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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.02pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
+0.02pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
No words rose this year.
Positive rising
effective+1
MD&A (Item 7)
7,754 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to our “theme parks” or “parks” in the discussion that follows includes all of our owned separately gated parks. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K.
The following discussion and analysis is intended to facilitate an understanding of our business and results of operations and should be read in conjunction with our historical consolidated financial statements and the notes thereto in the “ Financial Statements and Supplementary Data ” section included elsewhere in this Annual Report on Form 10-K. The discussion which follows consists of the following sections:
Business Overview: Provides an overview of the business.
Recent Developments: Provides a discussion concerning recent developments which have impacted the business.
Principal Factors and Trends Affecting our Results of Operations: Provides a discussion concerning the principal factors and trends affecting our results of operations, including a discussion relating to revenue, attendance, costs and expenses and seasonality.
Results of Operations: Provides a discussion of our operating results and applicable year-to-year comparisons.
Liquidity, Capital Resources and Indebtedness: Provides a discussion of our cash flows, sources and uses of cash, commitments, capital resources and indebtedness as of December 31, 2025.
Critical Accounting Policies and Estimates: Provides a discussion of our critical accounting policies which require the exercise of judgment and the use of estimates.
Management’s discussion and analysis relating to the fiscal year ended December 31, 2024 and the applicable year-to-year comparisons to the fiscal year ended December 31, 2023 are not included in this Annual Report on Form 10-K but can be found in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 , which specific discussion is incorporated herein by reference.
Business Overview
We are a leading theme park and entertainment company providing experiences that matter and inspiring guests to protect animals and the wild wonders of our world. We own or license a portfolio of recognized brands, including SeaWorld, Busch Gardens, Aquatica, Discovery Cove and Sesame Place. Over our more than 65-year history, we have developed a diversified portfolio of 13 differentiated theme parks that are grouped in key markets across the United States and in the United Arab Emirates. Many of our theme parks showcase our one-of-a-kind zoological collection and feature a diverse array of both thrill and family-friendly rides, educational presentations, shows and/or other attractions with broad demographic appeal which deliver memorable experiences and a strong value proposition for our guests.
Recent Developments
See the discussion under “ Recent Developments ” in the “ Business ” section included elsewhere in this Annual Report on Form 10-K, which includes discussions relating to the current operating environment.
Regulatory Developments
See the discussion of relevant regulatory developments under “ Recent Regulatory Developments ” in the “ Business ” section included elsewhere in this Annual Report on Form 10-K. For a discussion of certain risks associated with federal and state regulations governing the treatment of animals, see the “ Risk Factors ” section included elsewhere in this Annual Report on Form 10-K, including “ Risks Related to Our Business and Our Industry—We are subject to complex federal and state regulations governing the treatment of animals, which can change, and to claims and lawsuits by activist groups before government regulators and in the courts. ”
Principal Factors and Trends Affecting Our Results of Operations
Revenues
Our revenues are driven primarily by attendance in our theme parks and the level of per capita spending for admission and per capita spending for food and beverage, merchandise and other in-park products. We define attendance as the number of guest visits. Attendance drives admissions revenue as well as total in-park spending. Admissions revenue primarily consists of single-day tickets, annual passes (which generally expire after a 12-month term), season passes (including our fun card products and, collectively with annual passes, referred to as “passes” or “season passes”) or other multi-day or multi-park admission products. Revenue from these admissions products are generally recognized based on attendance. Certain pass products are purchased through monthly installment arrangements which allow guests to pay over the product’s initial commitment period. Once the initial commitment period is reached, some of these products transition to a month-to-month basis providing these guests access to specific parks on a monthly basis with related revenue recognized monthly, while others can renew for a full commitment period.
Total revenue per capita, defined as total revenue divided by total attendance, consists of admission per capita and in-park per capita spending:
Admission Per Capita. We calculate admission per capita as total admissions revenue divided by total attendance. Admission per capita is primarily driven by ticket pricing, the admissions product mix (including the impact of pass visitation rates), and the park attendance mix, among other factors. The admissions product mix, also referred to as the attendance or visitation mix, is defined as the mix of attendance by ticket category such as single day, multi-day, annual/season passes or complimentary tickets/passes and can be impacted by the mix of guests, as domestic and international guests generally purchase higher admission per capita ticket products than local guests. A higher mix of attendance from complimentary tickets/passes will lower admissions per capita. Pass visitation rates are the number of visits per pass. A higher number of visits per pass, including complimentary tickets/passes, would yield a lower admissions per capita as the revenue is recognized over more visits. The park attendance mix is defined as the mix of theme parks visited and can impact admission per capita based on the theme park’s respective pricing which, on average, is lower for our water parks compared to our other theme parks.
