Wednesday, July 26, 2017

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

Today was Six Flags Entertainment's second quarter earnings release.  The news for the quarter itself was good, with the company posting increased revenues by $15 million, and a 5% increase in attendance to 9.5 million guests.  Single day ticket sales declined, however, decreasing per capita figures - blamed on poor weather.  The full 6 months of the year give more info on the company's performance, which was detailed on their conference call.  Here are some notes:

•  Looking at the first six months of the year, revenue was $522 million, slightly down from 2016.  This was a result of a 2% decrease in per cap spending, offset by a 2% increase in attendance and a 7% increase in sponsorship revenue and licensing revenue.

 •  The company's plan to continue to increase the number of passholders has worked, as the total number of Active Pass members is up 12%.  This also resulted in a 12% increase in deferred revenue from season pass, season food and other purchases.

•  Due to the "soft" results during the first six months of the year, the company does not expect to reach their Project 600 ($600 million in EBITDA) goal for 2017.  The company reversed around $28 million in stock options that will not be paid this year due to not reaching the goal.

•  Expect to see more international licensing deals in the future.  Six Flags says they have several new deals in the works, to be announced over a few years, and more interest regularly received from around the world.  The deals require no capital investment so they are especially lucrative.

•  Adding water parks to the company that are located near existing theme parks is already a hit, with only two added.  In Mexico season pass sales are up 40% due to them being bundled with their newly acquired Hurricane Harbor water park.  The company has had several operators reach out to them about potential deals.

•  The plan to add licensed parks in Vietnam is still moving forward, but more slowly.  The originally partner developer is still working to acquire land for the park, but Six Flags is also already talking to other potential partners in the country.  They seem positive that eventually Six Flags parks will open there.

•  Six Flags is still interested in expanding its footprint in the U.S., but it all depends on the deals making sense for their growth.  There sounds like there will be no buying parks for the sake of owning more.  Water parks remain a high focus, but they did mention they have a team that works on potential deals with water parks, groups of water park, and even theme parks.  So you never know.

•  Increasing season-long dining pass sales is a focus that they will work on growing for the next five or even ten years.  They have a low penetration so far into their market, so see a ton of room for growth on these plans.