Six Flags [FUN] Corporate Discussion Thread

[thisdougsforu]

SFSL discussion

 

I would agree with you. Previous to this year the last time I had been in SFSL was 2011 and the park seems like it's in much better shape nowadays. I had a lot of fun visiting in the fall and picked up a pass for next year so I can venture out to some others in the chain.

 

It sure would be nice if the park pulled the trigger on a signature coaster sometime soon but I'm afraid that with all the 4D coasters being brought into Six Flags that is going to be what the park gets which then probably takes it out of the running for a more substantial non-clone for quite awhile. Doing something to the Boss also has to be a priority at some point as well. Bummed about all the rumors that an RMC revamp is off the table due to being too expensive.

[eugjackson]

Six Flags announced they have a formal agreement for SF branded parks in Bishan China to to open in 2020. There will be a theme park and water park at the site. Haiyan China SF theme/water park still expected to open in 2019.

[TrippinBillie]

Six Flags announced they have a formal agreement for SF branded parks in Bishan China to to open in 2020. There will be a theme park and water park at the site. Haiyan China SF theme/water park still expected to open in 2019.

 

 

Welp, there goes significant hope in investments in American parks for a while...

[Srosdude]

Six Flags announced they have a formal agreement for SF branded parks in Bishan China to to open in 2020. There will be a theme park and water park at the site. Haiyan China SF theme/water park still expected to open in 2019.

 

 

Welp, there goes significant hope in investments in American parks for a while...

Not at all. Six Flags is only licensing their name out. They aren't paying for anything.

[eugjackson]

Six Flags announced they have a formal agreement for SF branded parks in Bishan China to to open in 2020. There will be a theme park and water park at the site. Haiyan China SF theme/water park still expected to open in 2019.

 

 

Welp, there goes significant hope in investments in American parks for a while...

 

Read the investors presentation/annual reports from last year. These licensing deals make 5+M/yr each pre opening/constructions phase and are projected at up to 20M/yr post opening/full operation. SF puts up no money, the money for building the parks comes from the development groups in the foreign country. SF collects fees for consulting. management, use of SF name, etc.. Foreign parks are an easy way to increase revenue. These foreign parks in China(2 theme/2 water), Vietnam, Dubai, Saudi Arabia,etc...are going to be a good, no risk revenue stream.

[boldikus]

Special shout-out to all the morons endlessly whining about the lack of big coasters and/or hating on SF current business strategy. Read it and weep.

 

http://investors.sixflags.com/news-and-events/press-releases/2017/02-22-2017-120041930

[coasterbill]

This is great news! To be fair of course, Q4 growth in revenue isn't really a shock and had they remained flat it would have been pretty disastrous since they expanded Holiday in the Park to two new parks this year. Based on anecdotal first hand reports and photo updates it seemed like Six Flags St. Louis was a massive home run and Six Flags America seemed to have been successful also and it looks like the data backs that up. I'm interested to glance over the conference call transcript when it comes out a little later as they should go into more detail about this.

 

With Holiday in the Park expanding to new parks it was almost a forgone conclusion that they would be able to pat themselves on the back for huge Q4 growth but it's still nice to see that come to fruition. The adjusted EBITDA increase for the year is really the big news here but overall this is still a big win.

[eugjackson]

Special shout-out to all the morons endlessly whining about the lack of big coasters and/or hating on SF current business strategy. Read it and weep.

 

SF produced the same revenue as CF with 5+mil more visitors. SF per capita spending per visitor decreased while CF increased. Which do you think is better? Nothing really to brag about, it's a low end product strategy. High volume, low cost vs lower volume, higher revenue per visitor. They are thrilled that many people are content to keep showing up for cloned cheap coasters and rides. SF still is not going to build a major coaster. If you understand their investment formula the amount of revenue increase in FY 2016 is pittance in actual ride investment increase. Revenue increased by 55M, SF spends 9% of revenue on capital investments. That means 4.95M more in capital investments. Capital investments are split 60% rides, 25% asset management, 15% in park non rides. So the ride investment increased by 2.97M. I doubt 2.97M is what's going to make SF suddenly build a Giga or any other coaster. SF ride budget thus went fro 74M to 77M.