In-Park Per Capita Spending. We calculate in-park per capita spending as total food, merchandise and other revenue divided by total attendance. Food, merchandise and other revenue primarily consists of food and beverage, merchandise, retail, parking, other in-park products and service fees, and other miscellaneous revenue, including online transaction fees and revenue from our international agreements, not necessarily generated in our parks, which is not significant in the periods presented. In-park per capita spending is primarily driven by pricing, product offerings, the mix of guests (as domestic and international guests typically generate higher in-park per capita spending than local guests or pass holders), guest penetration levels (percentage of guests purchasing) and the mix of in-park spending, among other factors.
Total revenue per capita, admissions per capita and in-park per capita spending are key performance metrics that we use to assess the operating performance of our parks on a per attendee basis and to make strategic operating decisions. We believe the presentation of these performance metrics is useful and relevant for investors as it provides investors the ability to review operating performance in the same manner as our management and provides investors with a consistent methodology to analyze revenue between periods on a per attendee basis. In addition, investors, lenders, financial analysts and rating agencies have historically used similar per-capita related performance metrics to evaluate companies in the industry.
See further discussion in the “ Results of Operations ” section which follows and in Note 2–Summary of Significant Accounting Policies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. For other factors affecting our revenues, see the “ Risk Factors ” section of this Annual Report on Form 10-K.
Attendance
The level of attendance in our theme parks is generally a function of many factors, including affordability, the opening of new attractions and shows, competitive offerings, weather, marketing and sales efforts, awareness and type of ticket and park offerings, travel patterns of both our domestic and international guests, fluctuations in foreign exchange rates and global and regional economic conditions, consumer confidence, the external perceptions of our brands and reputation, industry best practices and perceptions as to safety. The external perceptions of our brands and reputation have at times impacted relationships with some of our business partners, including certain ticket resellers that have terminated relationships with us and other zoological-themed attractions. We continuously monitor factors impacting our attendance, making strategic operations, marketing and sales adjustments as necessary.
See discussion on seasonality of our attendance in the “ Seasonality ” section which follows.
Costs and Expenses
Historically, the principal costs of our operations are employee wages and benefits, driven partly by staffing levels, advertising, maintenance, animal care, utilities, property taxes and insurance. Factors that affect our costs and expenses include fixed operating costs, competitive wage pressures including minimum wage legislation, commodity prices, costs for construction, repairs and maintenance, park operating hours, new parks and/or incremental operating days, new and/or enhanced events, attendance levels, supply chain issues, and inflationary pressures, among other factors. The mix of products sold compared to the prior year period can also impact our costs as retail products generally have a higher cost of sales component than our food and beverage or other in-park offerings.
We have a dedicated team of employees and consultants focused on reducing costs and improving operating margins and streamlining our labor structure to better align with our strategic business objectives. We have spent significant time reviewing our operations and have identified meaningful cost savings opportunities, including technology initiatives, which we believe will further strengthen our business and, in some instances, improve guest experiences.
For other factors affecting our costs and expenses, see “ Current Operating Environment ” in the “Business” section and the “ Risk Factors ” section included elsewhere in this Annual Report on Form 10-K.
We make annual investments to support and improve our existing theme park facilities and attractions. Maintaining and improving our theme parks, as well as opening new attractions, is critical to remain competitive, grow revenue, and increase our guests’ length of stay. For further discussion of our new and planned attractions, see “ Capital Improvements ” in the “Business” section included elsewhere in this Annual Report on Form 10-K.
Seasonality
The theme park industry is seasonal in nature. Historically, we generate the highest revenues in the second and third quarters of each year, in part because four of our theme parks were historically only open for a portion of the year. As a result, approximately two-thirds of our attendance and revenues were historically generated in the second and third quarters of the year and we generally incurred a net loss in the first quarter. The percent mix of revenues by quarter is relatively constant each year, but revenues can shift between the first and second quarters due to the timing of Easter and spring break holidays and between the first and fourth quarters due to the timing of holiday breaks around Christmas and New Year. Even for our seven theme parks which have historically been open year-round, attendance patterns have significant seasonality, driven by holidays, school vacations and weather conditions. Changes in school calendars that impact traditional school vacation breaks and/or start dates could also impact attendance patterns.
