Six Flags revenue up on lower attendance, greater loss in first quarter

Posted | Contributed by Jeff

From the press release:

Six Flags Entertainment Corporation (NYSE: SIX), the world’s largest regional theme park company and the largest operator of water parks in North America, today reported first quarter Revenue of $142 million, Net Loss of $70 million, and an Adjusted EBITDA loss of $17 million.

“We are pleased to have delivered record first quarter revenue and the second-highest first quarter Adjusted EBITDA in our company’s history, which we believe are proof points that our new strategy and our new culture are beginning to take hold,” said Selim Bassoul, President and CEO. “Looking ahead, our team is excited to launch numerous special events this summer, including Viva La Fiesta, Flavors of the World, Six Flags Fireworks Spectacular, and parades. These events, combined with exciting new rides and attractions and our focused investments in infrastructure, should help us deliver an enhanced guest experience this year. We are still in the early stages of our transformation, but with our season pass sales accelerating and our attendance improving, we are encouraged by our recent progress.”

Total revenue for first quarter 2023 increased $4 million, or 3%, compared to first quarter 2022, driven by higher guest spending per capita, partially offset by lower attendance. The decrease in attendance was driven primarily by severe weather in our California and Texas parks.

The $5.42 increase in guest spending per capita compared to first quarter 2022 consisted of a $4.53 increase in Admissions spending per capita and a $0.89 increase in In-park spending per capita. The increase in guest spending per capita was driven by higher revenue from memberships beyond the initial 12-month commitment period, which is recognized evenly each month and includes a portion of revenue that is allocated to Park admissions revenue and to Park food, merchandise and other revenue. Higher membership revenue in first quarter 2023 increased Admissions spending per capita and In-park spending per capita by approximately $5 and $1, respectively, versus the prior year. Excluding this impact, Admissions spending per capita and In-park spending per capita in first quarter 2023 were essentially flat versus the prior year period.

The company had a net loss of $70 million in first quarter 2023, compared to a net loss of $66 million in first quarter 2022. The loss per share was $0.84 compared to a loss per share of $0.76 in first quarter 2022, driven by higher operating costs partially offset by an increase in revenue. Operating costs increased in first quarter 2023 versus the prior year due primarily to higher advertising spend. Adjusted EBITDA loss in first quarter 2023 was $17 million, essentially flat with the prior year.

As of April 2, 2023, the company had total reported debt of $2,452 million, and cash or cash equivalents of $65 million. Deferred revenue was $152 million as of April 2, 2023, a decrease of $33 million, or 18%, from April 3, 2022. The decrease was primarily due to a lower Active Pass base as of April 2, 2023 versus April 3, 2022. In first quarter 2023, the company invested $25 million in new capital, net of insurance recoveries.

On May 3, 2023, the company completed the private sale of $800.0 million in aggregate principal amount of 7.25% senior unsecured notes due 2031. The net proceeds from this offering were used to repay $892.6 million, or 94.01% of the aggregate principal amount outstanding, of the 4.875% senior unsecured Notes due 2024. In addition, the company increased the capacity of the Revolving Credit Facility from $350 million to $500 million.

Jeff's avatar

It's hard to tell where they're headed because of the first quarter, but if their operating costs outpace the rise in guest spending, it doesn't seem like winning to me.

Jeff - Editor - - My Blog - Phrazy

The revenue comparison is pretty sketchy:

The increase in guest spending per capita was driven by higher revenue from memberships beyond the initial 12-month commitment period, which is recognized evenly each month

AFAIK, season pass revenue is recognized during the operating period. This is shifting recognition from operating days (at seasonal parks) to non-operating days. That’s great now but it might be less great as the year rolls on. Time will tell I guess.

Fun's avatar

I think this part is really telling:

Excluding this impact (of membership revenue recognition), Admissions spending per capita and In-park spending per capita in first quarter 2023 were essentially flat versus the prior year period.

The whole business strategy was around getting people to pay more so you don't need the volume, which reduces variable costs. They've hit the wall on spending. They need more attendance, plain and simple. The business reality is that P1P parks don't work unless enough people walk through the front gate.