[ytterbiumanalyst]

There's lots of good news here. I'll focus on the one area that needs improvement, in-park spending per capita. SIX's big gamble is that by lowering the gate price, they'll encourage more in-park spending, and that just hasn't come about. Now, a 5% increase in adjusted EBITDA is really good, so they clearly are doing things right. Sounds like they've got some plans in place to help that. Food is a very high profit area that they haven't yet capitalized on. Holiday World is doing a Qdoba style restaurant this year, and Kings Island has one already. The concept has been proven to work at theme parks, and it's a big increase in food quality as well as being an appealing healthy option. It'd be nice to see Six Flags engage with that concept, either at their Go Fresh or at its own location.

[PeoplemoverMatt]

I'd be happier with an announcement that they weren't going to keep hiring 14-16yr olds for cheap labor and using horrible operations to run their parks.

[coasterbill]

Special shout-out to all the morons endlessly whining about the lack of big coasters and/or hating on SF current business strategy. Read it and weep.

 

SF produced the same revenue as CF with 5+mil more visitors. SF per capita spending per visitor decreased while CF increased. Which do you think is better? Nothing really to brag about, it's a low end product strategy. High volume, low cost vs lower volume, higher revenue per visitor. They are thrilled that many people are content to keep showing up for cloned cheap coasters and rides. SF still is not going to build a major coaster. If you understand their investment formula the amount of revenue increase in FY 2016 is pittance in actual ride investment increase. Revenue increased by 55M, SF spends 9% of revenue on capital investments. That means 4.95M more in capital investments. Capital investments are split 60% rides, 25% asset management, 15% in park non rides. So the ride investment increased by 2.97M. I doubt 2.97M is what's going to make SF suddenly build a Giga or any other coaster. SF ride budget thus went fro 74M to 77M.

 

Do you ever nor complain? The numbers are strong, nobody cares what they are compared to Cedar Fair's numbers and nobody thinks this means they'll be going out and building a Giga coaster in the foreseeable future. If you want to talk about what these numbers could mean in terms of future expansion I would focus on the possibility of them expanding Holiday in the Park to other markets since it was likely the driving force behind the Q4 jump. Six Flags America and Six Flags St. Louis each added about 20 days to the operating calendar and Great Adventure (between Friday night openings and an extra bonus weekend) added about 10 days to the calendar. That's about 50 additional operating days chain wide which was clearly the driving force behind the Q4 revenue and attendance jump.

[larrygator]

There's lots of good news here. I'll focus on the one area that needs improvement, in-park spending per capita. SIX's big gamble is that by lowering the gate price, they'll encourage more in-park spending, and that just hasn't come about.

 

I originally thought the same thing, but we do not know if this is a result of increased Food Pass sales. I doubt that income from food pass sales is then attributed back to customer spending in the park on the days they visit. This alone could easily account for decreased in park spending.

Edited February 22, 2017 by larrygator

[DirkFunk]

Better yet, what evidence is there that Six Flags intends to increase per capita spending? Everything they've said in recent years suggests that they are willing to accept a decrease in per capita spending to get an increase in overall attendance and advance sales.

 

What Six Flags is doing is very much like what they did in the Story era, except with one large and significant difference. Rather than attempt to cut costs wherever and appeal to what is effectively lowest common denominator along with massive expansion, they seem to accept that operating a limited number of facilities in extremely specific markets with that business plan can potentially be successful. The issue they will have is that the growth cannot continue forever. Expanding the season to include Christmas in most markets can't be done again. There's a pretty consistent base of visitors that they've got, and they aren't creating any potential additional revenue streams to tap into those once they've saturated the season pass market. They can't grow the season pass base by 20-30% every year indefinitely.

 

As for whether or not they'll build a giga coaster: No. They are not building any gigacoasters any time soon anywhere. Six Flags doesn't believe it is necessary right now to build the kind of roller coasters they historically had to generate the kind of numbers they seek.

[ElvisLuv]

If someone would have dropped some money on Six Flags stock in 2009, they'd be very happy.

