Posted
Six Flags released its second quarter earning results yesterday, missing alaysts' expectations by of 17 cents per share by 9 cents. Analysts down-graded the stock this morning, which subsequently droped as low as $4.75 after closing at $11.86 yesterday. In their earnings release and today's conference call, the company said it is not optimisitc about reaching its yearly targets.
Read the Six Flags press release from Business Wire via Yahoo and the report from Dow Jones Business News.
The 3 parks the mentioned that caused the attendance to be lower were Great Adventure, Over Texas, and World Of Adventure. They mostly blamed the weather, post 9-11 thinking, and the problems with terrorist warnings the first part of July(attendance was pretty bad across the board for that month).
Until consumers gain more confidence in the economy, they wont be wasting money on numerous trips to theme parks. Look at the Orlando area. They have less than 60% occupancy across the area in the summertime. Now, you KNOW when that happens, things are bad for the industry. The main reason why smaller parks like Holiday World and SDC are doing so well is because people are driving further for vacations now, and they want the most they can get for their money. Yes, customer service is going to be some of the cause for SF's problems, but overall they will bounce back by 2nd quarter next year. If they do what they say they were gonna do, expand at their performing parks, they should be in good shape. Eventually, they will top out on buying parks and concentrate on what they have. I think those days are swiftly approaching them and us regional park patrons will reap the benefits.
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WCUSA-The World's largest theme park is coming!
Theme parks will NEVER be the same!
Chris, I don't see how the weather at SFWOA could be all that different than that an hour or so West at CP, but I bought into Six Flags today for a variety of reasons.
One, the real estate. While I'd hate to see the company sell off its parks, there are some meaty parcels in there, off well-developed traffic by design. It's worth far more than the company's debt. That is why this stock isn't going to zero.
Two, the value. Yep, earnings are where they were back in 2000. Only the stock was trading in the $20's back then. Even after the stock tumbled later that summer, it never dipped more than three times higher than the $5 the stock is at today.
Three, the interest rates. They are low. I don't know the terms of the the Six Flags Piers (PKS-B) but any debt that is on a credit line is tied to the low rates and that which isn't can be refinanced even at lower rates even as the company's credit rating takes a hit given the low, low borrowing rates.
Four, the turnaround. Maybe this is the wake-up call to Six Flags. Maybe this is the buzzer going off to study why the parks that are doing well this summer are doing well this summer. We can quibble about the little things that are wrong at the park, but what the general public sees is a chain that has dirt cheap season tickets but outrageous one-day ticket prices and parking strategies relative to the season ticket deals. There has to be balance. From that point on, the maintenance of the rides and customer service training will fall in line.
Five, Five bucks.
Six, Six Flags.
No, this is not what they said at all. I just listened to the entire conference call. The lowered attendance at these properties was attributed to 1) increased ticket prices with nothing new and marketable added (this counts reduced discounts as well) and 2) a generally poor economy. In Cleveland they also cited particular confusion about what their product offering is, people not understanding that they've added the wildlife portion (or not caring since they didn't have the killer whales).
As a reward for their missed attendance forecasts these properties are all going to get something new for 2003.
Of course, second tier parks that have also had declining attendance aren't given the same consideration. I did not hear a single mention of any of the other US properties except for Jazzland: it seems that the only markets on the Six Flags radar are Great Adventure, Over Texas, Magic Mountain, Great America, and World of Adventure. *** This post was edited by Fierce Pancake on 8/13/2002. ***
I guess you missed the whole spiel about the weather affecting the northeast and midwest parks??? There were even questions that blasted SF for using 9-11 and weather as an excuse. One of them said, "So you are gonna use the weather as an excuse next year when the numbers are bad again??". He also mentioned the increases at SFEG, SFSTL, SFA, ans SFKK with minimal or no cap-ex.. did you not hear that either??
And close to the end, he said that parks that performed well would be rewarded with cap-ex, including SFWOA where they intended on giving it attention long term.
The funniest line out of the whole things was him saying that the less people paid to get into the park, the less they spend and the less time they stayed on the grounds. Now, that sounds like the total opposite of what I think happens. If people spend less to get into the park, they have MORE money to spend on items and food inside the park. That sounds more logical doesnt it??
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I hear a train a comin'
Comin' round the bend :P
TR2k3....GET READY!
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"To get into this head of mine, would take a monkey-wrench, and a lot of wine" Res How I Do
Two more things:
As Paris mentioned, Six Flags owns actual things - their asset/debt ratio is not terrible at all (more favourable than, say, Vivendi's park arm). This, however, will play little role in short-term stock performance.
Second, Jeremy is correct in noting the difference between income and growth investments. What he overlooked - wait - that may be presumptuous ... uh, what he neglected to mention was that the dumping of stocks related to their poor income generation - i.e. what's happening to PKS - directly affects its growth potential. Over the long run, you need a balance, and if the stock consistently fails to meet income projections (which remains to be seen here) ain't no "growth" gonna happen ...
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Age and treachery will always overcome youth and skill.
As long as their cash flow stays positive, they will continue to expand and add. Procuring loans are pretty easy when you have the ability to pay them back. Albeit over a long period of time, they still pay their bills(unlike one company that just closed its doors ;) )
Until their cash flow disappears, they are in decent shape.
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I hear a train a comin'
Comin' round the bend :P
TR2k3....GET READY!
There were several parks where attendance was up: Denver, Louisville, DC (+9), LA (+6). The 'new' acquisitions in Seattle and Montreal were also positives. I believe the attendance increases in DC and LA are without capital expenditures. All 4 major markets (LA, Dallas, Chicago, New Jersey) will get new rides/attractions next year. (I suppose that does put the old question about 'tiers' of parks within Six Flags to rest)
I heard the following in the conference call for SFOT:
Attendance was off due to: No new rides/attractions this year, Season Pass price increases and decreased ticket discounting, unusually wet weather. There will be new rides/attractions next year (yea!). Ticket/Pass pricing will be adjusted. CEO promises to pray for better weather (just kidding; but maybe he should)
Systemwide, spending per person was up 9.6%, but attendance was off 7.5%.
IMHO, the market has severely overreacted, but it's undoubtedly because of the past history of earning disappointments. Perhaps Mr. Gates can buy the whole enchilada now, if he's so inclined.
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"To get inside this head of mine, would take a monkey-wrench, and a lot of wine" Res How I Do
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