Tuesday, August 17, 2010

Heard On... Six Flags 2nd Quarter Earnings Call

Six Flags Entertainment Company has released its second quarter 2010 earnings release, and the numbers are showing positive trends. Revenues were up 7% for the first six months of the year, and attendance showed a 6% gain. The per cap spending was just slightly down, which seems to be the trend across the industry this year.

The company had their usual earnings release, where the new President, James Reid-Anderson, joined Al Weber in providing some useful details:

• In addition to moving company headquarters and some personnel reductions, the company has also ceased non-added value spending, calling it inefficient and distracting. Instead they have shifted their focus back to the theme park business. Getting back to the company's roots should prove a positive move.

• Mr. Weber pointed out that the parks are in great shape as previous management spent time and money on catching up on deferred maintenance. He also points out to the large diversity of rides and attraction currently offered - Six Flags has spent $1.75 billion on new capital at all the parks since 1998.

• Mr. Six is hitting the road once again. It was pointed out that their ads have relied too heavily on Mr. Six. The character became popular with the public but they found that his effectiveness was poor. My translation: he was fun to see but didn't make people desire a day at Six Flags. Instead, a focus on what the parks offer - specifically something for everyone - will be the key going forward.

• Six Flags parks under-price their competitors by 20%, they plan to stop the never-ending discounting that goes on all season long. This is something Cedar Fair does well.

• The way the parks get new capital spent will change, they will allow the individual parks more say in what goes in, versus it being a corporate decision (great idea!). Also, they'll focus on things that are worth the cash spent - Al pointed out that $7.5 million was spent on the Glow In The Park Parades but since they were at night many people didn't stay to see them, and they required parks to stay open longer each day than necessary.

• While I'm not sure if they meant for the whole year or just year-to-date, they mentioned that Six Flags Kentucky Kingdom did between 500k and 600k in attendance, and actually took a couple million off the company's EBITDA line.

• The Corporate Alliance business was something that is still regarded as a great success, and a continuation of those programs will be seen. So don't look for all those advertisements to go away any time soon.

After hearing the call it seems like the new top management duo could really do wonders for the parks. Naturally I'm interested in hearing more about their plans for more effectively spending capital, so hopefully they'll start those CEO blogger calls back up so I can ask!


Ryan said...

I'm surprised about the comments on the Glow in the Park parades. I thought these were strategies to keep guests in the park longer (same with Cedar Fair's laser shows/Starlight Experiences and Disney's fireworks and nighttime spectaculars at their parks). It's interesting to me that they're not working, and these new management types think they're extending the park's hours too far. I wish they'd go into more detail, but it probably won't happen.

Unlike Cedar Fair, they didn't take the time to tease or reveal anything for 2011. Would it kill these guys to even throw out a dollar amount for what they're spending at these parks next year, or the old Shapiro-esque comments about parks? I remember him always talking up parks like Fiesta Texas and America.