[DirkFunk]

If someone would have dropped some money on Six Flags stock in 2009, they'd be very happy.

 

No. No they would not.

[larrygator]

If someone would have dropped some money on Six Flags stock in 2009, they'd be very happy.

 

No. No they would not.

 

But if they had bought CF in 2009, they would be very happy

Edited February 22, 2017 by larrygator

[DirkFunk]

If someone would have dropped some money on Six Flags stock in 2009, they'd be very happy.

 

No. No they would not.

 

But if they had bought CF in 2009, they would be very happy

 

If you bought $1000 in Six Flags stock in February 2009, you would have $0 now.

 

If you bought $1000 in Cedar Fair stock in February 2009, you'd have roughly $8600 (not including dividends).

 

Chapter 11 is one helluva thing.

[coasterbill]

Okay, so I skimmed the transcript from the Q4 call. This sounds amazingly boring, but sometimes you can get some pretty interesting info from these (pro tip: disable javacript if you want to read that so it won't spam you to sign up and so that the entire call will be on one page).

 

This call was pretty mundane, but there were a few takeaways....

 

- The Mardi Gras event at Six Flags Mexico and Six Flags Fiesta Texas is a test and they seem like they'd really like to roll this out to the other parks in the chain to encourage the number of visits they get each year from their passholder base. This isn't exactly breaking news, but apparently they're really optimistic about the potential of this event.

 

- Buckle up... you may all lose your sh*t. I'll just quote this entire thing... lol this is from John Duffy

 

We are, I would have to say, one of the most efficient in the industry in terms of our CapEx spending. And the beauty is, is that, as you look at our international business as we've talked before, it requires no capital on our part. So, as you think about going forward, as we continue to grow that international licensing revenue where there's no capital associated with that, over time, we're going to be able to bring that down below that 9%.

 

And if you look at our capital spending, we believe it is the right amount of capital spending. Just look at what we've been able to accomplish over the last several years, but in particular, our attendance growth that we saw in 2016, our continued success around our season pass, and the fact that we can – our parks have never been in better shape than they are today. And I also want to point out that typically, when we go in with a new ride, we'll reinvent that whole area around the ride. So, as I said, our parks are in great shape. So, I think we'll have the ability to continue to take that balance and percentage of revenue as we grow international.

 

So the main takeways here are that

 

1) The international deals are licensing deals. We kind of knew that already. They're Six Flags parks in name only.

 

2) They have no intention of adding to their current level of CapEX spending (percentage-wise), and in fact they may lower it. The good news is that with the additional revenue from the licensing deals and the fact that they're currently investing a ton of money into a water park in Mexico they may have more capital to work with, but I don't think they're likely to spend it.

 

- Finally, they're tremendously happy with the performance of Holiday in the Park and their retention of memberships. The large number of people who keep the memberships beyond the 12 month point was a major point of the conference call so they seem to be very proud of it. They attribute a lot of this to Holiday in the Park and see a lot of value in extending their hours because there seems to be a correlation between the number of months the guest doesn't "receive benefits" from their membership and their retention rate. This is great news for us.

[RaceBoarder]

Okay, so I skimmed the transcript from the Q4 call. This sounds amazingly boring, but sometimes you can get some pretty interesting info from these (pro tip: disable javacript if you want to read that so it won't spam you to sign up and so that the entire call will be on one page).

 

This call was pretty mundane, but there were a few takeaways....

 

- The Mardi Gras event at Six Flags Mexico and Six Flags Fiesta Texas is a test and they seem like they'd really like to roll this out to the other parks in the chain to encourage the number of visits they get each year from their passholder base. This isn't exactly breaking news, but apparently they're really optimistic about the potential of this event.

 

- Buckle up... you may all lose your sh*t. I'll just quote this entire thing... lol this is from John Duffy

 

We are, I would have to say, one of the most efficient in the industry in terms of our CapEx spending. And the beauty is, is that, as you look at our international business as we've talked before, it requires no capital on our part. So, as you think about going forward, as we continue to grow that international licensing revenue where there's no capital associated with that, over time, we're going to be able to bring that down below that 9%.