Any changes to the operating schedule of a park such as increasing operating days for our historically seasonal parks, could change the impact of seasonality in the future. Incremental operating days generally are expected to drive incremental attendance and revenue.
Results of Operations
The following discussion provides an analysis of our operating results for the years ended December 31, 2025 and 2024.
Comparison of the Years Ended December 31, 2025 and 2024
The following data should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K. The following table presents key operating and financial information for the years ended December 31, 2025 and 2024:
For the Year Ended
December 31,
Variance
Selected Statements of Comprehensive Net Income Data:
(In thousands, except per capita data and %)
Net revenues:
Admissions
Food, merchandise and other
Total revenues
Costs and expenses:
Cost of food, merchandise and other revenues
Operating expenses (exclusive of depreciation and amortization
shown separately below)
Selling, general and administrative expenses
Severance and other separation costs
Depreciation and amortization
Total costs and expenses
Operating income
Other expense, net
Interest expense
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs
Income before income taxes
Provision for income taxes
Net income
Other data:
Attendance
Total revenue per capita
Admission per capita
In-park per capita spending
NM-Not meaningful
ND-Not determinable
Admissions revenue . Admissions revenue for the year ended December 31, 2025 decreased $56.2 million, or 6.0%, to $883.4 million as compared to $939.6 million for the year ended December 31, 2024. The decline was a result of a decrease in admission per capita and a decrease in attendance of 0.4 million guests, or 1.8%. The decrease in attendance was primarily due to a combination of factors including a decline in visitation from international markets and reseller tickets along with changes in operating schedules across parks and less than optimal execution. Admission per capita decreased by 4.3% to $41.73 in 2025 compared to $43.61 in 2024. Admission per capita decreased the impact of promotional activities and visitation mix and when compared to 2024.
Food, merchandise and other revenue . Food, merchandise and other revenue for the year ended December 31, 2025 decreased $6.5 million, or 0.8% to $779.2 million as compared to $785.7 million for the year ended December 31, 2024. The decrease results from the decrease in attendance discussed above, partially offset by improved in-park per capita spending. In-park per capita spending increased by 1.0%, to $36.81 in 2025 from $36.46 in 2024. In park per capita spending improved primarily due to pricing and operating initiatives when compared to 2024.
Costs of food, merchandise and other revenues. Costs of food, merchandise and other revenues for the year ended December 31, 2025 decreased $3.8 million, or 2.9%, to $127.6 million as compared to $131.4 million for the year ended December 31, 2024, primarily due to a decrease in inventory write-offs.
Operating expenses . Operating expenses for the year ended December 31, 2025 increased by $16.2 million, or 2.2% to $765.9 million as compared to $749.7 million for the year ended December 31, 2024. The increase in operating expenses is primarily due to an increase in labor-related costs when compared to 2024.
Selling, general and administrative expenses. Selling, general and administrative expenses for the year ended December 31, 2025 increased by $10.9 million, or 5.0% to $227.7 million as compared to $216.9 million for the year ended December 31, 2024. The increase in selling, general and administrative expenses is primarily due to an increase in marketing-related costs when compared to 2024.
Depreciation and amortization. Depreciation and amortization expense for the year ended December 31, 2025 increased by $11.0 million, or 6.8% to $174.5 million as compared to $163.4 million for the year ended December 31, 2024. The increase primarily relates to new asset additions, partially offset by the impact of asset retirements and fully depreciated assets.
