Wednesday, October 22, 2014

Heard On... Six Flags 3rd Quarter 2014 Results Call

Six Flags Entertainment Corp. has announced their 3rd quarter results, which saw revenues grow to a record $542 million, 7% better than the quarter last year.  This also made EBITDA rise 8% to $291 million, on a 6% increase in per capita spending and flat attendance.

The solid results led the operator to announce a new goal - to reach $600 million in modified EBITDA by 2017.  EBITDA is the earnings before taxes and depreciation, and is commonly looked at by the investing community as a key statistic.

The company held a conference call to discuss the results, and while there isn't any huge news in there here are some notes:

• The quarter saw Six Flags produce a modified EBITDA margin of 40.7%, which they say is an industry record.

• Six Flags is continuing to slowly raise ticket prices and erase the deep discounting that the previous operators relied on to draw guests to the park.

• The Season Pass Membership program, where a monthly fee is paid by the guest year round, has created a 10% increase in the number of active pass holders.

• With regard to the contracts that have been formed for Six Flags branded parks around the globe, the company feels there can be more to come and that this segment will be a "sustainable, valuable and significant long term growth opportunity."  They are also in talks with more operators for additional parks.

• The company plans to continue to invest 9% of revenues into new capital projects, and use excess earning for stock dividends.  They also announced a 11% increase in the quarterly dividend per share.

• Year to date revenue includes $10 million of "international revenue," which I would assume are payments for the Six Flags branded parks being developed.

• The addition of Holiday in the Park at Six Flags Magic Mountain and Six Flags Over Georgia will help to create additional revenue in the typically slow 4th quarter.

• Management was asked if they plan to acquire new parks to help reach the new goal of $600 million EBITDA, and management said they do not plan to take that route.  Sorry CNL parks!

• The revenues for Six Flags branded parks outside the U.S. will come from a design period that lasts until the parks open, then long term there will be management and licensing fees.  This actually sounds like a pretty great deal for the company overall.