Six Flags in the red but expects to be over the hump next year

Posted Wednesday, July 16, 2003 7:29 AM | Contributed by Jeff

Six Flags hasn't posted a profit since 1998, but says that next year will be the turning point. The company's CFO says that the debt acquisition was necessary to build the property portfolio and this will lead to significant growth.

Read more from The Star-Telegram.

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Wednesday, July 16, 2003 7:35 AM
Jeff's avatar Interesting arrangement with Six Flags Over Texas.

I'm not sure exactly how they're positioned for growth. Clearly Wall Street isn't a big fan of taking on more debt to finance acquisitions, and capital expenditures can't take too much away from debt service. Where's the balance?

My personal opinion is that they need to not give away the gate the way they do. Cedar Fair seems to see their growth in per capita spending, but how does SF even account for this? My local park doesn't scan passes most of the time, so how can they really have any data about what guests are spending?

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Jeff - Webmaster/Admin - CoasterBuzz.com - Luau II Cam 7/19
DELETED! What time does the water show start?

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Wednesday, July 16, 2003 8:02 AM
Remember that depreciation doesn't affect your cash flow, so all of that depreciation doesn't really burden that company, and it keeps them from having to pay income taxes. Six Flags cash flow looks OK and that's what really decides whether you stay in business in most cases. Would I invest in them? That's another question.
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Wednesday, July 16, 2003 8:04 AM
They expect to go from a loss of over 100 million to a profit? Yu ahve to wonder what they're planing on doing, because they could just go and raise food and admission prices even more, and that'll make people mad. They've cut costs on just about everything possible. I guess we'll know next year.
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Wednesday, July 16, 2003 8:26 AM
...or reconsider their dirt cheap season passes. I'm no CFO, but I do know that unless next year really is "The Turning Point", not too many places are going to want to loan them more money, and we all know that you gotta spend money to make money.

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Jes
Jes's Roller Coasters DJ Jes
Six Flags Worlds Of Adventure Ride-Ops Crew 2002-2003(Find Me, Win a prize!)

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Wednesday, July 16, 2003 8:27 AM

GOOD i hope six flags goes out of buisness, theyre rides suck, the food is crap and it costs a lot the cup bottoms fall apart on you after 10 minutes. They are so god damn expensive to park and get into, they never clean up the park, they dont enforce any rules whatsoever, the park security systems suck. THE WHOLE COMPANY IS SCREWED UP AND I HATE THEM, I HOPE THEY GO OUT OF BUISNESS, AND IF THEY DONT I WILL START UP A CHAIN OF AMUSEMENT PARKS MYSELF AND TRY TO BEAT THEM OUT. I KNOW HOW TO START AMUSEMENT PARKS, AND GET THE MONEY AND NOT HAVE TO PAY INTEREST, everything at six flags either sucks, its crap, or its too expensive, a bottle of water 12 oz. costs 5 dollars. theres garbage everywhere too, and the rides always break down before you can get on it.

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Wednesday, July 16, 2003 8:29 AM
janfrederick's avatar Goes to show you that most companies are not as simple as one might think.

Hmmm...how do we make our parks more profitable without increasing our debt? Hmmm good question. So will we see a reduction in equipment investment and reduction in service? I don't know if they could dip any lower.

I'd imagine from an earlier thread that perhaps they are "experimenting" with improving customer service. But something like that would take a few seasons to improve profits.

Curiouser and curiouser.

BTW, Jeff, all they have to do is click on each little person and go to the info tab... ;)

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"SOME people have NO class!" - Mom from the Whizzer queue

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Wednesday, July 16, 2003 9:14 AM
wow genghis. shut up. you know how to get a loan w/o interest?? sure.

sounds like somebody's cup bottom fell out one time (not even SF's fault btw... cup manufacturer) and now hates the entire chain. sickening.

*resume normal topic*

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"It's like something out of that twilighty show about that zone"

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Wednesday, July 16, 2003 9:28 AM
I would really love to rip Genghis' pathetic, grammatical lacking, unintelligent post to shreds, but I'm not feeling it today. Maybe tomorrow... or later today.

Anyway, I think it's good for SF to finally being getting out of debt, but I don't really see how they will be able to do this by next year especially with lower attendance figures in the past few years. On a side note, I do love the fact that SFOT isn't completely owned by SF!! ;)

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It IS as bad as you think, and they ARE out to get you.

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Wednesday, July 16, 2003 9:49 AM
Genghis Corn yelled: "....AND IF THEY DONT I WILL START UP A CHAIN OF AMUSEMENT PARKS MYSELF AND TRY TO BEAT THEM OUT. I KNOW HOW TO START AMUSEMENT PARKS, AND GET THE MONEY AND NOT HAVE TO PAY INTEREST."