Other expense, net. Other expense, net for the year ended December 31, 2025 primarily relates to an approximately $8.6 million one-time non-cash write-off of certain accounts receivable balances, partially offset by interest expected to be received related to a property tax refund. See Note 2–Summary of Significant Accounting Policies in our notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Interest expense. Interest expense for the year ended December 31, 2025 decreased $33.6 million, or 20.0% to $134.1 million as compared to $167.8 million for the year ended December 31, 2024. The decrease primarily related to the net impact of the Refinancing Transactions completed in 2024, which includes a lower average interest rate on our variable debt and write-offs of debt issuance costs and discounts, partially offset by a higher average outstanding balance on our total debt. See Note 11–Long-Term Debt in our notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Loss on early extinguishment of debt and write-off of debt issuance costs and discounts. Loss on early extinguishment of debt and write-off of debt issuance costs and discounts for the year ended December 31, 2024 primarily relate to write-offs of certain debt issuance costs and discounts resulting from the Refinancing Transactions during the year ended December 31, 2024. See Note 11–Long-Term Debt in our notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Provision for income taxes. Provision for income taxes was $58.2 million compared to $64.0 million in the years ended December 31, 2025 and 2024, respectively. Our consolidated effective tax rate was 25.7% for 2025 compared to 22.0% for 2024. The effective tax rate differs from the statutory federal income tax rate of 21.0% for the year ended December 31, 2025 primarily due to state income taxes and a deferred revaluation due to state filing changes as of January 1, 2025. The effective tax rate differs from the statutory federal income tax rate of 21% for the year ended December 31, 2024 primarily due to state income taxes and limits on certain compensation deductibility, partially offset by a tax benefit related to equity-based compensation which vested during the period and a deferred adjustment related to fixed assets. See Note 12–Income Taxes in our notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Liquidity and Capital Resources
Overview
Generally, our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash typically include the funding of working capital obligations, debt service, investments in theme parks (including capital projects), share repurchases and/or other return of capital to stockholders, when permitted. As of December 31, 2025, we had a working capital ratio (defined as current assets divided by current liabilities) of 0.7. We typically have operated with a working capital ratio of near 1.0 due to significant deferred revenue balance from revenues paid in advance for our theme park admissions products and high turnover of in-park products that result in limited inventory balances. Our cash flow from operations, along with our revolving credit facilities, have historically allowed us to meet our liquidity needs.
As market conditions warrant and subject to our contractual restrictions and liquidity position, we or our affiliates may from time to time purchase our outstanding equity and/or debt securities, including our outstanding bank loans in privately negotiated or open market transactions, by tender offer or otherwise. Any such purchases may be funded by incurring new debt, including additional borrowings under our Senior Secured Credit Facilities. Any new debt may also be secured debt. We may also use available cash on our balance sheet. The amounts involved in any such transactions, individually or in the aggregate, may be material. Further, since some of our debt may trade at a discount to the face amount among current or future syndicate members, any such purchases may result in our acquiring and retiring a substantial amount of any particular series, with the attendant reduction in the trading liquidity of any such series. Depending on conditions in the credit and capital markets and other factors, we will, from time to time, consider other financing transactions, the proceeds of which could be used to refinance our indebtedness or for other purposes.
Share Repurchases
See Note 18–Stockholders’ Deficit in our notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information on the Company's share repurchase programs.
Other
We believe that existing cash and cash equivalents, cash flow from operations and available borrowings under our revolving credit facility will be adequate to meet the capital expenditures, debt service obligations, and working capital requirements of our operations for at least the next 12 months.
The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated:
For the Year Ended December 31,
(In thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents, including restricted cash
Cash Flows from Operating Activities
Net cash provided by operating activities was $380.1 million during the year ended December 31, 2025 as compared to $480.1 million during the year ended December 31, 2024. The change in net cash provided by operating activities was primarily impacted by changes in working capital.
Net cash provided by operating activities was $480.1 million during the year ended December 31, 2024 as compared to $504.9 million during the year ended December 31, 2023. The change in net cash provided by operating activities was primarily impacted by an increase in cash paid for interest and income taxes.
Cash Flows from Investing Activities
Investing activities consist principally of capital investments we make in our theme parks for future attractions and infrastructure. Net cash used in investing activities during the year ended December 31, 2025 consisted of capital expenditures of $217.5 million largely related to future attractions (see further breakdown of capital expenditures in the table below). Net cash used in investing activities during the years ended December 31, 2024 and 2023 consisted primarily of capital expenditures of $248.4 million and $304.8 million, respectively.
The following table presents detail of our capital expenditures for the periods indicated:
For the Year Ended December 31,
Capital Expenditures:
(Unaudited, in thousands)
Core (a)
Expansion/ROI projects (b)
Capital expenditures, total
Reflects capital expenditures for park rides, attractions and maintenance activities.
Reflects capital expenditures for park expansion, new properties, or other revenue and/or expense return on investment (“ROI”) projects.
