Monday, February 24, 2020

Heard On... Six Flags Entertainment's 2019 Full Year Earnings Call

© Six Flags Entertainment
This past week also saw the announcement of Six Flags Entertainment's full year 2019 results... and they weren't nearly as rosy as Cedar Fair's news.  The chain's stock took another plummet downward after the news was announced, for various reasons.  The company had their earnings call just the same, here are some notes from that along with their results.

• Overall, revenues were up 2% or $24 million to just under $1.5 billion.  They had a 2% or 788k increase in attendance to 32.8 million, a "slight decline" in per capita spending, and a 3% decline in sponsorship, international agreement and accommodations revenues.  These figures include 2019 full year totals from 5 new parks purchased in June of 2018 and one new water park purchased in April of 2019.

© Six Flags
 • Taking out those six new parks the legacy parks, revenues only grew $1 million, costs grew $15 million and EBITDA was down $15 million.  The six "new" parks contributed 90% of the attendance growth in the year, while the legacy parks only saw a small, 65,000 visitors increase.

• The bottom line suffered from these figures and certain other adjustments, however.  Net income was down $97 million to $179 million and EBITDA was down 5% or $27 million to $527 million.  Other factors challenging the bottom line included a $10 million charge due to the China parks agreement, higher costs from the new parks and higher stock-based compensation.

•  Six Flags has formally terminated their agreement with Riverside, and believe it is "unlikely" that they will recognize any revenue in 2020 related to park development in China.

© Six Flags
• Six Flags has seen challenges from their legacy, or existing, parks in the U.S. during 2019.  Attendance, per capita spending and revenues were flat this year, but operating costs were up 2% reducing EBITDA by 3% from those parks.

• The company now says they see 2020 EBITDA coming in at $435 - $465 million, which is way down from 2019's total of $527 million.  To fight this they have decided to "make incremental investments in the base business to enhance the guest experience," though they're not saying what that is at this point.

• More on their 2020 outlook.  They estimated EBITDA based off of $30 million less in international development (loss of China parks), $20 million less due to wage increases, another $20 million for OpEx spending for park maintenance projects and operational improvements along with marketing spend for single day visitors, and finally restoring a $20 million bonus program for employee recruitment and retention.

© Six Flags
• Due to the depressed earnings, the company has slashed their stock dividend by 70% for the first quarter of 2020, down to $0.25 a share from $0.83 a share in the 4th quarter of 2019.

• In quite a reversal from prior management, the park's new CEO, Mike Spanos, says they saw a big decline in single-day tickets, and need to work to get those back.  Prior leadership was all about getting everyone to be a pass member, seemingly ignoring the single day visitors.

• The company was trying to fight operational cost increases by saving money elsewhere in the parks, and that has shown up in the form of lower guest satisfaction scores.  That's a scary thing for them I would imagine, as that could be the start of unhappy visitors that will turn on the parks.

© Six Flags
• At the end of 2019 the total number of active pass members actually decreased by 3%.  The number of active pass members increased by 18% to 2.6 million, but that was fully offset by soft regular season pass sales during the holiday season.  Overall, the active pass base contributed 63% of attendance last year.

• Six Flags spent a total of $140 million in capital expenditures in 2019.  That feels quite low for the 26 parks they have, in fact that averages to $5.4 million per park.  Considering one large coaster probably costs 3 times that, or more, that doesn't leave much for the small guys.

• The chain's new CEO is embarking on a new comprehensive plan that will play out over the next 3 to 5 years.  They intend to address revenue growth, margin improvement and capital deployment and have hired the Boston Consulting Group to give an external perspective to their plan.  The full plan will be revealed at the May 28th Investor Day for Six Flags.  The Investor Day sounds like a very big deal, specifically regarding capital expenditures going forward, so be sure to watch out for that.

© Six Flags
• Understanding that former management's goal of 750 million in EBITDA "Project 750" is "not realistically attainable" a new, shorter reward system for employees will be uses.  Focused on awarding restricted stock units, the hope is to closely align employee reward with stock growth.  To help out, the new CEO will not participate in the award plan in 2020.

Sunday, February 23, 2020

Orion Begins Test Runs at Kings Island

© Kings Island
Ahh, the smell of freshly run new-for-2020 roller coasters is in the air in Southwest Ohio, specifically at Kings Island where Orion has just started testing!

The theme park posted a surprise blog post on Saturday evening announcing that the giga-coater had completed the first runs.  Trains have now fully completed Orion's 300 foot first drop, and made quick work of the ride's 5,321 feet of track.

The new coaster will open with the park on April 11th, but those participating in the first riders benefit fundraiser will get a go on Orion on April 9th.  That's just over six weeks from now, not long to wait at all!