Hmmmm... maybe Genghis can get an executive position with the CPO(formerly CPS).

Seriously... I never did understand the logic behind their season passes and all of their incredible admission discounts. Great for the customer, but how good for the financial health of the chain?

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Kind of hard to take a post as objective if a park or coaster name is part of the "user name"*** This post was edited by SLFAKE 7/16/2003 1:51:29 PM ***

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Wednesday, July 16, 2003 9:54 AM
SFoG isn't completely owned by SF either.

On a side note, I don't completely understand how SF thinks they will recover in one year either. However, I have noticed a significant increase in atmosphere and customer service at a few of their parks this season. Maybe they finally are doing things right.

Even though the changes have been coming, the people aren't. Unfortunately, it might be too late for the company, and I would hate to see that.

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Wednesday, July 16, 2003 10:03 AM
Jeff's avatar And like we've said before, how much money are the kids who get dropped off at the park really spending? As an adult season passholder with disposable income I don't even spend that much.

I've never doubted that the company's cash flow was fine, and I think that the drop in stock price was, to a certain degree, somewhat of an over-reaction, but I can't stand the way company's scream EBITDA and say, "See, we're doing well!" As the article states, it's easy to take that out of context if you don't consider the debt service you need to make. Sure, EBITDA gets better year over year, but are you making progress?

I'm sure Six Flags will be fine in the long run, but it's still not an investment I'd be willing to make, especially considering the only other pure amusement park player is paying out cash more and more very year.

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Jeff - Webmaster/Admin - CoasterBuzz.com - Luau II Cam 7/19
DELETED! What time does the water show start?

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Wednesday, July 16, 2003 10:26 AM
There are several things that caused the reaction to stock prices. SF has not had a good current ratio, acid-test ratio, return on total assets ratio, gross margin percentage, and cash debt coverage ratio for the past few years. I had to do a report in my intermediate accounting class on it, and the paper had to include the 3 most current years of 2 companies in the same sector. Sony and Panasonic, GM and Ford, and in my case, SF and CF (since they are both chain parks that don't focus in destination parks{ie Universal, Disney}). SF has some major problems to overcome if they want to look good in the eyes of investors. Its very possible to make a comeback, but there will need to be some changes in the way that the company is run.

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Don't ever underestimate the psycho factor in my head

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Wednesday, July 16, 2003 10:29 AM
FWIW, Six Flags is not the only company that harps on EBITDA. That's Cedar Fair's main metric, too.

Of course, the financial stories underlying the two companies are different---the corporate structure of FUN makes it pretty appealling to think about cash flow first, and FUN appears to be much more conservative on capital expenditures than PKS.

-b, who really has to get around to placing that FUN order soon.

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http://www.eecs.umich.edu/~bnoble/

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Wednesday, July 16, 2003 10:44 AM
Jeff's avatar I disagree with you there. While they make mention of EBIDTA regularly, their conference calls and quarterly releases tend to concentrate more on attendance and per capita spending (the latter of which is probably their best opportunity for growth).

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Jeff - Webmaster/Admin - CoasterBuzz.com - Luau II Cam 7/19
DELETED! What time does the water show start?

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Wednesday, July 16, 2003 11:06 AM
Jeff:

I got dropped off at the park yesterday and spent 6 dollars. I hope that answers your question.

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http://coasterplace.web1000.com

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Wednesday, July 16, 2003 11:08 AM
Jeff's avatar Well good, that must mean everyone who is dropped off at the park spends six dollars! Data acquired!

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Jeff - Webmaster/Admin - CoasterBuzz.com - Luau II Cam 7/19
DELETED! What time does the water show start?

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Wednesday, July 16, 2003 11:22 AM
janfrederick's avatar Hey, maybe they could start collecting zip codes like Radio Shack...

"I'll take two corn dogs and a funnel cake please..."

"What's your zip code?"

"Zip code? Uh, I dunno, Mom's house??"

"And while your at it, how old are you?"

;)

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"SOME people have NO class!" - Mom from the Whizzer queue

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Wednesday, July 16, 2003 11:22 AM
Jeff,

My IT deparment will not appreciate that last post seeing as there is now coffee all over my keyboard. Who knew coffee could travel out of your nose like that?

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Wednesday, July 16, 2003 12:05 PM
Yeah, Krypton, I knew both parks weren't completely owned by SF. Does anyone know if SFOMA has any other investors in it like OT and OG since it opened after the parks were sold.

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It IS as bad as you think, and they ARE out to get you.

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