Jeff's avatar

I think anecdotally that demand for amusement and theme parks might soften a little this year. Things seem a little less crowded at Disney (but still more than 8 years ago), and with AP's available again, room discounts, maybe the pent up demand has been somewhat satisfied. Does that translate to regional parks? They should be the winners in that equation.

Jeff - Editor - - My Blog - Phrazy

Fun's avatar

The industry belief is that the demand shifts during periods of economic hardship. International traveler shifts to domestic, destination park vacationers shift to regionals, overnight stays turn to staycations, etc. There is a reason why Walmart stock typically beats the market during a recession.

But like many things, this isn't a traditional market cycle we're observing. Employment is high but everyone's convinced doom and gloom is right around the corner. Inflationary pricing is obvious and credit card debt is increasing. Where there was revenge spending last year, I see the inverse this year- remorse frugality.

This will be interesting to follow. From visiting SFGAmerica Saturday, I can say that unless operations improves (and significantly), it will be hard to truly see spending or the "value" proposition improving. While I understand this is early in the season and operations are not finely tuned, to be in line for 20 minutes or more to refill drinks does not lead to a great customer experience, especially when there were only 4 or 5 sets of people ahead in line... Or 2+ hour waits for Superman or XFlight due to only a single coaster train running (and running very inefficiently). And even if we had wanted to get food in the park, finding an open restaurant for food would have been a challenge.

This visit reminds me oh so much of the Six Flags visits of circa 2004-2005 or so, back in the Burke era. Again, it is early in the season, so there could be a turnaround, but it certainly was not an optimistic first visit of the year.

Haven’t been to a legacy Six Flags park since 2000, and I used to love SFGAm. They used to be a leader in developing major new attractions (thinking the raft rides, Arrow megaloopers or Batman rides) but they moved away from that and then turned the parks into a babysitting service and they lost appeal for me.

Therein lies the trap this regime finds itself in. Reducing crowds alone doesn't make a Six Flags park a premium product; they actually have to deliver a quality experience. That means consistently good operations and food, fantastic service, ongoing maintenance and landscaping, fresh paint, etc. All that needs to come before guests reward them with higher spending and increased visitation.

And even if this management team could pull off that miracle (no evidence of that), the brand has so thoroughly pissed off the higher-income demographics that would otherwise be game to pay for a premium experience, that they will never come back.

SFGAm isn't far from the affluent north shore suburbs. These families were consistently visiting during the 90s Time Warner era. They're not visiting now. It's not a marketing or economics problem. It's a core product problem.

Six Flags after Time Warner is such a tragedy. So many different management regimes, each with their own flawed strategy and inability to execute.

Jeff's avatar


the brand has so thoroughly pissed off the higher-income demographics that would otherwise be game to pay for a premium experience, that they will never come back.

This is totally it. We've seen other industries race to the bottom, and while the business might be a "success," they live in thin margins from folks that can't afford better. It's really hard to walk that back unless you can deliver premium.

Jeff - Editor - - My Blog - Phrazy

Lord Gonchar's avatar

Boo, Six Flags! Booooo!

Six Flags has been the Walmart of amusement parks (and this sort of entertainment dollar in general, really) for as long as I've been paying attention. That's not changing anytime soon.

Except Walmart's business model actually works (low cost + high volume). They also offer convenience with services like grocery delivery that helped them gain new affluent customers during covid. Their stock is up 83 percent in the past five years.

Low cost + high volume doesn't work for an amusement park. SF stock is down 57 percent in the past five years. Management now understands this, but is seemingly incapable of fixing it, and so the death spiral continues.

Lingering brand stink aside, a turnaround is possible. It will take massive investment and lots of time, none of which will happen under current management. Maybe never unless someone takes them private.

There you have it: Privatize, invest, copy the Herschend playbook, rebrand and relaunch. Easy. 😉

Or have Dick Kinzel come out of retirement to buy it, close all the parks, and force everyone to go to Cedar Point

Lord Gonchar's avatar

I've been posting here for over 22 years.

Know how long there's been posts sure that SF was doing things so poorly that they'd be out of business without major changes?

At least 22 years.

I wish I was able to fail for as long as they have. 😉

Jeff's avatar

Well, bankruptcy is a pretty major change. 🙂 They survive I think mostly because they have significant assets. There's a business there.

