It’s not back to the levels that we saw in 2019. It’s still down in that 50% range, and we’ve kind of been settled in there a little bit. I think when we look out on a forward-looking basis, the park that has the most probably international visitation for us is Discovery Cove, and we’re pleased with the bookings we’re seeing there. But when international comes back, that — I don’t know when exactly that will be. That depends on a lot of different factors, obviously, but it’s still down 50%.
Group attendance is down less than that. It’s down probably in the teens somewhere in that range. And that ebbs and flows a little bit quarter-to-quarter for the most part. What we’re — I think on the back half of the year, we see some corporate events that we feel good about. I think the key thing will be what is schools and groups like Church groups and things like that do. And to the extent schools go back in session, some are back in session already are coming back here in the next couple of weeks. Hopefully, schools would get the green light to travel again and do field trips. And that can be more of a spring phenomenon, but we’ll see what we can pick up in the fall.
And then your second question on staffing. I mean, look, the — we — I talked about this in Q1. I think we left some money on the table, obviously, in Q1 by not having everything open and staff like we’d like to. We did a better job of that in Q2, having better staffing and more things open. And I think that certainly helps the park experience and helps us capture more of that revenue. We’re still not optimized as I talked about. So I don’t want to put a number to what the opportunity is, but we just want to continue to optimize our levels so that we can finish out the summer and then the rest of the year strong.
Operator
Our next question comes from James Hardiman with Citi Group.
James Hardiman
So my first question, just as I think about versus ’19 attendance, I think it was up 2% in the first quarter, and it was down 3 in the second quarter. And I guess more specifically, is that core business that went from plus 16 to plus 3. Maybe thoughts on sort of a detail versus 2019? And just within the quarter, is it sort of a straight line between those two things or for anything worth calling out there?
Marc Swanson
James, what I would focus on really is when I step back and look at everything, I look at the total revenue growth. And if you look at the total revenue growth in Q2 versus Q1, we did a little bit better in Q2 versus Q1 with less attendance, as you noted.
And look, we know in some of our markets in 2019, we were comping against probably some more aggressive ticket offers in 2019 than we had this year. Nonetheless, we want to do better, and there are things we can continue to do better in marketing and communications, et cetera. But look, overall, we’re very pleased with the revenue growth, the per cap growth and what we’re driving there, like I said, even relative to Q1 to do better with the tenants a little bit more down than it was in Q1. We’re very pleased with that total revenue growth.
James Hardiman
Got it. And then I guess along those same lines, so July grew 20% versus 2019. The second quarter was up 24%, so it does seem like there was some deceleration versus ’19 in July. There was a little bit of confusion. It sounds like a tenants got better year-over-year, but I’m just trying to figure out versus that 2019 level, what decelerated — was it per caps or attendance? Or am I thinking about this the wrong way?
Marc Swanson
What I would say, James, is I’m really pleased with 20% revenue growth in July. I realize it’s not 24, but that is still really strong growth versus 2019. Obviously, there’s going to be some moderation, I’m sure, over time. But that is still very strong revenue growth. I mentioned some of the weather impacts we saw in Busch Gardens, Williamsburg and SeaWorld San Antonio. So look, July, like I said, was better than June. The revenue growth remains very strong, the per caps are up in July. So we’re pleased with that. I think we feel good about that.
Operator
The next question comes from Ben Chaiken with Credit Suisse.
Benjamin Chaiken
The cost savings bucket you guys buckets that you guys laid out — sorry if I missed this, how many of those are already in motion versus kind of like more theoretical down the line? That’s my first question.
Marc Swanson
We posted some things out there, as you noted on the slide. A lot of that — it’s in various stages, right? So I don’t think we would talk about things if we didn’t — if we haven’t done a meaningful amount of homework on it. So some of these things are more further along than others. Some of these things, I believe, we’re testing. .
So there’s various stages of completion, various lead times, but I think what I would take away is that we have a continual focus on costs. You guys know that. We hold ourselves to a really high standard when it comes to cost, and we’re going to continue to try to find efficiencies and other initiatives to offset as much of the inflation as we can. We’re in a very high inflationary time. and we got to deal with that. That’s the reality, and we got to work hard to offset as much of that as we can. So that’s what we’re working on.
Benjamin Chaiken
Makes sense. And is there any way to — in very broad strokes kind of using the total number you guys threw out there that $20 million to $40 million. Is there any way to ballpark and broad strokes think about how much of the inflation that would offset versus ’19. So if you think about the cost inflation versus ’19, does that 20% to 40% of cost savings offset half the inflation, less than half, 75%, — like is there any directional you can help us out?
Marc Swanson
Look, I’ll try to give you some comments, but I’ll probably leave a little bit of the math to you. I mean we’re in some of the highest inflation we’ve ever had in the history of this country, right? So you can probably do the math that we had meaningful — I’m sure just like many other companies, inflationary pressures, that’s why we called them out. And they were certainly more than a normal year. So it’s a meaningful amount.
