Six Flags posts loss for quarter, with increase in per cap spending

Posted Tuesday, May 9, 2006 9:00 AM | Contributed by supermandl

Six Flags Inc. on Monday said its first-quarter loss widened as attendance at its theme parks declined, but the results beat analysts' expectations and the company affirmed its forecast for 2006. First-quarter revenue fell 14 percent to $42.7 million. But the company said per capita revenue increased 13 percent to $37.13, as guests spent more on admissions, food and beverage, merchandise, games and parking.

Read more from Reuters.

Tuesday, May 9, 2006 9:53 AM
Yet another reason I think they will continue to look for parks to offload and certainly won't be in the running for any parks that might be for sale.
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Tuesday, May 9, 2006 10:53 AM
Jeff's avatar Hey... so far it's exactly what I said in a podcast weeks ago. Attendance will be down slightly, revenue down a little to flat, per cap spending up.
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Tuesday, May 9, 2006 11:29 AM
beast7369's avatar If per cap is up, then they are doing one thing right. From what I have heard from non-enthusiast people who have been to SFGAm, that they are really impressed with the changes. And even some of them are in the "teen" years which SF is trying to get away from "solely" catering to.
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Tuesday, May 9, 2006 12:56 PM
According to Shapiro, Attendance was down by 350,000 visits. Some of those visits, 100,000 according to him, were the result of a new law in Mexico barring schools from going to amusement parks on field trips. Additionally it rained 25 or 31 days in San Franciso (or was it Sacramento) resulting in a major drop in attendance there over last year.

He said Flash Pass revenue was up 80%, Food per cap is up 15%, Retail is up 10%.

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Tuesday, May 9, 2006 3:41 PM
Jeff's avatar That is a pretty dramatic drop in attendance though when you consider the number of parks actually open in the first quarter. I'm sure it's not a trend, and I'll buy the excuses for now.

Listen to me, I'm actually upbeat on Six Flags. Maybe all the marketing and for-the-investors nonsense actually does consider the root changes that need to happen in the operation of the parks.

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Tuesday, May 9, 2006 3:59 PM
Lord Gonchar's avatar I've said it before, I'm saying it now and I'll say it some more.

These guys are delivering.

Better yet, they're not just delivering within the old confines, they're changing the whole damn game.

I think SF is really going to be something in the next couple of years and I think other chains are going to be left behind if they don't follow the example.

And yes, that's a far cry from the SF bashing we were known for on the early podcasts and it's even further from the posts I consistently made about the parks in the forums over the past few years, but these guys have really won me over in just a few months. I love their approach, I dig their ideas and if they continue to back up their talk with action, there's no reason not to believe...even though very few enthusiasts seem to want to.

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Tuesday, May 9, 2006 4:07 PM
I agree with Jeff and Gonch. You can hear it in his voice. I lot of we will do this and we will do that. He wants to be clear and upfront. In fact, there will be a mid-quarter conference call in June to let everyone know how they are doing. He doesn't want to wait until August and then let unload a bunch of bad news. A very unusual step for any corporation this day and age.
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Tuesday, May 9, 2006 4:42 PM
Gonch said:

" I love their approach, I dig their ideas and if they continue to back up their talk with action, there's no reason not to believe...even though very few enthusiasts seem to want to".

With some of the naysayers, I get the feeling it feels a little like being beat up for 5 years by the school bully. He may go to therapy and emerge as a new person in the same imposing body, but that doesn't mean you'll forgive and want to be his best buddy.

I too like what I am seeing, and even if they don't succeed I can't imagine anyone else with a better plan of how to fix the chain in the short term.

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Tuesday, May 9, 2006 6:01 PM
Those are just words Gonch. Did you buy the stock? :-)
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Tuesday, May 9, 2006 6:25 PM
They list in this article that they've entered a contract to sell Astroworld's former site for a paltry $77 million (remember Kieran Burke's estimates expecting twice that?).

And considering Six Flags footed about $20 million in demolition/ride relocation costs - that's a mere profit of about $55 million gained from this whole mess.

http://www.washingtonpost.com/wp-dyn/content/article/2006/05/08/AR2006050801542.html

This other article also mentions, "The company, which recently signed a contract to sell AstroWorld in Houston for $77 million, may sell more parks after summer to pay down its more than $2 billion debt, chief executive Mark Shapiro said yesterday during an analyst call."

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Tuesday, May 9, 2006 8:02 PM
Shapiro also said the park sold for 15x the amount of revenue they were bringing in.
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Tuesday, May 9, 2006 8:22 PM
Doesn't it bother anyone that Shapiro said 1 or 2 of the big parks or a handful of smaller ones will be on the market by the end of 2006.

*** This post was edited by SFGAdv lover 5/9/2006 8:23:11 PM ***

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Tuesday, May 9, 2006 8:31 PM
Made more money on admissions and parking but down in overall revenue? Wow that's a shocker!

Did'nt they raise the price of parking just a tad? Hmm... admission prices went up too didn't they? Do you see a correlation? Will the suits at SF? I doubt it.

I look for this trend of PKS profits going down. If you trade options you could make a killing shorting this baby.

