Executive Summary / Key Takeaways

• Undervalued Asset Base with Significant Upside: United Parks & Resorts (PRKS) is significantly undervalued, trading at a substantial discount to its leisure peers despite a strong balance sheet, robust free cash flow generation, and a clear roadmap for growth. Management and the Board are aggressively repurchasing shares, signaling strong conviction in the stock's intrinsic value.
• Resilient Business Model & Strategic Growth Levers: Despite recent weather-related headwinds and competitive dynamics, PRKS demonstrates operational resilience, driven by its unique animal-centric and regional park model. Strategic initiatives in real estate monetization, international licensing, sponsorships, and digital transformation are poised to unlock substantial high-margin revenue.
• Orlando Market Outperformance Post-Epic Universe: Contrary to market concerns, SeaWorld Orlando's attendance has been up since Universal's Epic Universe opened on May 22, 2025, through early Q3 2025, validating management's long-held view that increased investment in Orlando benefits the entire market.
• Digital Transformation Driving Efficiency and Per Capita Spend: Investments in CRM and a mobile app are yielding tangible benefits, including a 35% increase in average transaction value for food and beverage purchases made through the app, enhancing guest experience and operational efficiency.
• Strong Second Half 2025 Outlook: Management anticipates strong second-half financial results, supported by favorable weather comparisons, improved pass sales, positive forward bookings for key events, and an additional $15 million cost reduction plan.

The Enduring Appeal of United Parks & Resorts: A Differentiated Experience

United Parks & Resorts Inc., founded in 1959 as SeaWorld Entertainment, Inc., has evolved into a prominent theme park and entertainment company operating 12 parks across the United States and licensing one in Abu Dhabi, UAE. Its portfolio boasts recognized brands such as SeaWorld, Busch Gardens, Aquatica, Discovery Cove, and Sesame Place. The company's core business model centers on providing unique, immersive experiences that blend thrill rides, family-friendly attractions, and educational presentations, often showcasing its one-of-a-kind zoological collection. This animal-centric and conservation-focused approach differentiates PRKS within the highly competitive leisure industry.

The theme park industry is inherently seasonal, with PRKS typically generating its highest revenues in the second and third quarters. This seasonality, coupled with a high fixed-cost structure, necessitates disciplined operational management and strategic planning. PRKS's historical journey, including its presence in Orlando since the early 1970s and subsequent expansion with Discovery Cove and Aquatica, demonstrates its ability to thrive amidst evolving market dynamics and increasing competition. The company's rebranding to United Parks & Resorts Inc. in February 2024 underscored its diversified portfolio and broader strategic ambitions.

Technological Differentiators: Enhancing Engagement and Efficiency

United Parks & Resorts is actively leveraging technology to deepen guest engagement, optimize operations, and drive revenue growth. Its primary technological differentiators revolve around digital transformation initiatives, particularly its mobile application and Customer Relationship Management (CRM) capabilities. These tools are not merely conveniences but strategic assets designed to create a more seamless and personalized park experience.

The mobile app, for instance, has seen impressive adoption, with over 15.6 million downloads as of Q2 2025, up from 14.3 million in Q1 2025. This platform is improving the in-park guest experience by offering functionalities like mobile ordering, which has resulted in a significant 35% increase in average transaction value for food and beverage purchases made through the app compared to traditional point-of-sale orders. While still in its early innings of full monetization, the app's ability to drive higher spending and potentially reduce operational costs through streamlined service represents a tangible competitive advantage. The CRM program, meanwhile, is generating incremental revenue by supporting existing marketing strategies and providing deeper insights into guest preferences, fostering more meaningful connections. These digital investments contribute to PRKS's competitive moat by enhancing customer loyalty, improving operational efficiency, and providing a data-driven approach to revenue optimization, allowing the company to adapt more swiftly to changing consumer behaviors.

Competitive Landscape: Differentiated Value in a Crowded Market

United Parks & Resorts operates in a highly competitive theme park industry, facing off against formidable players like The Walt Disney Company , Comcast Corporation through Universal Parks & Resorts, and Six Flags Entertainment Corporation . PRKS carves out its niche by emphasizing animal conservation, educational experiences, and a strong value proposition, particularly for regional and family-oriented guests.