I think if we can execute everything, we’ll have a good chance to offset a good part of that inflation, but we got to see where things land on a go-forward basis. But we’re not — our goal is to get more efficient. And our goal is whether there’s inflation or not, we’re going to continue to get more efficient. So that’s how we approach these projects.
Operator
The next question comes from Chris Woronka with Deutsche Bank.
Chris Woronka
I wanted to ask, and I don’t know if you’re going to have this level of granularity in the way you look at the business, but we know that a large number of people have relocated to Florida and also Texas in the past couple of years. Do you have any details in your analysis to show whether you’re benefiting from that? And since you indicated a big chunk of your attendances drive to, is there any way to kind of look at that and see if you’re capturing those incremental people that are moving?
Marc Swanson
Chris, thanks for the question. What I think I would comment on is you’ve kind of gone there is, we like the markets we’re in. Obviously, you specifically called out Florida and Texas, those are growing markets. We, in general, like when more people come to a market and so we’re going to do our best to capture the share of new people coming to markets, obviously.
Chris Woronka
Okay. Fair enough. And then a follow-up question is on staffing. I think you talked last quarter about bringing in some of the J-1 visa workers to the parks in Florida. Did that transpire? And kind of where are you versus what you had hoped to do at this time last quarter?
Marc Swanson
Yes. Good question. I think we’re pretty pleased with the international programs that we rolled out. As I mentioned, we had really only used those in the past in one location, and that was primarily in Virginia. And so we expanded it to our other markets. So I think for the first year, we were generally pleased and I think it’s something that we’ll continue to utilize on a go-forward basis.
Operator
The next question comes from Michael Swartz with SunTrust Robinson Humphrey.
Michael Swartz
Marc, just wanted to touch on some of your comments earlier in the call, and I think you had made the comment that attendance is still pretty far removed from all-time back in 2008, most of us weren’t around back then, and I think you are publicly trading back then. So maybe give us a sense or some context of what that means? Are we at a 10% gap, 20% gap versus [indiscernible]? Any color would be helpful.
Marc Swanson
Yes. Sure, Michael. I’m happy to provide that. I mean what I can tell you is our attendance in 2008 was over 25 million people. On a most recent LTM basis, as I noted, we’re under 22 million. So there’s a 3 million plus gap there. Even if you look back to 2019, which we’re not even back to, that was 22.6 million, and I just told you 2008 was over $25 million, and that was with one less park. So that was with 11 parks, not 12.
So that’s one of the things that gets us super excited about the prospects for this business. If we could capture another 2 million to 3 million people, and that’s just to get back to 2008. And if you think about a lot of others in the industry, they’ve grown since 2008.
So not only if we can get back to where we once were, but then grow from there. I mean you can do the math on if you add 2 million to 3 million people or more and how that flows through, that’s one of the things that really excites us about the prospects of this business on a go-forward basis.
Michael Swartz
And just a follow-up question was on some of the inflationary costs you’re experiencing, and I think you called out $20 million to $25 million. So just put a clarification there, was that in the quarter? Or is that kind of a run rate basis? And then are you seeing most of that in park cost versus SG&A?
Marc Swanson
Yes. No, good question. I think you’re talking about the remarks that Chelle was making. So look, in general, that — as you noted, it was in the second quarter that $20 million to $25 million. So it’s spread across a number of things. Obviously, you have some things that I’m sure we’re all not surprised about shipping, food, various supply chain initiatives. Maybe some of the others that maybe don’t come to mind at times or some of the water quality chemicals. If any of you have a pool, you probably have experienced higher costs to treat your pool. It’s no different than at our water parks things like that. So there’s a host of costs in there that, obviously, are or higher that Chelle was alluding to.
Operator
Next question comes from Barton Crockett with Rosenblatt.
Barton Crockett
I want to about your share repurchase. So if you could just what are the factors that drove you to the gas this quarter versus other periods when the business has been strong, but you haven’t done this level of share repurchase. And also talk about the re-up and how you would describe the environment here as we go into the third quarter compared to the second quarter when you did all that share repurchase. Has anything really changed in the environment? Or is it still kind of the same as it was?
Marc Swanson
You broke up slightly at the beginning of your question, but I think you were just — I think you were asking kind of how we think about the share repurchase? And I made a comment in the prepared remarks that was approved today. I meant to say that that’s being announced today. So we’re announcing that today. Obviously, — and look, we — as you’ve heard me say in the past, I mean, we work closely with our Board on use of cash. And certainly, we look at what are the best ways to deploy that for shareholders. And you can look back to this year and prior years and typically, share buybacks have been one use of that cash.
We can, obviously, also invest in our business with CapEx, and we’ve certainly done that. We’ve driven a lot of CapEx into our parks over the last several years, higher growth initiatives, consider other strategic opportunities and then return capital to shareholders. So we’ll continue to work with our Board on how to — how we deploy cash that’s in the best interest of shareholders. And I can tell you that’s something that the Board is very clear on making sure we do what’s in the best interest of shareholders.
Barton Crockett
Okay. And then for the question, I haven’t heard a lot from you guys about the [indiscernible] launch. I was wondering if you could describe how that’s performed relative to your expectations? And maybe a little bit of color about how that looks relative to the one that you have in Pennsylvania. A little color there would be helpful.
