Wednesday, October 28, 2020

Heard On... Six Flags Entertainment's Q3 2020 Earnings Call

© Six Flags Entertainment

Today was Six Flags Entertainment's earnings call for the 3rd quarter of 2020.  The company sent out a full press release detailing their results, available here.  No one expected the numbers to be great during these pandemic times, but there are still some very interesting takeaways from both the release and the call that they had today.  Here are some notes.

• In the third quarter attendance was 2.6 million guests, down 11.4 million from the same quarter of 2019.  Total revenue was $116 million, down $495 million from last year.  This resulted in a net loss of $116 million, with an EBITDA loss of $54 million.  The company spent $82 million in cash during the quarter, or around $27 million per month.


© Six Flags

• Nine of the company's parks remained closed during the 3rd quarter, out of 26 total.  Attendance at the operating parks started at around 20-25% of prior year totals, increasing to 35% in the 3rd quarter.  They also had a $22 million decline in park licensing agreements, mostly from the cancelled parks in China.  There was also a $9 million write off of park ride assets, more on that in a bit.

• The company's active pass base at the end of the quarter was down 49%, to a total of 1.9 million compared to 2.6 million at the end of the 3rd quarter 2019.  There is another 1.9 million regular season pass holders as well.

• At quarter end Six Flags Entertainment had $673 in liquidity (cash they have or can borrow).  They continue to reduce operating expenses, including deferring or eliminating capital discretionary capital projects for 2020 and 2021.  They still feel that even if all parks close they could sustain the company through the end of 2021.

© Six Flags

• Company leaders have a Transformation Plan underway to change some aspect of the company, utilizing technology to find cost savings and increase revenue.  They've spent just under $30 million year to date on the plan, including consultant fees, costs associated with layoffs and ride retirement write offs.  They expect the Transformation Plan to create $80 to $110 in new EBITDA per year when complete.

• The Plan will modernize park operations and improve the guest experience.  The effort is so large that a new office will house employees dedicated to it starting in Q2 2021.  


• For costs, they will optimize the corporate structure, reduce non-labor expenses, and optimize labor costs at the parks.  This includes reducing layers in the corporate structure (see recent layoffs) and creating a shared services area that will do certain jobs for the parks centrally - like finance, human resources and information technology.  They are also eliminating two satellite offices the company had and changing travel and expense policies to reduce costs.  They will also centralize purchasing, so each property isn't buying the same items at different costs; for example they said buying the same lettuce for all parks will save $40k a year.

• More on costs.  They are also looking at ride maintenance budgets and by optimizing ride offerings they can save enough to build one new ride per year (not at each park, just one new ride).  However, this means that they've found 15 rides that are currently being removed from the parks.  To do this they looked at operating costs versus rider throughput... so expensive to operate, low capacity rides are on the way out.  They has let them see what rides are great for each park, what ones need to be refurbished and which ones will be eliminated.  No word on what the 15 rides are... but you can be sure we all want to know.  They also used the term "redeploy" with regard to some rides, saying they can be "redeployed to other parks in lieu of actually spending new marketable capital."  So it sounds like the old Six Flags ride relocation program may be coming back.

© Six Flags

• As for increasing revenues from the Transformation Plan.  This will be done through improved guest experience, improved websites, pricing and promotions, media spending and culinary offerings.  The guest improvements include reservations, prepaid parking, mobile ordering, contactless transactions etc.  They tested a new website in August and saw double digit increases in online sales, and have since rolled out the new website for all parks.  They're using targeted advertising and increasing spending on ads by one additional percent of revenue.  Finally, they are aware that food scores on satisfaction are low, so they are working to offer a better product that will make guests happy and increase revenue.

• Attendance in October has been hitting 50% and higher of prior year attendance, in some places even beating prior year attendance.  During the quarter attendance at the drive through safari in New Jersey was 371,000.

• In order to breakeven and have 0 EBITDA instead of a loss, they estimate they need 45% to 55% of 2019's attendance.  In order to have a breakeven of cash flow, they think they would need 65% to 75% of 2019 attendance.  For cash, those percentages would cover interest payments and partnership park distributions. 