The amount of our capital expenditures may be affected by general economic and financial conditions, among other things, including restrictions imposed by our borrowing arrangements. We generally expect to fund our capital expenditures through our operating cash flow.
Cash Flows from Financing Activities
Net cash used in financing activities during the year ended December 31, 2025 primarily results from $160.4 million used to repurchase shares and payment of related excise tax and repayments of $15.4 million on long-term debt.
Net cash used in financing activities during the year ended December 31, 2024 primarily results from $482.9 million used to repurchase shares, repayments of $242.1 million on long-term debt and $8.8 million for payments of tax withholdings on equity-based compensation through shares withheld, partially offset by $378.3 million of net proceeds from the issuance of debt.
Net cash used in financing activities during the year ended December 31, 2023 results primarily from share repurchases of $17.9 million, repayments of $12.0 million on our long-term debt, and payment of tax withholdings on equity-based compensation through shares withheld of $6.9 million.
See Note 11–Long-Term Debt and Note 18–Stockholders' Deficit to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Our Indebtedness
We are a holding company and conduct our operations through our subsidiaries, which have incurred or guaranteed indebtedness as described below. As of December 31, 2025, our indebtedness consisted of senior secured credit facilities and 5.25% senior notes due 2029 (the “Senior Notes”).
See discussion which follows and Note 11–Long-Term Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details related to our indebtedness and related debt transactions.
Senior Secured Credit Facilities
SEA is the borrower under the senior secured credit facilities, as amended and restated pursuant to a credit agreement (the “Amended and Restated Credit Agreement”) dated August 25, 2021 (the “Senior Secured Credit Facilities”).
As of December 31, 2025, our Senior Secured Credit Facilities consisted of $1.523 billion in Term B-3 Loans, which will mature on December 4, 2031, along with a $700.0 million Revolving Credit Facility, which had no amounts outstanding as of December 31, 2025 and will mature on August 23, 2029. As of December 31, 2025, SEA had approximately $10.9 million of outstanding letters of credit, leaving approximately $689.1 million available for borrowing under the Revolving Credit Facility. Subsequent to December 31, 2025, SEA borrowed $80.0 million on the Revolving Credit Facility for general working capital purposes.
Senior Notes
As of December 31, 2025, SEA had outstanding $725.0 million in aggregate principal amount of Senior Notes due on August 15, 2029.
Covenant Compliance
As of December 31, 2025, we were in compliance with all covenants in the credit agreement governing the Senior Secured Credit Facilities and the indentures governing our Senior Notes. See Note 11–Long-Term Debt to our consolidated financial statements for further details relating to our restrictive covenants.
Adjusted EBITDA
We define Adjusted EBITDA as net income plus (i) income tax provision (benefit), (ii) loss on extinguishment of debt, (iii) interest expense, consent fees and similar financing costs, (iv) depreciation and amortization, (v) equity-based compensation expense, (vi) certain non-cash charges/credits including those related to asset disposals and self-insurance reserve adjustments, (vii) certain business optimization, development and strategic initiative costs, (viii) merger, acquisition, integration and certain investment costs, and (ix) other nonrecurring costs including incremental costs associated with the COVID-19 pandemic or similar unusual events.
Under the credit agreement governing the Senior Secured Credit Facilities and the indentures governing our Senior Notes and First-Priority Senior Secured Notes (collectively, the “Debt Agreements”), our ability to engage in activities such as incurring additional indebtedness, making investments, refinancing certain indebtedness, paying dividends and entering into certain merger transactions is governed, in part, by our ability to satisfy tests based on Covenant Adjusted EBITDA as defined in the Debt Agreements (“Covenant Adjusted EBITDA”).
Covenant Adjusted EBITDA is defined as Adjusted EBITDA plus certain other items as defined in the Debt Agreements, including estimated cost savings among other adjustments. Cost savings represent annualized estimated savings expected to be realized over the following 24 month period related to certain specified actions including restructurings and cost savings initiatives, net of actual benefits realized during the last twelve months. Other adjustments include (i) recruiting and retention costs, (ii) public company compliance costs, (iii) litigation and arbitration costs, and (iv) other costs and adjustments as permitted by the Debt Agreements.