Check out the video of Orion testing below!

Thursday, February 20, 2020

Heard On... Cedar Fair's 2019 Full Year Earnings Call

© Cedar Fair
Cedar Fair has announced their 2019 full year results, and had very good news to share pretty much all around.  As always, they hosted a conference call to discuss their results and here are some tidbits from that event:

• Including their two new Schlitterbahn parks, overall revenues for the year increased $126 million or 9% to $1.47 billion.  That came from an increase in attendance of 8% or 2 million visits to a total of 27.9 million.  The company also saw a 1% increase in per-capita spending and an 11% or $16 million increase in out of park revenues for a record amount of $169 million.

• Excluding the Schlitterbahn parks the numbers were still good.  Revenues were up 6%, attendance was up 1.3 million or 5%, per capita spending was up 1% and out of park revenues were up 8% or $12 million.

© Cedar Point
• The company has seen an amazing 40% increase in season pass sales right now over last season.  In 2019 season pass visits totaled 53% of their attendance, up from 50% in 2018.  The increase has led to deferred revenues being up $40 million at year end.  We all know that Cedar Point is killing it with their season pass sales, but sales are up double digits this year at almost every park as well.

• In 2019 the number of unique visits, aka not season pass visits, were up almost 1 million.  The company knows the benefit of growing season pass sales but also sees unique visitor count as critical to sustained long term growth.  They credit the rise in unique tickets to events like Grand Carnivale and Monster Jam.  The company plans to continue these limited run events in the future, adding more like Grand Carnivale and Summer Nights.

© Cedar Fair
• The out of park revenue segment continues to shine, and they see that fact as an item that differentiates them from other regional companies.  Out of park revenues now represent 10% of overall yearly revenue totals, which is significant.  They're currently renovating both the Knott's Hotel and Castaway Bay and hope for significant returns like they saw with Hotel Breakers.

• Food and Beverage per capita spending was up 5% in 2019, which they credit to their culinary chefs and new efficient and immsersive dining establishments.  They also see their food program as something that differentiates them from competitors in the industry.

• 2019 saw both strong consumer spending trends as well as very nice weather through the summer and fall, both of which led to the record results.  You often hear parks talk of bad weather affecting their results, it is nice to hear about good weather for a change.

© Canada's Wonderland
• Canada's Wonderland just finished their first Winterfest event and it was a success.  They had two thirds of their visitors purchase single day tickets, meaning they were probably new visitors to the park.  That's different than the chain's other Winterfest events where 60-70% of guests are pass holders.

• The Pass Perks loyalty program is rolling out to all parks (except Schlitterbahn which they hope to add in 2021) this year.  The test parks last year helped gather data to improve the program.  They use Pass Perks not only to build loyalty but also to drive more visits through limited time offers and specials.

• Cedar Fair has set a new goal of reaching $600 million in EBITDA by 2024.  This year they hit $505 million, which was up $37 million.  Without the Schlitterbahn parks it was up $21 million, meaning those two parks contributed $16 million.

© Kings Island
• There was a lot of chatter about capital expenditures, which are ride-lovers best friend.  They're still planning to move toward more OpEx oriented and CapEx efficient additions, which are more like the limited events and such.  They will also continue to spread out the major thrill ride additions at individual parks by an additional one or two years.  So if it used to be 4 years between big rides at park X, now it will be 5 or 6 (as an example, they did not give specific data).  This allows them to have something new at each park, each year.

• More on capital spending - they want to get overall spending closer to 9% of revenues by the 2021 season.  In 2020 they're spending around $190 million, for comparison 9% of the 2019 revenues would be around $132 million.  By 2021 and 2022 their large spending on hotel renovations and bringing the Schlitterbahn parks up to speed should be over, allowing them to spend less overall.

© Carowinds
• A couple final tidbits.  Two more parks will be adding a parade during Winterfest in 2020, similar to the parade that Carowinds added this year.  They confirmed no new park will add Winterfest in 2020, which we knew already.  Lastly, they did remark on how they removed two roller coasters from Kings Island in order to make operating costs balance for the addition of Orion - so they're not afraid to remove old rides to add new ones in the future... at least that's what I gather.

Wednesday, February 19, 2020

Apex Parks Group to Permanently Close Both Indiana Beach and Fantasy Island Amusement Parks

Sad news for the amusement park industry - Apex Parks Group has announced the permanent closure of both Indiana Beach (Monticello, Indiana) and Fantasy Island (Grand Island, New York).

News had just started to break that the amusement operator, which owns many family entertainment centers under the brands of Boomers and SpeedZone, no longer had the resources to invest in and operate the two longstanding amusement parks and now they've confirmed that the parks are indeed closed for good.