I really do not want any park to do badly but they are doing it to themselves with some poor decision making IMO. The parking gouge is chief among them. This is really going to turn people off into coming back. I hope they wake up and soon.I know some of you have stated the opposite piont of view and that's fine. I have not heard the pod casts so you probably have so extra info I don't. I just have a hard time getting over the parking thing and I will back up my feelings about it by not going to a single SF park this year because of it even though I went to several SF parks last year.As far as the admission prices. I will say the season passes were too cheap, but I disagree with the raising of the regular 1 day admit. Cedar Fair is lowering prices across the board. It does make for a very intersting dynamic. It will be fun to see how all this unfolds, and which company does better. *** This post was edited by Mister 7 5/9/2006 8:39:43 PM ****** This post was edited by Mister 7 5/9/2006 8:41:56 PM ****** This post was edited by Mister 7 5/9/2006 8:42:47 PM ***

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Tuesday, May 9, 2006 8:38 PM
SFGADV lover I heard the same thing and took note of it. He also said they were concentrating on the companies 14 biggest parks that pull in 85% of the business. I know the Amusement Business numbers are controversial but given it's the only source of figures I have, I see the 14 biggest parks as these:

SIX FLAGS GREAT ADVENTURE
SIX FLAGS GREAT AMERICA
SIX FLAGS MAGIC MOUNTAIN
SIX FLAGS OVER TEXAS
SIX FLAGS MEXICO
SIX FLAGS OVER GEORGIA
SIX FLAGS NEW ENGLAND
SIX FLAGS MARINE WORLD
SIX FLAGS FIESTA TEXAS
SIX FLAGS ST. LOUIS
SIX FLAGS DARIEN LAKE
LA RONDE (SIX FLAGS)
SIX FLAGS AMERICA
SIX FLAGS ELITCH GARDENS

In that order. I wonder what his definition of big parks is. Personally, I see #13 and #14 as prime candidates (unfortunately).

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Tuesday, May 9, 2006 9:34 PM
He talks about the 14 branded Six Flags theme parks (not the 14 biggest parks) in that statement mentioned.

The parks he is talking about are: SFOT, SFOG, SFSL, SFGAdv., SFMM, SFGAm., SFFT, SFKK, SFA, SFDL, SFEG, SFMW, SFNE and SF Mexico (SFNO is not included, but is the 15th branded theme park).

The other SF parks (after the already mentioned sales) will be: SFHH (Arlington), SFHH (NJ), SFHH (LA), SF White Water/American Adventures, SF Waterworld (Concord), SF Splashtown, SF Wild Safari, La Ronde, The Great Escape and Wild Waves/Enchanted Village.

*** This post was edited by SFZIP 5/9/2006 9:36:49 PM ***

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Tuesday, May 9, 2006 10:53 PM
Hey they got rid of 350,000 teenagers and "riff-raff" in the first quarter. The lesson here is that while it's good to increase your per capita (per head) spending, it doesn't help your bottom line if that increased spending comes from far too few heads (23.33% less).
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Wednesday, May 10, 2006 12:32 AM
They made a little more money per guests by gounging them for parking and admission, but if attendance doesnt increase it will eventually even it self out.

Now if you have a major increase in atttendance with increased parking and increased admission price and then per capita spending on trinkets/food etc, that would be impressive.

Right now i see no positive results from this report and will have to wait and see what happens the next 2 quarters to judge the result of the changes that were made.

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Wednesday, May 10, 2006 1:59 AM
Lord Gonchar's avatar It's not as 'doom and gloom' as one would like to think if you really stop and considers some things.

- 10% fewer operating days over the same period last year. Assuming equal performace, the numbers would be 10% lower to begin with. (making the apples-to-apples comparison - an attendance drop of more like 200,000)

- Taking the school trip numbers/excuse at face value, that's an additional 100,000 expected loss (now we're down to 100,000 total drop)

An 100,000 person attendance drop on an expected 1.35 million (last year minus 10%) is right around a 9% drop in expected attendance. (not nearly as fun as that 23% number to spout, but more realistic)

- 10% fewer operating days would also seem to indicate 10% less revenue. (not too far from the 14% they reported)

- Season pass prices are still at the old numbers. (Still stuck with the annoying riff-raff and empty pocket teens for one more year. :) ) If an increase in SP prices is in the future plans that is similar to the gate hike, then that's some serious revenue lost.

Feels like a minimal loss, all things considered.

-Per cap spending is up to $37.13.

Read that one again. If all these evil price hikes were really in full effect and that's what was keeping people away, then at $59 to get in, $15 to park and food, games, souvenirs on top of that - the per cap would be much higher. I mean people aren't even spending $40 during an entire day at the park! Still reeks of the old SF, doesn't it?

And it should. These guys didn't even take control until the second week of December. The first quarter was underway before these guys even had a chance to start to change things. How much change can realistically be made and how quickly? I'd call it an outstanding job to even be at this point. (look at the trouble CF is having with the damage done at GL)

Bottom line: This is just the very tipity-tip of the iceberg and with just that much showing, these guys have boosted per cap spending by 13% and beaten analyst expectations all while trying to stop the dismal avalanche that the old guys set into motion over the past 5 or so years.

- I wanna be Mark Shapiro when I grow up. :)

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Wednesday, May 10, 2006 2:11 AM
"Shapiro also said the park sold for 15x the amount of revenue they were bringing in."

Well yeah, any park is going to sell for a good multiple of what it brings in on any given year, duh. Doesn't mean it was a good move to sell a profitable operation for the land underneath. They scored far less for the "valuable" land under the park than they boasted (expectations were stated as between $95 - $145m). And the last financial report including Six Flags $20m loss to demolish the place takes that profit of sale down another 25% to the $55m range. It's a folly they weren't willing to sell the park intact for $80m, they would have made more and the park would still exist. Instead Six Flags held out for more, didn't get it, and Houston lost their only viable theme park in the process.

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