Jeff - Editor - - My Blog - Phrazy

I once went to Great Adventure with a friend who is not really an amusement park type; she went partly for the company and partly for a kind of anthropological excursion. This would have been around the time El Toro was new-ish - I remember because of her abject terror on the way up - so maybe 2008-10? Her summary of the place, as we waited in some line or other, was, "This place seems like it appeals to people who believe advertising."

I don't think she meant that in the sense of, "they were convinced to come here by Mr. Six"; more like, they were the sort of people who think that consumption will bring them happiness.* I'll ride that giant ride, I'll get my credit count to 400, and then I'll achieve nirvana.

I think fewer people believe that these days. When Great Adventure was built in the 70s, it was possible to build a giant tepee or the Yum-Yum Palace or whatever else they had and wow people. A few decades later, we had all been to the places that did it better - Disney World, Universal, et al.; we've all flown around the world; we all do these amazing things** - and it just takes a lot more to impress us; we've got the internet, we've got video games and VR, we've got everything else. Six Flags (and other places) are trying to compete with that with, fundamentally, 1970s (or 1920s!) experiences. Get in a cart and go up and down hills.

Or actually worse, because they're trying to present 1920s/70s experiences as if they are cutting edge (e.g., VR headsets that nauseate people).

Nobody is going to pay a premium for that in 2023.

So: what's the path forward if you're the current management?

A) You can double down on the "believe advertising" crowd (the Wal-Mart crowd, if you like)*** - accept thin margins, deliver a mediocre product, annoy the sort of people who post on websites like this. That might be a legitimate approach, but your margins will be thin, your stock price will suffer, and you'll be vulnerable to a downturn.

B) Realize what business you're in and try to get back to delivering a modern version of the 1970s (1920s?) experience - a pleasant day out, without all of the whistles and kettledrums, play to nostalgia and taking people out of the modern world, not into an even more intense experience of it. Cedar Point, specifically, is better at this than Six Flags (I'm not really sure about the rest of the Cedar Fair chain); Knoebels is way better at it; Kennywood seems to be stubbing its toe.

I know which way I would go. But I'm old, and I'm probably not representative of the market (I post on this website), and I certainly don't have any real knowledge of the business. And, that's a really hard pivot to make, that requires totally rebranding - probably taking the Six Flags name off most properties, there's a huge amount of negative equity there - and probably another bankruptcy**** and selling off a bunch of parks that have never really fit the portfolio to begin with.

Anyway, this is all off the top of my head; I might be full of crap.

*Probably we all believe that to some extent, including her; what varies is the degree to which we believe it as well as what we consume.

**By "we all," I mean the people on the North Shore who used to go to Marriott's Great America and be wowed by a double-decker carousel.

***The difference being, Wal-Mart is really good at delivering customer satisfaction. When I go there, they have what I want, it's cheap, the staff are friendly, and I don't have to wait forever to get it. If only Six Flags were more like Wal-Mart.

****Would Magic Mountain survive another bankruptcy? That park's land is probably worth more than the entire park together.

It turns out that advertising is effective, because people are riddled with unhealthy dependencies, one of which is "solved" by retail therapy.

So, not a bad business at all.

ApolloAndy's avatar

In a possible coincidence, this is the first season since 2001 that I don't have a Six Flags season pass. Discovery Kingdom is about an hour and change away, but given how little they've added, and the "decent but not great" visits we've had, I just don't see the point. I think we got to the park twice last year and probably totaled 4 hours of needlessly long lines and closed rides and attractions.

Frankly, I'll probably end up with a pass before the end of the summer, but if they give away the fall with a 2024 pass, I might not be a bad idea if we just hold out until then.

Hobbes: "What's the point of attaching a number to everything you do?"
Calvin: "If your numbers go up, it means you're having more fun."

Vater's avatar

Haven't been to my home Six Flags park in 20 years. Not sure if I've mentioned that at all in the last 20 years.

janfrederick's avatar

I wonder what a Dollar Store amusement park would look like? A couple hundred Chuck-E-Cheese rides, vending machines, and a bunch of change machines? ;)

"I go out at 3 o' clock for a quart of milk and come home to my son treating his body like an amusement park!" - Estelle Costanza

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