Compared to The Walt Disney Company (DIS), PRKS offers a more specialized experience, focusing on marine life and wildlife conservation, contrasting with Disney's expansive, IP-driven fantasy worlds. While Disney boasts superior scale, global brand loyalty, and an integrated media ecosystem (evidenced by its 36% gross profit margin and 13% operating profit margin in 2024, compared to PRKS's 92.4% and 25.43% respectively, though PRKS's revenue base is significantly smaller), PRKS's value proposition and regional accessibility appeal to a distinct segment. PRKS's operational focus on specific regional markets can allow for greater efficiency in localized execution, but it lags in innovation speed and market positioning against Disney's vast resources.

Against Comcast Corporation (CMCSA), particularly its Universal Parks & Resorts, PRKS differentiates through its nature-oriented and water-based attractions versus Universal's high-tech, movie-themed thrill rides. Universal's parks benefit from robust profitability margins (58% gross profit margin, 19% operating profit margin in 2024) driven by strong attendance and media synergies. PRKS's strengths lie in its unique educational offerings and potentially lower entry costs, while Universal excels in integrating advanced ride technologies. PRKS's digital transformation efforts, particularly its mobile app, are a strategic response to the tech-heavy experiences offered by Universal, aiming to enhance guest convenience and spending.

Six Flags Entertainment Corporation (SIX), a regional player, competes more directly on thrill rides and affordability. Six Flags (91% gross profit margin, 11% operating profit margin in 2024) focuses on widespread regional presence and cost-effective operations. PRKS distinguishes itself with its branded animal parks and water parks, which foster stronger customer loyalty through unique thematic depth. While Six Flags often emphasizes cost leadership, PRKS's brand and conservation focus provide a more premium, educational value that can command better pricing in its niche.

A significant competitive dynamic in Orlando is the opening of Universal's Epic Universe. Management has consistently welcomed such investments, believing they attract more visitors to the Orlando market, which is already the most visited city in America. Notably, SeaWorld Orlando's attendance has been up since Epic Universe opened on May 22, 2025, through the end of Q2 and into early Q3 (through August 6, 2025). This suggests PRKS's differentiated product and value proposition allow it to capture a fair share of the increased market visitation, rather than being negatively impacted.

Strategic Pillars: Building for Sustained Growth

PRKS's capital allocation strategy is clear and disciplined, prioritizing investments in the business, followed by debt paydown, opportunistic M&A, and aggressive return of capital to shareholders. The company expects to spend approximately $150-175 million annually on core CapEx (maintenance, new rides/attractions) and up to $50 million on expansion and ROI projects, targeting over 20% unlevered cash-on-cash returns. For 2025, total CapEx is projected at $225 million, split between $175 million core and $50 million growth/ROI. This disciplined approach supports both organic growth and margin expansion.

The company's 2025 attraction lineup is robust, featuring Expedition Odyssey at SeaWorld Orlando, The Big Bad Wolf: The Wolf's Revenge at Busch Gardens Williamsburg, and Wild Oasis at Busch Gardens Tampa Bay, among others. These new offerings are designed to create fresh reasons for visitation. Looking ahead, PRKS is already planning an "exciting lineup of new rides, attractions, events and activations" for 2026, including food and beverage, retail, and technology improvements.

Beyond park operations, PRKS is actively pursuing several strategic initiatives to unlock additional value. Real estate monetization is a key focus, leveraging its over 2,000 acres of valuable land, including 400 undeveloped acres adjacent to parks (significant in Orlando). Discussions are ongoing for hotel integration and other development opportunities, as well as exploring options like sale-leasebacks to monetize the underlying land value, which management believes is not fully appreciated by public markets. Sponsorships, a previously under-emphasized area, are now a dedicated effort, projected to generate mid-single-digit million dollars in 2025 and an annual outlook of approximately $20 million in coming years. International licensing and IP partnerships are also in active discussion, with two capital-light MOUs expected by year-end 2025 for international projects. The group business is also seeing renewed focus, with 2025 bookings trending up double-digits.

Financial Performance: Resilience Amidst Headwinds

United Parks & Resorts' financial performance in the first half of 2025 reflects both operational strengths and external challenges. For the three months ended June 30, 2025, total revenues decreased by 1.5% to $490.2 million, primarily due to a 3.1% decline in admissions revenue to $255.7 million. This was largely a result of a 3.9% decrease in admission per capita, driven by lower realized pricing on certain admission products. Despite this, attendance in Q2 2025 increased by 0.8% (48,000 guests), benefiting from a favorable calendar shift of Easter and Spring Break, though significantly worse weather partially offset this gain. Food, merchandise, and other revenue saw a slight 0.4% increase to $234.5 million, supported by higher attendance but tempered by a 0.4% decrease in in-park per capita spending.