We believe that the presentation of Adjusted EBITDA is appropriate as it eliminates the effect of certain non-cash and other items not necessarily indicative of a company’s underlying operating performance. We use Adjusted EBITDA in connection with certain components of our executive compensation program. In addition, investors, lenders, financial analysts and rating agencies have historically used EBITDA related measures in our industry, along with other measures, to estimate the value of a company, to make informed investment decisions and to evaluate companies in the industry. In addition, we believe the presentation of Covenant Adjusted EBITDA for the last twelve months is appropriate as it provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Debt Agreements. See Note 11–Long-Term Debt to our consolidated financial statements for further details relating to our restrictive covenants.
Adjusted EBITDA and Covenant Adjusted EBITDA are not recognized terms under U.S. generally accepted accounting principles (“GAAP”), should not be considered in isolation or as a substitute for a measure of our financial performance prepared in accordance with GAAP and are not indicative of income or loss from operations as determined under GAAP. Adjusted EBITDA, Covenant Adjusted EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate our financial performance. Adjusted EBITDA and Covenant Adjusted EBITDA as presented by us, may not be comparable to similarly titled measures of other companies due to varying methods of calculation.
The following table reconciles Adjusted EBITDA and Covenant Adjusted EBITDA to net income for the periods indicated:
For the Year Ended December 31,
(In thousands)
Net income
Provision for income taxes
Loss on early extinguishment of debt and write-off of discounts and debt issuance costs (a)
Interest expense
Depreciation and amortization
Equity-based compensation expense (b)
Loss on impairment or disposal of assets and certain non-cash expenses (c)
Business optimization, development and strategic initiative costs (d)
Certain investment costs and other taxes (e)
COVID-19 related incremental costs (f)
Other adjusting items (g)
Adjusted EBITDA (h)
Items added back to Covenant Adjusted EBITDA as defined in the Debt Agreements:
Estimated cost savings (i)
Other adjustments as defined in the Debt Agreements (j)
Covenant Adjusted EBITDA (k)
Reflects a loss on early extinguishment of debt and write-off of discounts and debt issuance costs associated with the Refinancing Transactions in 2024. See Note 11–Long-Term Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Reflects non-cash equity compensation expenses and related payroll taxes associated with the grants of equity-based compensation. See Note 17-Equity Based Compensation to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
For the years ended December 31, 2025, 2024 and 2023 reflects approximately $17.5 million, $21.2 million and $11.8 million, respectively, related to non-cash self-insurance reserve adjustments. Also includes non-cash expenses related to asset write-offs and costs related to certain rides and equipment which were removed from service. See Note 8–Property and Equipment, Net, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
For the year ended December 31, 2025, reflects business optimization, development and other strategic initiative costs primarily related to: (i) $7.6 million related to the implementation of a new enterprise resource planning system and (ii) $4.5 million of other business optimization costs and strategic initiative costs.
For the year ended December 31, 2024, reflects business optimization, development and other strategic initiative costs primarily related to: (i) $10.7 million of third-party consulting costs and (ii) $7.0 million of other business optimization costs and strategic initiative costs.
For the year ended December 31, 2023, reflects business optimization, development and other strategic initiative costs primarily related to: (i) $16.9 million of third-party consulting costs and (ii) $15.3 million of other business optimization costs and strategic initiative costs.
For the year ended December 31, 2025, primarily relates to expenses associated with a share repurchase proposal. For the year ended December 31, 2024, primarily relates to expenses associated with a stockholders' agreement amendment proposal and a share repurchase proposal.
For the year ended December 31, 2025, primarily reflects costs associated with certain legal matters and nonrecurring contractual liabilities and respective assessments related to the previously disclosed temporary COVID-19 park closures.
For the year ended December 31, 2024, primarily reflects a reversal of costs, which had previously been accrued, associated with nonrecurring contractual liabilities and respective assessments related to the previously disclosed temporary COVID-19 park closures.
For the year ended December 31, 2023, primarily reflects costs associated with nonrecurring contractual liabilities and respective assessments, and certain legal matters related to the previously disclosed temporary COVID-19 park closures.
Reflects the impact of expenses, net of insurance recoveries and adjustments, incurred primarily related to certain matters, which we are permitted to exclude under the credit agreement governing our Senior Secured Credit Facilities due to the unusual nature of the items.
Adjusted EBITDA is defined as net income before income tax expense, interest expense, depreciation and amortization, as further adjusted to exclude certain non-cash, and other items as described above.