Apex did released a statement regarding the closures for both parks, using almost the same wording for both:  "Despite significant effort and a great deal of investment in infrastructure and rides, we have not seen an improvement in operating results. As such, we made the difficult decision to cease operations. This was not a decision entered into lightly. Team members are being assisted by their supervisors and the company is working to minimize impact to those affected."

It is said in several new stories that Apex tried to find a buyer for both of the parks, with no success.

Indiana Beach © Google Maps
At the same time that the parks were announced as closing, Apex is also shopping the rides from the parks to other operators.  They plan to keep some of them, but many are up for sale or being retired.  According to this post from ACE, all of the steel roller coasters at the parks are for sale, but the only wooden coaster listed is the Silver Comet from Fantasy Island.  That leaves the three wooden rides at Indiana Beach seemingly destined for destruction.

Interestingly, all four of the wooden roller coasters between the two parks were built by Custom Coasters International.

Fantasy Island © Google Maps
Indiana Beach first opened in 1926 and was a longtime family-owned favorite vacation spot for people as it sat nearly in the middle of Lake Shafer.  Scott & Carol have shared a great deal of wonderful stores about the park through the years, you can scroll through them at this link to learn much more about the park.

Fantasy Island, which was for a long time known as Martin's Fantasy Island, opened in 1961 and was also family owned park that was run privately under a handful of owners for many years.  It was just purchased by Apex near the start of the 2016 season.

The news of the parks closing has hit many fans, both inside and outside the amusement industry, as a punch in the gut.  Sadly it seems the time for possibly saving these parks is over, especially since Apex already tried to find new owners.

Tuesday, February 18, 2020

Six Flags Over Texas Quickly Installing New Aquaman: Power Wave Water Coaster

© Six Flags Over Texas
Six Flags Over Texas will debut Aquaman: Power Wave in 2020, North America's first Mack Power Splash attraction.  The ride combines a splash boat ride with the launch elements found on modern roller coasters, making for a unique and thrilling experience.

Six Flags Over Texas has been sharing photos of the ride's construction, which just kicked into high gear recently as the parts of the ride were moved to the work site to be installed.  That can be seen up top, and also in this video from the park.

© Six Flags Over Texas
Just this week the park has started to show off how much of Aquaman: Power Wave is already installed in a fun interactive image on social media.  You can scroll around and take a look at the work site, part of which can be seen above.  That end of the track isn't yet complete, but over on the other end...

© Six Flags Over Texas
Things are much bigger!  The backside of the ride is starting to tower over the park - this will be the totally vertical side of the U shaped track that the boats launch up.  Each of the towers will stand 148 feet tall, though the other will feature a bit of a level-off near the top.  The ride launches the boats both forward and backward several times - hitting a top speed of 63 miles per hour which is super fast for a water ride.  After the final launch up one of the towers the boats come down to the splash lagoon and naturally a huge wave covers all.

© Six Flags Over Texas
Just as a reminder, here is how Aquaman: Power Wave will look when it is complete.  Right now the park is working on the tower on the left of this image, with much of the middle section of track also installed. 

Monday, February 17, 2020

Hersheypark Places Final Track Piece for New Candymonium Hyper Coaster

© Hersheypark
Another of North America's new for 2020 roller coasters is now complete as Hersheypark just recently placed the final track piece for Candymonium.  The park's new hyper coaster, fabricated by B&M, now has a completed 4,636 foot long course.  The final track piece, seen above, was located just before the brake run at the end of the ride.

Candymonium is the biggest ride in the park's new Chocolatetown entrance area, which is all new for 2020 as well.

© Hersheypark
Less recently than the instillation of the final track piece, Hersheypark also shared photos of the coaster's three shiny new B&M trains.  There will be three color schemes for the trains, the blue one above represents the famous Hershey's Kisses.  There will be a red train as well, representing Twizzlers.

© Hersheypark
The third train is orange, signifying Reese's Peanut Butter Cups, which can be seen above.  The trains have both milk and dark chocolate color schemes as well, seen on the beautiful B&M clam shell design above.  Candymonium starts with a 210 foot tall lift hill and the three trains will hit a top speed of 76 miles per hour as they race out into the newly developed land the park is utilizing.

© Hersheypark
The entire Chocolatetown area is a massive renovation of the entire entrance area to Hersheypark, and this recent photo shows that much progress has been made on the area.  You can see Candymonium in the background, along with all the new buildings that fill up this part of the land.  There's even a Hershey's Kiss shaped planter that can be seen here, a fitting way to welcome guests to the land of chocolate!