Saturday, February 16, 2019

Heard On... Six Flags Entertainment's 2018 Full Year and 4th Quarter Earnings Call

This past week was also Six Flags Entertainment's earnings announcement, covering 2018 in total along with 4th quarter results.  The stock market had a pretty substantial negative impression of the results, even though they were record breaking in many aspects.  Let's take a closer look.

•  For full year 2018 Six Flags saw record revenues of $1.46 billion, an 8% increase.  Attendance was up 5% to 32 million, though mostly due to adding 5 new parks mid-year.  Adjusted EBITDA was up 7% to $554 million and per capita spending increased 2% for the year.  They also report spending $133 million on new capital expenditures in 2018, $23 million to acquire the 5 new parks, and paid $267 million to shareholders via dividends.

© Six Flags
•  The 4th quarter also saw new records achieved, with revenues of $270 million, up 5%, fueled by a 6% increase in guest spending and a 3% increase in attendance.  The numbers benefited from the addition of two new parks offering the Holiday in the Park event.

•  Six Flags is happy to report that during the year the Active Pass Base, those who have either a membership or season pass, increased 8%.  They rolled out new tiers at the start of 2018, and this led to pricing increases that also helped increase revenues as more signed up for higher tier plans than they expected.  For the year, pass and membership holders amounted to 63% of all attendance.  At the end of 2018 there were almost 8 million active pass members, more than 2 million of those are memberships.

•  Six Flags has had a Project 600 goal for some time now, which aimed to see $600 million in EBITDA by the end of last year.  They hit $554 million, but the failure to meet the goal meant some big bonuses were unaccrued which also helped the 4th quarter results.  They also wanted to hit $750 million by 2020, and now admit that probably won't happen, but think it could in 2021.

© Six Flags
•  In 2018 Six Flags recognized $42 million in revenue from licensing agreements.  They had to reverse $15 million in revenues in the 4th quarter due to delays on the parks in China.  The first parks are now expected to open in 2020, previously 2019, then more in 2021 and 2022.  The Dubai park is permanently on hold, and my never happen.  Since starting these agreements in 2014, Six Flags has booked $133 million in revenues from them.

•  Six Flags plans to continue to purchase water parks and other smaller operations in coming years located in "feeder" markets to the big parks, with "dozens" of opportunities available.  Since starting this in 2017 they've already added 8 parks.