Our Debt Agreements permit the calculation of certain covenants to be based on Covenant Adjusted EBITDA, as defined above, for the last twelve-month period further adjusted for net annualized estimated savings we expect to realize over the following 24-month period related to certain specified actions, including restructurings and cost savings initiatives. These estimated savings are calculated net of the amount of actual benefits realized during such period. These estimated savings are a non-GAAP Adjusted EBITDA add-back item only as defined in the Debt Agreements and does not impact our reported GAAP net income.
The Debt Agreements permit our calculation of certain covenants to be based on Covenant Adjusted EBITDA as defined above, for the last twelve-month period further adjusted for certain costs as permitted by the Debt Agreements including recruiting and retention expenses, public company compliance costs and litigation and arbitration costs, if any.
Covenant Adjusted EBITDA is defined in the Debt Agreements as Adjusted EBITDA for the last twelve-month period further adjusted for net annualized estimated savings among other adjustments as described in footnotes (i) and (j) above.
Contractual Obligations
We had no off-balance sheet arrangements as of December 31, 2025. The following table summarizes our principal contractual obligations as of December 31, 2025:
Total
Less than
1 Year
1-3 Years
3-5 Years
More than
5 Years
(In thousands)
Long-term debt (including current portion) (a)
Interest on long-term debt (b)
Operating and finance leases (c)
Purchase obligations, license commitments and other (d)
Total contractual obligations
Represents principal payments. See Note 11–Long-Term Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Includes amounts attributable to the Senior Secured Credit Facilities and Senior Notes calculated as of December 31, 2025 using certain assumptions. See Note 11–Long-Term Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Represents commitments under long-term operating and finance leases requiring annual minimum lease payments, primarily consisting of the lease for the land of our SeaWorld theme park in San Diego, California. See Note 13–Leases to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
We have minimum purchase commitments with various vendors through 2031. Outstanding minimum purchase commitments consist primarily of capital expenditures related to future attractions, infrastructure enhancements for existing facilities and information technology products and services. Amounts have been calculated using early termination fees or non-cancelable minimum contractual obligations by period, as applicable, under contracts that were in effect as of December 31, 2025. In addition, in connection with the Sesame License Agreement we have made certain commitments, as a result, obligations related to this agreement are included in the table above. For further details, refer to Note 14–Commitments and Contingencies in our notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
In the ordinary course of business, we execute contracts involving customary events of default in the case of certain events such as bankruptcy or insolvency involving the Company, material breach in contract terms, and indemnifications specific to a transaction such as the sale of a business. We regularly evaluate the probability of having to incur costs associated with these obligations and have accrued for expected losses that are probable and estimable, if any.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, revenues and expenses, and disclosure of contingencies during the reporting period. Significant estimates and assumptions include the valuation and useful lives of long-lived assets, the accounting for income taxes, the accounting for self-insurance and revenue recognition. Actual results could differ from those estimates.
We believe that the following discussion addresses our critical accounting policies which require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For more discussion of these and other significant accounting policies, refer to Note 2–Summary of Significant Accounting Policies in our notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Impairment of Long-Lived Assets
All long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. Assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. An impairmentloss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. The measurement of the impairmentloss to be recognized is based upon the difference between the estimated fair value and the carrying amounts of the assets. Fair value is generally determined based upon a discounted cash flow analysis. If significant, certain impairment indicators may trigger an impairment review.
Accounting for Income Taxes
We are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation periods for property and equipment and deferred revenue, for tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheets. We must then assess the likelihood that deferred tax assets (primarily net operating loss and tax credit carryforwards) will be recovered from future taxable income. To the extent that we believe that recovery is not more likely than not, a valuation allowance against those amounts is recorded. To the extent that we record a valuation allowance or a change in the valuation allowance during a period, we recognize these amounts as income tax expense or benefit in the consolidated statements of operations. Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), contains rules that limit the ability of a company that undergoes an ownership change, which is generally any change in ownership of more than 50% of its stock over a rolling three-year period, to utilize its net operating loss carryforwards in years after the ownership change. These rules generally operate by focusing on ownership shifts among stockholders owning directly or indirectly 5% or more of the stock of a company and any change in ownership arising from shares of stock sold by these same stockholders.
We utilize a two-step approach to recognize and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolutions of related appeals or litigation process. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating our tax positions and estimating our tax benefits. There is no uncertain tax benefit recorded for the periods ending December 31, 2025, 2024, and 2023, and no interest or penalties have been accrued. Within twelve months, we do not expect to record any uncertain tax benefit.