• When asked about capital expenditures for 2021 leaders stated they're still doing analysis and due to ever changing market conditions related to the pandemic, it's too early to forecast what they'll spend.  So no real update on if the 2020 rides will open in 2021, or if their will be additional ones too.  They said they will updated again on the next call, which would be in January.

Tuesday, October 27, 2020

Knott's Berry Farm to Celebrate the Season with Knott's Taste of Merry Farm Special Event

© Knott's Berry Farm

Halloween may be this coming weekend, but Knott's Berry Farm is already getting ready for the next big holiday with today's announcement of the Knott's Taste of Merry Farm event.  Continuing their trend of offering guests seasonal food and retail events while the rides remain closed, the park is going to get totally decked out for holiday fun.

Running select days November 20th through January 3rd, Knott's Taste of Merry Farm will celebrate the "merriest season of all" with plenty of family fun.  Visitors will find "enchanted d├ęcor, thousands of twinkling lights, miles of festive garland, and a variety of picturesque holiday settings, all serving as a backdrop to the tastiest holiday foods around."


© Knott's Berry Farm

The only way to access the event is through purchasing a tasting card, which run $40 for adults and $20 for kids - season pass holders will receive a discount on their purchase.  The park will offer a total of 60  food and beverage options, and the park's unique gift stores will be open along with 23 local crafters.  A visit to the park will not only be quite filling, but also offer a great way to check holiday gifts off the list for everyone!

Knott's Taste of Merry Farm tasting cards are specific to a certain date, and reservations are required along with the tickets.  Admission per day is limited for safety, so if you're planning a visit make sure to schedule in advance as many dates are expected to sell out quickly!

Monday, October 26, 2020

Disneyland Resort Expands Downtown Disney to Include Part of Disney California Adventure

© Google Maps

With no solid possibility of reopening their theme parks any time in the near future, the Disneyland Resort has decided to expand their shopping and dining options by expanding the Downtown Disney District.  Starting in November, the front section of Disney California Adventure will be open to guests, allowing them to shop and dine at select locations.

With fans desperate to get back into the parks, this is fairly big news for the resort.  Downtown Disney has already seen a steady flow of visitors who want their taste of the Disneyland Resort, even if they can't experience their favorite attraction.  Now they'll be able to step foot into one of the park, exploring the offerings of Buena Vista Street.


© Disney

The area will be reopening just in time for visitors to do some holiday shopping in stores such as Elias & Co, which features tons of Disney merchandise for men, women and children.  Also opening is Julius Katz & Sons, featuring holiday merchandise and home decor and the Kingswell Camera Shop with frames, photo albums and more.

Food options will also be expanded through the expanded offerings.  Trolley Treats will offer classic candies and confections and Fiddler, Fifer & Practical Cafe will have artisan sandwiches and coffees.  Many fans are excited to learn that the area will also have vending carts, offering park classics such as popcorn, churros, ice creams and other famous snacks.

© Disney

Finally, for a full meal the park will reopen the Carthay Circle Lounge, featuring expanded outdoor seating and a new menu for dining and cocktails.  Smokejumpers Grill will also reopen, serving classics for lunch and dinner like burgers, fries, craft beer and more.

All existing safety protocols will be in place within the expanded Downtown Disney District as it welcome Buena Vista Street into the fold.  And remember, in 2020 a little of something is better than nothing!

Sunday, October 25, 2020

S&S - Sansei Reveal Spin Shot Tower Retrofit for Existing Tower Rides

© S&S - Sansei

Parks with existing S&S tower rides have a new option on the table for thrilling their guests, as S&S - Sansei Technologies has debuted the new Spin Shot Tower attraction concept.  The company has created a design that will allowed their 4D Free Spin coaster seats to be installed on existing tower rides, which then can be blasted up and down while fully rotating.

According to S&S, the ride profile (how many times riders invert, etc) can be programmed differently for each park.  That allows a full spectrum of mild to really wild, featuring face-up, face-down and even upside down experiences during the ride.  The spinning is mechanically controller and endlessly customizable.