 

And if you look at our capital spending, we believe it is the right amount of capital spending. Just look at what we've been able to accomplish over the last several years, but in particular, our attendance growth that we saw in 2016, our continued success around our season pass, and the fact that we can – our parks have never been in better shape than they are today. And I also want to point out that typically, when we go in with a new ride, we'll reinvent that whole area around the ride. So, as I said, our parks are in great shape. So, I think we'll have the ability to continue to take that balance and percentage of revenue as we grow international.

 

So the main takeways here are that

 

1) The international deals are licensing deals. We kind of knew that already. They're Six Flags parks in name only.

 

2) They have no intention of adding to their current level of CapEX spending (percentage-wise), and in fact they may lower it. The good news is that with the additional revenue from the licensing deals and the fact that they're currently investing a ton of money into a water park in Mexico they may have more capital to work with, but I don't think they're likely to spend it.

 

- Finally, they're tremendously happy with the performance of Holiday in the Park and their retention of memberships. The large number of people who keep the memberships beyond the 12 month point was a major point of the conference call so they seem to be very proud of it. They attribute a lot of this to Holiday in the Park and see a lot of value in extending their hours because there seems to be a correlation between the number of months the guest doesn't "receive benefits" from their membership and their retention rate. This is great news for us.

I'd be curious what this means for "Round 2" of their ride clones then. I feel that the 4D's and S&S's were solid additions. Curious what they choose for this round.

 

I'm also curious if they put an emphasis on infrastructure in the parks.

[larrygator]

Round 2?

 

Here are the additions that we have seen at multiple parks in recent years.

 

HiTP

SkyScreamer

Larson Super Loops

VR additions

Justice League

S&S Free Spin

 

I suspect the next round will not be a coaster. I think they will continue to look for rides in the $1MM - $3MM range to replicate in parks.

Edited February 23, 2017 by larrygator

[DirkFunk]

to summarize the talking points that matter

 

-SIX stock has dropped about $3 since Wednesday AM because they missed their earnings per share number.

 

-Attendance up overall by 5%, new events given credit. More events, which as long as it means more operating days is A-OK with me. If you want to scratch your beard and ponder something, go with this: Attendance increased in Q4 2016 by 22% over 2015. Revenue only increased by 10%. Per capita spending was down 7%, so just blaming the Peso for that difference isn't gonna fly. Overall for the year it was a bit rosier.

 

-Season pass/membership sales are up 15% over the prior year. For FY2015, 56% of park entries was by passholders. If the ratio of visits->passholders needed to then dip for it to only be the claimed 60% of attendance in 2016.

 

-SIX likes VR. They are planning to keep on pushing it as part of their capex strategy because it is cheap and easily marketable.

 

-Revenue is down $5 million for the quarter because the Vietnamese investors wanting a Six Flags forgot to pay. Oops! They are assured it is just a timing thing, and not that a bunch of dudes in Southeast Asia don't actually have the money for Six Flags' potentially useless branding.

 

-In case you forgot that Six Flags' executives are sharks and not really park folks, they're really interested in the idea of setting up an REIT spinoff. This is an old trick that "activist investors" (aka human trash responsible for most everything bad about capitalism) have pushed. What the hell is an REIT? Well, it is this innovative idea to produce revenue. By splitting off the park operations from the real estate, you can obtain revenue in a whole new corporation who's job it is to maximize the value of the real estate!

 

That didn't make sense to you? Spinning the park off from the park? Let me explain. Six Flags' parks would be run by Six Flags Inc. Six Flags Real Estate Holdings would own the land under the Six Flags parks, then charge rent to Six Flags for being on Six Flags Real Estate Holdings' land. In turn, investors receive a dividend for having bought into Six Flags Real Estate Holdings (the REIT). For the REIT, the success of the parks would then make the land they're on more valuable. But also other things can make land more valuable, like residential development. And also make REITs less invest-able, like higher federal interest rates.

 

Let me summarize then: Six Flags wants to split in two, and the part that's possibly worth the most (the land) is going to be divested from the parks. Do you like the parks? Good. But just know that the odds increase dramatically that one can be sold off by doing this regardless of its performance.