Marc Swanson
Yes. We opened that park really right towards the end of Q1 in San Diego. I mentioned I was out there for the opening and anybody that’s gone out there. It’s a really beautiful park. It’s a beautiful setting. We like the location of Southern California and the attractive demographic with families.
So I think we’re still learning and operating that park, and we’re looking forward to what lies ahead. I’m excited, as I mentioned a couple of times. We’ll start the Halloween event there this fall called counts, Halloween Spooktacular. And the water park that was there before Aquatica did not have that. It was basically a very seasonal water park. So what I’m excited about is transitioning to a more year-round operation in that location with the Sesame product and being able to do events like Halloween and Christmas and other events.
Operator
The next question comes from Paul Golding with Macquarie.
Paul Golding
Chelle, congrats on the role and looking forward to working together. Marc, I wanted to ask about your commentary in terms of regaining the record attendance levels or is that sort of an aspirational level. I guess, given the labor constraints or costs and just the general inflationary environment, I guess, help us think about whether that’s really maybe your true goal or whether there’s a sweeter spot somewhere in between where you can balance this inflationary environment and the tweaks you’re making to the cost base with how much you’re yielding on a per visit basis.
And in a similar vein, maybe some color around the extent to which the app or your presentation on cost savings contemplates savings that you may get from the app seeing higher penetration?
Marc Swanson
Sure, sure. Thanks, Paul. Look, it’s a good question about how do we think about the attendance and balance that with pricing and things like that. What I would just remind everybody is we have a couple of things: one, we have a lot of capacity in our parks. We don’t — very few days out of the year, do we have to shut down a park. So there’s a lot of capacity. And I think one of the things we can do to get back to those prior attendance levels in 2008 is find ways to continue to fill where we have capacity, which is most every day for the most parks.
So we’re not going to — the other thing I would say is, we’re focused on driving total revenue. So at the end of the day, that’s what matters as much as anything. So we will balance the right mix of attendance versus total revenue. If we can drive really high dollar revenue with lower tenants, yes, you would obviously do that. That would come with lower cost and probably a better experience in your parks and things like that. But I think there is a spot where you can do both. And we — that’s our goal. We’re not — we want to grow tenants and we want to grow per cap.
We think on a go-forward basis, you can grow per caps at a pretty normalized — as you guys know the recipe, if you can grow attendance a little bit, grow per caps a little bit and watch our cost, the business levers up pretty nicely, right? So that’s how we’re thinking about it. Forgot your second question.
Paul Golding
On the app and the extent to which potential cost savings from the app are contemplated in that presentation.
Marc Swanson
Yes, yes, sorry. Good question. Look, we’re pleased with the app, as I mentioned. We’re seeing people use the app. We are still, I would say, in the early stages of we do have — we have mobile ordering, things like that. And so there’s certainly — if you think about in a park, if you could have a restaurant that is only — carryout only, if you will, mobile only, right?
I think you could obviously have some staffing savings there because you’re effectively just making the food and people are picking it up and they’re paying on the app and things like that. So that is more efficient. And that’s what we are rolling out or have rolled out in some of our parks. Our goal is to have more of that. And there’s some things we got to do just logistically to make that happen a little bit better In some of our parks, but we’re excited that we’ve got an app and people are using it.
Operator
The next question comes from Eric Wold with B. Riley Securities.
Eric Wold
I want to hit on the 25 million — 25 million attendance one more time just asked a different way. I guess, when we think about that, what has changed besides the addition of — obviously, one more part. Maybe what has changed structurally within the park since then that could accommodate more guests. The additional space more food and beverage, more rides. I guess, one, just trying to get a sense of how low that 25 million could actually be over time? Or maybe asked a different way, what do you think the attendance number is where you start to see an adverse impact to guest experience. I mean if you have any information on kind of what guest satisfaction scores look like back then with that level of attendance back in ’08, I guess, sense of that kind of peak number?
Marc Swanson
Yes. No, thanks for the question, Eric. And look, and just to remind everybody that the 25 million is getting back to 2008. If we had grown since that time, we’d probably be talking closer to 30 million or something in that range. So we absolutely have capacity in our parks. I mean like I said, we don’t — we have very few days where we’re at full capacity. I’m talking like 4th of July or New Year’s Eve and that’s still not at every park. So we have room in our parks. We’ve added a number of new attractions over the years. We have more attractions on the horizon. We’ve done different new lands and realms and things like that.
So I’m confident that we can still attract more people, obviously, and still have plenty of room and can deliver on an experience that people will find enjoyable. So feel good about the capacity availability in our parks, if you will.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Marc Swanson for any closing remarks.
Marc Swanson
Well, thank you, Rene. On behalf of Chelle and the rest of the management team at SeaWorld Entertainment, I want to thank you for joining us this morning. As you heard today, we are confident in our long-term strategy, which we believe will drive improved operating and financial results and long-term value for stakeholders. So thank you for joining us today, and we look forward to speaking with you next quarter.
Operator
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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