© S&S - Sansei

The attraction has been designed with these tough times in mind.  To help parks with limited budgets the retrofit of an existing S&S tower can be done modestly, at least compared to a brand new ride or roller coaster.  Executive Director of Sales & Marketing, Josh Hays said, “Our CEO, Tim Timco, challenged us to develop an exciting attraction that parks could offer their customers at a modest budget. We believe our talented engineering team has met that goal. Parks want to offer their guests new and exciting experiences every year. That is a difficult task right now, but we believe our new Spin Shot Tower will allow parks with existing tower rides to reward their guests with a thrilling experience that doesn’t break the bank.”

Check out the below video of the concept in action - it looks like a ton of fun and I can't wait to see which park signs up to be the first!

Saturday, October 24, 2020

Universal Studios Beijing Attraction Roster and Details Revealed in New Updates

© Universal Studios Beijing

Universal Studios Beijing is getting closer to its grand opening in 2021, with the final states of the park's construction now underway.  That means it's time for the press machine to start up, and thankfully that means much more concept art and details for us.

While the basics of the park were already known, this information release contains another level of detail that we haven't seen before.  As a recap the park will consist of 7 lands: Hollywood, Transformers Metrobase, Kung Fu Panda Land of Awesomeness, Waterworld, The Wizarding World of Harry Potter, Jurassic World Isla Nublar and Minion Land.  

© Universal Studios Beijing

It will have a mix of attractions that can be found at other Universal theme parks, however there will a selection of unique attractions as well.  For instance, Jurassic World Isla Nublar will feature an indoor dark ride named the Jurassic World Adventure - this is one to watch as so many of us have longed for an intense Jurassic Park themed dark ride for many years.  The greater Jurassic World section will be unique as well, offering The Aviary with a suspended powered coaster to boot.

The Incredible Hulk coaster at Islands of Adventure has been replicated at the park, though now called the Decepticoaster - the theming on the launch is top notch!  Minion Land is a super silly fun place for kids to explore, with smaller attractions both indoor and outdoors.  The Kung Fu themed section is largely indoors, which will allow the park to make a realistic nighttime setting which is sure to amaze.  Both Waterworld, which is just the stunt show, and the Wizarding World of Harry Potter are now staple attractions at Universal Parks that will be found in China as well.

The below video will take you through all the attractions and hotels at the resort, showing off never before seen concept art and details.  Also, since the park is so far along in construction there are tons of great photos coming out from workers and the press - check out a huge selection of them at this link on ThemeParx.

Wednesday, October 21, 2020

California Releases Strict Rules for Parks Reopening During Pandemic

All California theme parks have stayed shuttered during the pandemic, with only some opening in order to have special food and retail festivals or operate as zoos.  While parks in some parts of the country opened as early as June, there have been no rides operating in California since March, or so.  Recently the parks across the state have urged the California Governor to release a plan so that they know when they will be able to open the gates again, and now the plan has been released.  You can read the full document here, but in short, parks in California won't be reopening any time soon.

The plan features color coded stages related to positive COVID-19 test results and cases rates per county.  Purple (Widespread) is the worse, followed by Red (Substantial), then Orange (Moderate) and finally Yellow (Minimal).  These follow the larger reopening plan that the state has had in place for some time, and the risk matrix for each stage is below.

No parks are allowed to open at all in counties in both the purple and red stages.  Starting in the orange stage "small" parks (overall capacity less than 15,000) can open but on at a maximum of 500 guests or 25% of capacity, whichever is less.  That's a severe restriction that would make operations unprofitable for nearly every park I can think of.  Plus, in the orange stage, these parks cannot open indoor attractions and visitors can only be from the same county the park is located in.  The logistics of checking that operationally seems like a nightmare as well.

If a county gets to the yellow stage then a park within it can operate at 25% of maximum capacity and all indoor locations in the park can only have 25% capacity.  That would allow parks to open in similar ways that others around the country already have, as there are also a full set of rules related to face masks, cleaning, social distancing, etc.

The catch is that currently less than 10 counties in California are in the yellow stage, none with parks in them.  Less than 15 counties are in the orange phase, which would come with the strictly limited attendance, and they don't have parks in them anyway.  So all the bigger parks, like Disneyland, Universal Studios, Knott's Berry Farm, Legoland, Six Flags Discovery Kingdom, California's Great America and a multitude of others, are currently stuck in purple or red stages.

Essentially, this means that under the Governor's current plan we won't see any of these parks open any time soon, especially with COVID-19 cases surging across the country once again.