 

-Remember what I said about there being 60% of visits belonging to season passholders? So Six Flags is still arguing that the remaining 40% of single day guests are a strong potential source of new memberships. Problem? Diminishing returns. In FY2015, season passholder growth was at 26%. This year was 15%. Aggressively pushing passes next year might show another surge. But probably not. The larger your passholder base grows, the less potential there is for significant growth. In 2008, just before bankruptcy, season passes were responsible for less than 30% of visitation to the chain's parks. They've doubled that. But even if they managed to keep the growth levels high, at some point they max out of potential season passholders. They hit market saturation. Then what?

 

-Selling dining passes is still deemed low compared to season pass holder sales. Is it because there isn't a demand from "Active Pass Holders" (deemed to be a 1/3 of the passholder base)? They don't think so. They're gonna ride that hard this year.

 

-About capex: Like Bill said, they're planning to reduce it. Not the first call in which they've said that. Spending on infrastructure is part of that, since the new additions generally go with rehabs of areas into technicolor nightmares. Don't expect anything to change. Stop holding your breath for a giga anywhere. It isn't just a bad look: oxygen deprivation can cause brain damage and death.

[larrygator]

Great analysis and speculation. However, I'm not clear what you mean by this comment. Can you rephrase?

 

-Selling dining passes is still deemed low compared to season pass holder sales. Is it because there isn't a demand from "Active Pass Holders" (deemed to be a 1/3 of the passholder base)? They don't think so. They're gonna ride that hard this year.

[DirkFunk]

Great analysis and speculation. However, I'm not clear what you mean by this comment. Can you rephrase?

 

-Selling dining passes is still deemed low compared to season pass holder sales. Is it because there isn't a demand from "Active Pass Holders" (deemed to be a 1/3 of the passholder base)? They don't think so. They're gonna ride that hard this year.

 

All-Season Dining has "good penetration" but sales are not what they would like, so they say. Usually if people are aware of something, think it is a good value, and desire it, they buy it. Macroeconomics 101, right? But Six Flags thinks there's room for growth. So they're just gonna keep pushing them anyways until sales increase.

[larrygator]

^Ok, now I got it, thanks.

[eugjackson]

Round 2?

 

Here are the additions that we have seen at multiple parks in recent years.

 

HiTP

SkyScreamer

Larson Super Loops

Justice League

S&S Free Spin

 

I suspect the next round will not be a coaster. I think they will continue to look for rides in the $1MM - $3MM range to replicate in parks.

 

1st round of clones is not done. I totally expect to see more JL's and Free Spins. I totally expect at minimum every park that has a JL now, gets a Joker(free spin) and vice versa. That means OG, Stl, Mexico get free spins and FT, NE get JL's. That would make 9 parks with both JL's and free spins. 10 of 13 parks have Skyscreamers and 2 parks without them, GAm and MM actually could use them.

 

Round 2 Clones

Zamperla Giant Discoveries - SF has already put in 4 total, 2014,2016, and 2 in 2017. They are really good flat rides IMO and would be a wise clone into 8+ parks. 2 of SF's favored parks, MM and GAm both need to beef up their flat rides and these would be a good addition, along with the Skyscreamers mentioned before.

 

Zamperla Endeavors would be a wise clone or the 2nd Gen Enterprises. Go with one or the other, as they are kind of in the same genre. SF has been dealing with Zamperla a lot more than Huss recently, so I would lean towards them.

Both MM, GAm could use a 3 ride flat package over a couple of years of a skyscreamer, discovery and endeavor.

 

 

Skyline Skywarps - for the 5 parks that don't have Superloops, they can be listed as a coaster and are quoted at 2M cost at IAAPA presentation.

 

The next coaster clone after the 4D's, which SF is not likely done with, may be another S&S ride. The Mack Xteme could be a clone coaster also. But, S&S put out those concept coaster videos and some looked pretty good. SF is pretty thrilled with S&S thus far. S&S is kind of going for the cost efficient coaster market, which is right in SF wheel house of frugality. No big coasters can be expected from SF anytime soon and even the RMC conversions are likely over for a while, as it appears CF is about to go on a run of conversions like SF did.