Significant management judgment is required in determining our provision or benefit for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. Management has analyzed all available evidence, both positive and negative, using a more likely than not standard in assessing the need for a valuation allowance against its deferred income tax assets. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecast of future profitability, the duration of the statutory carryback and carryforward periods and tax planning alternatives. Forecasted financial performance is not used as evidence until such time as we have cumulative pretax income for a rolling 36-month period. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we use to manage the underlying business.
As of December 31, 2025 and 2024, we have a valuation allowance of approximately $4.8 million and $5.0 million, net of federal tax benefit, respectively, on our deferred tax assets related to state net operating loss carryforwards, which we believed did not meet the “more likely than not” criteria and would expire before being realized in future periods.
Our valuation allowances, in part, rely on estimates and assumptions related to our future financial performance.
For further details, also refer to Note 12–Income Taxes, in our notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Self-Insurance Reserves
Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. Reserves are established for both identified claims and incurred but not reported (“IBNR”) claims. Such amounts are accrued for when claim amounts become probable and estimable. Reserves for identified claims are based upon our own historical claims experience and third-party estimates of settlement costs. Reserves for IBNR claims are based upon our own claims data history, actuarially determined loss development factors and qualitative considerations such as claims management activities. All reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary.
Revenue Recognition
Admissions revenue primarily consists of single-day tickets, annual or season passes or other multi-day or multi-park admission products. For single-day tickets, we recognize revenue at a point in time, upon admission to the park. Annual passes, season passes, or other multi-day or multi-park passes allow guests access to specific parks over a specified time period. For these pass and multi-use products, revenue is deferred and recognized over the terms of the admission product based on estimated redemption rates for similar products and is adjusted periodically. We estimate redemption rates using historical and forecasted attendance trends by park for similar products. Attendance trends factor in seasonality and are adjusted based on actual trends periodically. These estimated redemption rates impact the timing of when revenue is recognized on these products. Actual results could materially differ from these estimates based on actual attendance patterns. Revenue is recognized on a pro-rata basis based on the estimated allocated selling price of the admission product. For pass products purchased on an installment plan that have met their initial commitment period and have transitioned to a month-to-month basis, monthly charges are recognized as revenue as payments are received each month. For certain multi-day admission products, revenue is allocated based on the number of visits included in the pass and recognized ratably based on each admission into the theme park.
Certain admission products may also include bundled products at the time of purchase, such as food and beverage or merchandise items. We conduct an analysis of bundled products to identify separate distinct performance obligations that are material in the context of the contract. For those products that are determined to be distinct performance obligations and material in the context of the contract, we allocate a portion of the transaction price to each distinct performance obligation using each performance obligation’s standalone price. If the bundled product is related to a pass product and offered over time, revenue will be recognized over time accordingly.
For further details, also refer to Note 4–Revenues, in our notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualita tive Disclosures about Market Risk
Inflation
The impact of inflation has affected, and will continue to affect, our operations significantly. Our costs of food, merchandise and other revenues are influenced by inflation and fluctuations in global commodity prices. In addition, other costs such as costs of fuel, construction, repairs and maintenance, labor, freight, utilities and insurance are all subject to inflationary pressures. For further discussion, see the “ Risk Factors ” section included elsewhere in this Annual Report on Form 10-K.
Interest Rate Risk
We are exposed to market risks from fluctuations in interest rates, and to a lesser extent on currency exchange rates, from time to time, on imported rides and equipment. The objective of our financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not acquire market risk sensitive instruments for trading purposes.
We presently manage interest rate risk primarily by managing the amount, sources and duration of our debt funding. At December 31, 2025, approximately $1.5 billion of our outstanding long-term debt represents variable-rate debt. Assuming an average balance on our revolving credit borrowings of approximately $700.0 million, a hypothetical 100 bps increase in Term SOFR would increase our annual interest expense by approximately $22.2 million. Assuming no revolving credit borrowings, a hypothetical 100 bps increase in Term SOFR would increase our annual interest expense by approximately $15.2 million.
Item 8. Financial Stateme nts and Supplementary Data
Our consolidated financial statements and the notes thereto are provided in Part IV, Item 15 of this Annual Report on Form 10-K.
