Monday, May 4, 2020

Heard On... Six Flags' 1st Quarter 2020 Conference Call

© Six Flags
Late last week was Six Flags Entertainment's 1st Quarter 2020 earnings conference call.  This one was a bit different since we're in the middle of a pandemic, but there were still some interesting items to note from the call.  Here is a link to the company's press release about the quarter.

•  Revenues for the quarter were $103 million, a decrease of $26 million from the prior year.  They had 1.6 million guests, down 584k from last year.  However, prior to the park's closing attendance was up 255k over last year.  The park also had $10 million less revenue due to the international licensing agreements in China and Dubai which were cancelled.

•  The company's active pass base decreased 10% over the prior year.  The company attributes that to the pandemic, causing deferred revenue to be $149 million, down $29 million from the prior year.

•  Prior to closing the parks in March, single day paid admission at the operating parks was up 38%, something important as that metric failed last year and was going to be a big push for the operator in 2020.

© Six Flags
•  The Six Flags branded park in Saudi Arabia is "on track" and is still planned to open in 2023.

•  Reaffirming their plans to save cash, they clarified that they have deferred $20 million of "increased investments" they planned to help the guest experience, and found $10 - $20 million of extra non-labor operating costs to cut.  They are also "taking steps to defer or eliminate at least" $40 - $50 million of capital expenditures for this year.

•  More on the active passholder base - at the time of the call the program was down 20% over the prior year.  Six Flags is working to retain the current passholders.  They have offered guests the ability to pause payments on their passes, get a free tier upgrade if they keep paying, and get an extension for the time the parks are closed.

•  Six Flags is working with their active pass base to understand what they expect to see once the parks are able to open.  This is helping them plan to operate the parks in a way that will make the customers feel comfortable.  50% of guests said they would visit a park right now if it were open, and 80% said they would visit this year if the park includes social distancing and increased disinfecting standards.

© Six Flags
•  They are also turning to technology to allow for virtual queues, cashless transactions for payments and mobile food ordering, all of which are designed to help with social distancing.  As for other methods, there will be temperature checks, hand washing stations, and plenty of hand sanitizer among others.

•  Once a park is deemed okay to be opened, they will need two to three weeks to prepare.  They also note that they know how to operate a park with small attendance so that it is still profitable, so they are prepared if attendance is weak.

•  When asked about what parks could open first, the company made it clear it's all up to local governments, however the parks in Georgia, Texas, Oklahoma, Missouri and Mexico appear to be the first in line at the moment.