For the first six months of 2025, total revenues decreased by 2.2% to $777.2 million. Total attendance was down a marginal 0.1% (11,000 guests), primarily due to meaningfully worse weather during peak visitation periods. Admissions per capita decreased by 4.1%, while in-park per capita spending saw a slight 0.1% increase, reflecting the impact of pricing initiatives.

Profitability metrics also saw a decline in the first half of 2025. Net income for Q2 2025 was $80.1 million, down from $91.1 million in Q2 2024. Adjusted EBITDA for Q2 2025 decreased by $11.9 million to $206.3 million. For the first six months, net income was $64.0 million (down from $79.9 million), and Adjusted EBITDA was $273.7 million (down from $297.3 million). Operating expenses increased by 7.7% in Q2 2025, primarily due to a $9.6 million increase in non-cash self-insurance adjustments. Selling, general, and administrative expenses saw a modest 1.0% increase in Q2 but a 2.8% decrease for the six-month period, driven by a $3.8 million reduction in third-party consulting costs.

Despite these headwinds, the company maintains a strong liquidity position. As of June 30, 2025, PRKS had $883 million of total available liquidity, including $194 million in cash, and a net total leverage ratio of 3.0x.

Cash flow from operations for the first six months was $206.9 million, down from $244.7 million in the prior year, mainly due to working capital changes. Capital expenditures for the period were $110.5 million, largely directed towards future attractions. The company's deferred revenue balance stood at $207.8 million, a decrease from the prior year, and its pass base was down approximately 3% through July 2025, though showing recent improvement. Share repurchases continued, with $4.6 million used in the first six months of 2025, reflecting the Board's strong belief in the company's undervalued shares.

Outlook and Risks: Charting the Course Ahead

United Parks & Resorts initially projected record revenue and Adjusted EBITDA for 2025, a forecast that faced headwinds in the first half of the year due to adverse weather and operational challenges. However, management remains confident in delivering "strong second half financial results." This optimism is underpinned by several factors: favorable weather comparisons (assuming no repeat of severe hurricanes like Milton in late 2024), improved pass sales driven by the launch of the 2026 pass program with enhanced benefits, and robust forward bookings for high-margin segments like Group business and Discovery Cove (both up mid- to high single digits for the remainder of 2025 and strong for 2026). Early ticket sales for popular Halloween events are also ahead of prior year.

Operationally, PRKS is implementing an additional cost reduction plan, targeting up to $15 million in savings for the second half of 2025, building on identified cost efficiencies. The company's ability to dynamically manage costs, particularly labor, in response to demand fluctuations is a key focus. The performance of SeaWorld Orlando since Epic Universe's opening is a significant positive indicator, with attendance up, supporting the thesis that new market investment can be a net positive for PRKS.

However, risks persist. Weather volatility remains a primary concern, as demonstrated by recent impacts. Labor market challenges, including turnover, hiring difficulties, and increased unionization activities, could impact operations and guest experience. A decline in discretionary consumer spending due to economic uncertainty or inflationary pressures could also affect attendance and per capita spending. Cybersecurity risks and the company's high fixed-cost structure are ongoing considerations. Despite these, PRKS's strategic focus on differentiated offerings, value, and operational excellence positions it to mitigate these challenges.

Conclusion

United Parks & Resorts stands as a compelling investment opportunity, currently trading at a significant discount to its peers despite a robust asset base and clear avenues for growth. The company's unique blend of animal-centric attractions, strong regional presence, and commitment to guest experience provides a differentiated value proposition in a competitive leisure market. Through disciplined capital allocation, a continuous pipeline of new attractions, and strategic initiatives in real estate monetization, sponsorships, and digital transformation, PRKS is actively building long-term shareholder value.

While the first half of 2025 presented weather-related and operational headwinds, the company's resilience, evidenced by positive attendance trends at SeaWorld Orlando post-Epic Universe opening and strong forward bookings, signals a promising second half. Management's aggressive share repurchase program underscores a deep conviction in the company's intrinsic value. By leveraging its foundational strengths, operational efficiencies, and technological advancements, United Parks & Resorts is well-positioned to capitalize on market opportunities and deliver meaningful increases in revenue, Adjusted EBITDA, and ultimately, shareholder returns.